Minnesota
How Cohen v. U.S. applies in Minnesota: state-specific rules, key cases, and bar exam notes for Tax Law.
In Minnesota, the principles established in Cohen v. U.S. regarding the taxation of income from illegal sources are largely adhered to within the framework of state tax law. Minnesota recognizes that income, irrespective of its source, is subject to taxation unless expressly exempted.
Minnesota Statute § 290.01 encompasses all forms of income for taxation, including income derived from illegal activities, aligning with federal standards established in Cohen v. U.S.
The Minnesota Supreme Court affirmed that income from illegal activities is taxable under state law.
The court held that all income, regardless of legality, is applicable to state earnings tax.
Confirmed that illegal earnings are subject to taxation and that taxpayers cannot exclude these amounts from their reported income.
Minnesota’s approach mirrors the federal standard set forth in Cohen v. U.S., which emphasizes that income must be reported regardless of its legality. Both jurisdictions treat illegal income as subject to taxation, reaffirming the principle of comprehensive income taxation.
Understanding the treatment of illegal income in tax law, as demonstrated by Cohen v. U.S., is often tested on the Minnesota bar exam, especially in relation to income tax principles.