FINAL DRAFT — 10/2/23

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2023 Schedule M2SB, Income Tax Computation for S Portion of ESBT 

Name of Trust                                                                                                                Federal ID Number                                         Minnesota ID Number

Name of S-Corporation S Portion of ESBT Holds Stock In                                                                       Federal ID Number of S-Corporation

Additional S-Corporation S Portion of ESBT Holds Stock In                                                                    Federal ID Number of Additional S-Corporation                        

 1  Federal taxable income of S portion (enclose federal computation)   . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . .  1   

 2  Fiduciary’s deductions and losses not allowed by Minnesota (enclose Schedule M2NM)                                                       . . .  . . . . . .  . . . . .  . .  2   

  3  Additions (from line 27, on page 2 of this schedule)                        . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . .  3   

 4  Add lines 1 through 3  . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . .4. . . .      

  5  Subtractions (from line 43, on page 3 of this schedule)    . . .  . . . . . .  . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  .  5   
 6  Fiduciary’s income from non-Minnesota sources  
     (enclose Schedule M2NM)           . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . .6. .  . .      
 
 7  Add lines 5 and 6    . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . 7.  . .  .      

 8  Minnesota taxable net income. Subtract line 7 from line 4   . . . . .  . . . . . .  . . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . .  .   8   

 9  Tax from table in Form M2 instructions   . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . . .  . . . . .  . . 9. . .  .      

 10  Total of tax from Schedule M2MT (enclose Schedule M2MT)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   10   
 
 11  Total of 2023 tax for S portion. Add lines 9 and 10 and include amount on line 11 of Form M2    . .  . . . . .  . .  11   

You must include this schedule and a copy of federal computations for the S portion of the ESBT when you file Form M2.

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2023 M2SB, page 2
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Additions to Income

  12    State and municipal bond interest from outside Minnesota    . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . .12 . .  .  

    13  State taxes deducted in arriving at net income   . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  .  13   
  14    Expenses deducted on your federal return that are attributable to income not taxed  
        by Minnesota (other than interest or mutual fund dividends from U.S. bonds)                             . . .  . . . . . .  . . . . .  . . . . . . .  . . . .  .  14   
  15    80 percent of the suspended loss from 2001–2005 or 2008–2022 on your  
        federal return that was generated by bonus depreciation (see Form M2 instructions)   . . . . .  . . . . .  . . . . . .  . . .  .  15   

  16    80 percent of federal bonus depreciation    . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .   16 . . . . 

    17  Section 199A qualified business income  . . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .17 .  . .  .  

    18  This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  .  18   

    19  Net operating loss carryover adjustment   . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . .  .  19   

  20    Foreign derived intangible income (FDII) deduction . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  .  20                        

  21    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  .  21   

     22 This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .     22   

  23    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .     23   

  24    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .     24   

  25    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .     25   

  26    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .     26   

  27    Add lines 12 through 26. Enter the result here and on line 3   . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . .                              27   

Subtractions from Income

  28    Interest on U.S. government bond obligations, minus any expenses  
        deducted on your federal return that are attributable to this income                    . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  .   28   

    29  State income tax refund included on federal return   . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . .                         29   

  30    Federal bonus depreciation subtraction (see Form M2 instructions)                     . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . .   30   

  31    This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   31   

  32    Subtraction for railroad maintenance expenses  . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . .   32   

  33    Net operating loss carryover adjustment   . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . .   33   

  34    Deferred foreign income (section 965)  . . . .  . . . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . .   34   

  35    Disallowed section 280E expenses of a licensed cannabis business  . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . .   35   

     36 Delayed business interest  . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . 36   

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2023 M2SB, page 3
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  37  Delayed net operating loss deduction  .  . . . . .  . . . . . . .  . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .  . .  .  37   

   38 This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   38   

  39  This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   39   

  40  This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   40   

  41  This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   41   

  42  This line intentionally left blank  . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . . .  . . . . .  . . . . . .  . . . . .  . . . . . .   42   

 43   Add lines 28 through 42. Enter the result here and on line 5  . . .  . . . . . .  . . . . .  . . . . . . .  . . . . .  . . . . . .  . . . . .  . . .  .  43   

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2023 Schedule M2SB Instructions

Who Must File Schedule M2SB
If a trust is filing as an Electing Small Business Trust (ESBT), you must file Schedule M2SB to report all items relating to the S Portion of the 
trust.
Report all the income from the S Portion of an ESBT on Schedule M2SB and include a copy of Schedule KS. Enter the name and federal 
tax ID of each S-Corporation on the Form M2SB. If you have to enter more than two entities and need additional spaces, include them on an 
attached statement.
Apportion all income, deductions and modifications based upon the S-corporation’s Minnesota apportionment factor reported on Schedule 
KS, line 47. Include an attachment detailing the calculation.

Line Instructions
Round amounts to the nearest whole dollar.
Line 1
Enter the federal taxable income of the S Portion that you calculated on your federal schedule. Be sure to include a copy of the federal sched-
ule when you file Form M2 and Schedule M2SB.
Line 2
Use Schedule M2NM, Non-Minnesota Source Income and Related Expenses, to determine the amount to include on line 2.
Line 6
Use Schedule M2NM to determine the amount to include on line 6.
Line 10
Complete a separate Schedule M2MT for the S Portion of the trust. See the instructions for Schedule M2MT for details on completing this 
schedule for the S Portion of the ESBT.
Lines 12 - 43
To complete lines 12 through 43, see instructions for Form M2 lines 41 through 72.