1875 INCOME AND FRANCHISE TAXES 71.01 CHAPTER 71 by yaohongm

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  1875                                                                I N CO M E AN D FRAN CHISE TAXES 71 .01




                                                               CHAPTER 71

             I N CO M E A ND FRA N CHISE TAXES FOR STATE A N D LOCAL REVENUES
  7101         Imposition of tax ; exempt income,                                  '71301 Distributions of 'property to corporations .
 71 .015       Menominee Indian tribe ; distribution of assets..                    71 302 Distributions in redemption of stock
 '71 . 02      Definitions .                                                        '71 ..303 Distributions in redemption of stock to pay death
  7103         Gross income and exclusions .                                                          taxes ' .
  71035        Exchanges and distributions in obedience to orders                71 305           Distributions of stock and stock rights ,
                   of securities and exchange commission .                       71307 . Basis of stock and stock rights acquired in
   11 .04                 s
               Deductions from gross income of corporations„                                          distributions..
 710,42        Tax-option corporations,                                          71 311 Taxability of corporation on distribution .
 ' 11 .. 043   Reduction of tax .                                                71 :312 Effect on earnings and profits
 '71045        Allowability of certain deductions .                              '11 :316 Dividend defined .
 71. . 046 .   Depletion ; certain mines producing ores of lead,
                                                    g                            71 .. 317 ' Other definitions .
                   zinc, copper or othe r metals .                               71 331           Gain or loss to shareholders in corporate
 71 . . 047    Depletion ; mines producing low-grade iron ore .                                       liquidations .
 '71 . 05      Modifications, transitional adjustments and elec-                 71 . 332 Complete liquidations of subsidiaries .
                   tion of deductions forr natural persons and                   71 . 333 Election as to recognition of gain in certain corpo-
                   fiduciaries ..'                                                                    rate liquidations.
  7106         Corporation business loss carry forward .                             71 334 Basis of property received in liquidations .
  7107         Situs of income ; allocation and apportionment ,                  '71 . .  336 Gain or loss to corporation on liquidation ; general
 '71 .08       Fiduciaries .                                                                          rule .
  11 . 09      Rates .,of taxation, interest and personal                         71 . 33 ' 7 Gain or loss on sales or exchanges in connection
                   exemptions                                                                         with certain liquidations
 71 095        Designation of payment to campaign fund .                          '71 . 346      Partial liquidation defined .
 71 :16        Filing returns ; payment of tax ; tax refunds and                                                                         .
                                                                                   7] . 351 Transfer to corporation controlled by transferor,
                   c redits; nonresident contractor's surety bond;              '71 . ..354 Exchanges of stock and securities in certain
                   withholding statements and wage reports .                                          reorganizations,
 71 ,11        Administrative provisions; penalties ,                           '71 . .355 Distribution of stock and securities of 'a controlled
 71 12         Contested assessments and claims for refund .                                          corporation.
 71 13         Collection of delinquent taxes .                                 '71 . 356 Receipt of additional consideration ,
 ' 71. . 135   Withholding by employerr of delinquent tax of                    71 .35'7 Assumption of liability.
                   employe                                                      '11 ..358 Basis to distributees .
 71 14         Distribution of revenue                                             71 ,361 Nonrecognition of gain or loss to corporations
 71 ; 15       Miscellaneous provisions .                                       71 ,362 Basis to corporations. .
 11 , 18       Urban transit companies ; special tax ..                         71 368           Definitions relating to corporate rear $anizations
'11 . . 19     Withholding income tax ; definitions ..                          71 . 371 Reorganization in certain receivership and bank-
 '7 . 120      Employers required to withhold                                                        ruptcy proceedings
71 .21' ;      Declaration of estimated tax by individuals                      71 .. .372 Basis in connection with certain receivership and
'11 ..22       Declarations of estimated tax by corpo r ations ,                                     bankruptcy proceedings . .
 71 , 23       Penalties not deductible,                                        71 53            Property tax and rent credit .
71 - 26        Time extension                                                   '71 . . 55 Peoples escrow fund .




 71 . 01 Imposition of tax ; exempt income . residing within the state for the purposes of
 (1) PERSONAL INCOME TAX, For the purpose of determining liability for income taxes and sur-
 raising revenue for the state and the counties, taxes . . This section shall not be construed, to
 cities; villages and towns, there shall be assessed, prevent or affect the correction of errors or
 levied, collected and paid a tax on all net in- omissions in the assessments of income for for-
comes as hereinafter provided, by every natural mer, years under s . 71 .11 (16) and (20) .)
person residing within the state or by his per- (2) F RANCHISE TAX ON CORPORATIONS . For'
sonal representative in case of death, and trusts the privilege of exercising its franchise or doing
administered within the state ; by every nonresi- business in this state in a corporate capacity
dent natural pet-son and trust of'this state, upon every domestic or foreign corporation, except
such income as is derived from property located corporations specified in sub, . (3), shall annually
or business transacted within the state, and also pay a franchise tax according to or measured by
by ,every nonresident natural person upon such its entice, net income of the preceding income
income as is derived from the performance of year, at the rates set forth in s . 71 00 (2m) .
personal services within the state ; and by every Every corporation organized under the laws of
corporation not subject to the franchise tax this state shall be deemed to be residing within
under sub . : (2), which owns property within this,' this state for the purposes of this franchise tax .,
state or whose business within this state dur' g All provisions of chs 71 and 73 relating to net
the taxable year consists exclusively of for ign income taxation of corporations shall apply to
commerce, interstate commerce, or both ; ex pt franchise taxes imposed under this subsection,
                                                        - as hereinafter, exempted„ Every natural per-so unless the context requires otherwise .. The tax
domiciled in the state: shall be deemed to be imposed by this subsection on national banking
                     Electronically scanned images of the published statutes.
  7 1 .01 INCOM E AND FRANCHISE TAXES                                                                                   1876

  associations shall be in lieu of all taxes imposed             bond of occupation, or association, or to groups
  by this state on national banking associations to              within a well-defined neighborhood, community
  the extent it is not permissible to tax such                   or rural district . . Beginning with calendar year
  associations under federal law The tax imposed                  1972 and thereafter, this paragraph does not
  by this subsection on insurance companies sub-                 apply to the income of insurers under ch .. 613
  ject to taxation under this chapter, except socie-             operating by virtue of' s, 148 .03, 447 .13, 449 .15,
  ties, organizations or corporations under ch . 613             450. 13 or 613,80, Tax on the income of such
  operating by virtue of s. 148 . 03, 447 1 .3, 449 ., 15,       insurers shall f irst be payable on or before
  450 .13 or 61 .3 .. 80, shall be based on net income           March 15, - 1973, and thereafter' under s . 71 .10
 computed under sub.. (4), and no other provision                (1) .
 of this chapter relating to computation of tax-                       (b) Income received by the United States,
 ableincome for other corporations shall apply to                 the state and all counties, cities, villages, school
 such insurance companies . All other provisions                  distr icts, vocational, technical and adult educa-
                      r           y
 of this chapter shall apply to insurance compa-                  tion districts or other. political units of ' this state . .
 nies subject to taxation under this chapter- unless
                                                                       (c) Income of co-operative associations or
 the context clearly requires otherwise . . The tax
 imposed upon societies, organizations of corpo-                  corporations engaged in marketing farm prod-
 rations under ch 613 operating by virtue of s ..                 ucts for pt • oducers, which turn back to such
                                                                  producers the net proceeds of the sales of their
  148 . . 0 .3, 447,13, 449 . 15, 450 . 13 or 613 . 80, shall
 be upon such net income as is determined by                      products ; provided, that such corporations or
 application `to such companies of those provi-                   associations have at least 25 stockholders or
 sions of the internal revenue code applicable to                 member s delivering such products and that their,
 mutual insurance companies, other than life                      dividends have not,, during the preceding 5
 insurance companies or mutual marine insur-                     ,years, exceeded 8 per cent per, ,year; also income
 ance companies, having total receipts over '                    of associations and corporations engaged solely
 $500,000 subject to any applicable addition or                  in processing and marketing farm products for
 subtraction as provided in sub.. (4) (a) .                      one such co-operative association or corporation
                                                                 and which do not charge for such marketing and
    (3) EXEMPT INCOME, There shall be exempt
                                                                 processing more than a sufficient amount to pay
 from taxation unde r this chapter income as
                                                                 the cost of such marketing and processing and 8
 follows, to wit :
                                                                 per cent dividends on their ' capital stock and to
     (a) Income of mutual insurer s exempt from
 federal income taxation pursuant to section 501                 add 5 per cent to their surplus
  (c) (1' S) of' the i nternal revenue code, town                    (d) Whenever, any bank has been placed in
 mutuals organized under or subject to ch 612,
                    d                                            the hands of the commissioner of banking for
 foreign insurers, and domestic insurers engaged                liquidation under s ;. 220 .08, no tax under ' this
 exclusively in life insurance business, domestic               chapter shall be levied, assessed or collected on
 insurers insuring against financial loss by reason             account of such bank, which shall ' diminish the
 of nonpayment of principal; interest and other                 assets thereof so that full payment of all deposi-
 sums agreed to be paid under the terms of any                  tors cannot be made Whenever the commis-
 note or bond or other evidence ofindebtedness                  sioner of' banking certifies to the department of'
                                                                                    g
 secured by a mortgage, deed of trust or other '                revenue that the tax or any part thereof levied
 instrument constituting a lien or charge on real               and assessed under ' this chapter against any such
 estate,' railroad corporations and sleeping car                bank will so diminish the assets thereof that full
 companies, of car line companies from operation                                              s
                                                                payment of all depositors cannot be made, the
 of car line equipment as defined ins 76 39, and                                                             e
                                                                said department shall cancel and abate such tax
 corporations organized under ch .185 of operat-                or, part thereof, together, wi th , any penalty
 ing under subch I of ' ch . 616 which are bona- fide           thereon , This subsection shall apply to taxes
cooperatives operated without pecuniary profit                  levied and assessed subsequent to the time the
 to any shareholder or member ; or operated on a                bank was taken over , by the :e commissioner of
cooperative plan pursuant to wh ich they deter-                 banking ; which taxes have not been paid .,
mine and distribute their proceeds in substantial                   (e) The first $1,680 of any annuity rece i ved
compliance with s 185 .45, and of all religious,                annually from a retirement system established
scientific, educational, benevolent or other cor-               for ` . its civil service employes by the United
porations or associations of ' individuals not oiga-            States.. This exemption is limited to persons 62
nized or conducted for pecuniary profit.. This                  years of age or older „ For those persons having
paragraph does not apply to the income of                       ear ned income in excess of $600 per taxable
mutual` savings banks, ' mutual loan corpora-                   year,, the exemption under this section shall be
dons, savings ' and loan ' associations or credit               reduced - by the amount of earned income in
unions except credit unions the membership of                   excess of $600. For purposes of this exemption,
which is limi ted to groups having a common                     "earned income" means "earned income" as
                        Electronically scanned images of the published statutes.
  1877                                                                 I NCO ME AN D . FRANCHISE TAXES 71 .01

 defined in section 911 (b) of' the internal reve-                      9 . By subtracting from federal taxable in-
 nue code as of` . January 1, 1972 .                                 come any net capital losses not offset against
    (f) The first $1,000 of compensation received                    capital gains to the extent provided by s . 71,04
 from the United States f 'or , service as a r eserve or             (7) and (7a) ;
 active member, of the a r med forces                                     10 . By subtracting any net business loss
       (g) Awards received under ch 949 . .                         carry-forward permissible under s 71 . . 06, but no
       (4) INSURERS (a) Insurers subject to taxa-                   loss incurred by any insurer in 1971 or any prior
              r
  tion under this chapter, except insurers under                    year, may be carried for ward, and any such loss,
  ch :: 613 operating by virtue of s . 148 .. 0 .3, 447 . . 1 .3,                      .
                                                                    not incurred in 1971 or, any prior year, sustained
  449 15, 450,13 or 61 .3 .. 80, beginning with calen-              by a nonprofit service plan of sickness care
  dar year 1972 and thereafter, shall be taxed on                   under ch . 148, dental care under s . 447 , . 13,
  the `basis of net income . Such tax shall first be                prepaid optomettic service plans under s : 449 .15
  payable on or before March 15, 1973, and                          or . prepaid prescription plans under' s, 450,13
 thereafter under s , 71,10(l), "Net income" of                     shall be treated as a net business loss of the
 an insurer, subject to taxation under this chapter                 successor service insurer under ch . 613 operat-
 means federal taxable income as determined in                      ing by virtue of s . 148 . 0 .3, 447,13, 449 . ; 15 or'
 accordance with the provisions of the internal                     450 : 13
 revenue code applicable to the insurer with
                                                                         (b) l . With respect to any domestic insurer'
 r espect to determination of federal income tax
                                                                    engaged in the sale of' life insurance and also
 payable by the company, adjusted as follows:
                                                                    other insurance, the net income figure derived
 ` 1 By adding to federal taxable income the                        by application of pa t„ (a) shall be multiplied by
amount of any loss carry-fo r ward, including any
                                                                                                          h
                                                                    a €raction, the nume r ato r of 'which shall be the
capital loss carry-forward, deducted in the cal-
                                                                    net gain from operat ions on insu r ance, other
culation of federal taxable income ;
                                                                    than life insurance, and the denominator, of
   2 . By adding to federal taxable income that
                                                                    which shall be the totall net gain from opera-
portion of any gain on sales of assets in a                         tions If the numerator is zero or, negative, the
corporate liquidation subject to s . 71,337 repre-
                                                                    multiplier shall be zero.
sented by the r atio which the percentage of' the
outstanding stock of such corporation owned by                         2.. For purposes of the numerator, "net gain
nonresidents of this state bears to the total                        from operations on insurance, other than life
outstanding stock of such corporation;                               insurance" includes net income, after ' dividends
   3 . By adding to federal taxable income, if not                   to policyholders, but before federal and foreign
already included therein,, the amount of any                         income taxes, fr om fire and casualty insurance ;
federal tax refund or portion thereof previously                     net gain fr om operations, after dividends to
applied to reduce the amount of tax payable                         policyholders and before federal : income taxes,
under this chapter ;                                                                     d                  ;
                                                                    from .m accident - and health insurance; . and net
   4 , By adding to federal taxable income an                       realized capital gains or losses on investments
amount equal to interest income received or                         from accident and health insurance operations,
accrued during the taxable ,year to the extent                      said , net realized capital gains or losses to be
such interest income was used as a deduction in                     apportioned among life and accident and health
determining the company's • federal taxable                         insurance lines in the same manner as net invest-
income; '.                                                          ment income is required to be . apportioned by
     5 By adding, to federal taxable income an                      the commissioner of insurance .. "Net gain fr om
 amount equal to dividend income received dur-                      operations", "net income", "net realized capital
 ing the taxable year, to the extent such dividend                  gains or, losses", and "net investment income"
 income was used as a deduction in determining                      shall be calculated and reported as required
 federal taxable income ; :                                         under, rules adopted by the commissioner of
     6 : By adding to federal taxable income the                    insuragce .
amount of Wisconsin corporation franchise tax,                         3 . ; For purposes of ' the denominator, "total net
if ' any, deducted in the calculation of federal                    gain from operations" includes net income, after
taxable income ;                                                    dividends to policyholders, but before federal
     7 „ By subtracting : from federal taxable in-                  and foreign income taxes, from fire and casualty
come dividends received from Wisconsin co rpo-                      insurance; net gain from operations after divi-
rations which are deductible under s : . 71 . 04 (4),               dends to policyholders and befo r e federal in-
to the extent such dividends have been included                     come taxes, from accident and health and life
in federal taxable income ;                                         insurance; and net realized capital gains or '
     8 , By subtracting from federal taxable in-                    losses on investments from accident and health
come the amount of Wisconsin corporation
                                    n                               and life insurance operations„ "Net income",
franchise tax ; if any, assessed during the taxable                 "net gain from operations", and "net realized
year ;                                                              capital gains or losses" shall be calculated and
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 7 1 .01 INCOME. AND FRANCHI SE TAXES                                                                                     1878

 reported as required under rules adopted by the             (e) Section 71 . . 22 shall apply to insurers
 commissioner of insurance.                             subject to taxation under this chapter on and
    4 . The resultant figure shall constitute Wis-      after January 1, 1972.
 consin net income for purposes of the Wisconsin             (f) Elections author i zed by and made in
 franchise tax measured by net income except            accordance with the internal revenue code, ex-
 with respect to such of said insurers as had, in       cept an election to fi le consolidated returns,
 the taxable year, premiums written on insurance        shall be deemed elections for the purpose of
 other than life insurance where the subject of         applying- this chapter . .
 such insurance was resident, located or to be              (g) In this subsection :
 performed outside this state .                             1 : For taxable year 1976 "internal revenue
    (c) With respect to domestic insurers not           code" means the federal internal revenue code
 engaged in sale of life insurance or not operating     as amended to December 31, 1975, or such code
 under ch . 613 by virtue of s . 148 . . 03, 447 13,
                   3                                    as subsequently amended or changed by the
450 . 13, . 449 .. 15 or 613,80 but which, in the       U . S ., congress and effective for the taxable year
taxable year,, have collected premiums written          for, federal income tax purposes, at the option of
on subjects of insurance resident, located or to        the insurer..
be performed outside this state, there shall be            2 . For taxable year 1977, "internal revenue
                        e
subtracted from the net income figure derived           code" means the federal internal revenue code
by application of par . (a) to arrive at Wisconsin      as amended to December 31, 1976, or the code
income constituting the measure of the                  as subsequently amended or, changed by the
franchise tax an amount calculated by multiply-         U S, congress and effective for the taxable year
ing such adjusted federal taxable income by the         for federal income tax purposes, at the option of
arithmetic average of the following 2                   the insurer .
per centages :                                             3 . For taxable years 1978 and 1979, "internal
   1 . The percentage of total premiums written         revenue code" means the federal internal reve-
on all property and risks other than life insur-        nue code as amended to December 31, 1977, or
ance, wherever located during the taxable year,         the code as subsequently amended or changed
as reflects premiums written on insurance, other        by the U .S., congress and effective for the tax-
than life insurance, where the subject of insur-        able year for federal income tax purposes, at the
ance was resident, located or to be performed           option of the insurer :
outside this state                                         4 . For taxable ,year 1980 and subsequent
     2 The percentage of total payroll, exclusive       years, "internal revenue code" means' the fed-
 of life insurance payroll, paid everywhere in the      eral internal revenue code as amended to De-
taxable ;year- as reflects such compensation paid
                                               n        cember 31, 1979 .:
outside this state.. Compensation is paid outside           5 . "Life insurance" includes annuities .
 thi s state if the individual's service is performed      History: 1971 c. 125, 154, 211, 215, 320 ;: 197.3 c. 243;. 19 ' 75
                                                        c. 41, -223, 224, 344, 372, .422 ; 1977 c 29, 142, 418 ; 1979 c .
entirely outside : this state; or the individual's      102 ss , 16, 2 .36 (3), (4) ; ] 979 c . 110 s.. 60 (13) ; 1979 c. 221,
service is performed both within and without            261
                                                           Legislative Council Note to (3) (a), 1975: In this revision,
this state, but the service performed within is         the position has been taken that present tax law should not be
incidental to the individual's service without this     disturbed; The repeal of s 201 .04 requires the amendment of
state ; or some service is performed without th is      s 71 07 (3) (a) as above [Bill 632-S]
                                                           Legislative Council Note, 1979: Most of the alterations
state and the base of operations, or if there is no     made in (3) (a) are purely editorial. The one important
base of operations, the place from which the            change, adding language, preserves tax law intact despite the
                                                                                                             d
                                                        changes made by other parts of this bill . ' It should be noted
service is directed or controlled is without this       that thetax exemption under this section requires substantial
state, of the base of operations of the place from      compliance with s 185 .45 [Bill 2 '1,S] '
which the service is directed or controlled is not          See note to 70. . 11, citing Pitts u . . Dept . :t of Revenue, 333 F
                                                        Supp. 662„
in any state in which some part of the service is           The theory of property taxation and land use restrictions .
performed, but the individual's residence is            Heller, 1974 WLR 751
outside this state..
    (d) The arithmetic aver-age'of ' the 2 percent-     71 .015 Menominee Indian tribe ; distribu-
ages refer red to in par : (c) shall be applied to      tion of assets. No distribution of assets from
the net income figure arrived at by the succes-         the United States to the members of the Me-
sive application of pars , (a) and (b) with re-         nominee Indian tribe as defined in s . ` 49 , . 085 or
spect to Wisconsin insurers to which both pals          their lawful distributees, or to any corporation,
 (a) and (b) apply and which have collected             or organization, created by the tribe o r at its
premiums written upon , insurance, other than           direction pursuant to section '8 P .L 83-399, as
life insurance, where the subject of such insur-        amended, and no issuance of stocks, bonds,
ance was resident, located or to be performed           certificates of indebtedness, voting trust eert fi-
outside this state, to arrive at Wisconsin income       cates or other securities by any such corporation
constituting the measure of the franchise tax .         of organization, or voting trust, to such mem-
                   Electronically scanned images of the published statutes.
 1879                                                       INCOME AND FRANCHISE TAXES 7 1 .02

bets of' the tribe or their lawful distributees shall                                 d
                                                          as subsequently amended or changed by the
be subject to income taxes under th is chapter;           U.. S , congress and effective for the taxable year
provided, that so much of any cash distribution           for federal income tax purposes, at the option of
made .under, said P. L . . 8 .3-399 as consists of a      such corporation or trust . The same version ofn
share of any interest earned on funds deposited           the internal revenue code shalll be used by the
in the treasury of the United States pursuant to          corporation or trust under this subdivision to
the supplemental appropriation act, 1952, . (65           determine its qualification and to define its "net
Stat . 736,754) . shall not by virtue of' thi s section   income" .
be exempt from the individual income tax of' this                                         8
                                                               4.. For taxable years 1978 and 1979, for, a
state in the hands of the recipients for the year in      corporation or common law trust which qualifies
which paid For the purpose of ascertaining the             as a regulated investment company or real estate
gain or loss resulting from the sale or other              investment trust under the internal revenue code
disposition , of such assets and stocks, bonds,           as amended to December 31, 1977, or such code
certificates of indebtedness and othe r securities        as subsequently amended or changed by the
under this chapter, the fair market value of ' such       U : S., congress and effective for the taxable year
property, on termination date as defined in s . .         for federal income tax purposes, at the opt i on of
70 057 [Stats . 1967], shall be the basis for             the corporation or trust, "net income" means the
determining the amount of such gain or loss .             federal regulated investment company taxable
                                                          income or the federal real estate investment
71 .02 . :Definitions . (1) DEFINITIONS APPLI-            trust taxable income of the corporation or trust
CABLE TO CORPORATIONS . As used in this                   as determined under the internal revenue code
                                                                                 r
chapter :                                                 as amended to December 31, 1977, or the code
    (a) "Net income" means, for corporations,             as subsequently amended or changed by the
 "gross income" . less, allowable .: deductions, ex-      US : congress and effective for the taxable year
 cept as, follows :                                       for federal income tax purposes, at the option of
           r
    1 For taxable years 1972, 1973, 1974 and              the corporation or trust . The same version of the
 1975 for a co r poration or common law trustw            internal revenue code shall be used by the corpo-
which qualifies as a , regulated investment com-          r ation or trust under this subdivision to deter-
                                                                            t
pany or real estate investment trust under the            mine its qualification and to define its net
internal . revenue code as amended to December            income . .
31, 1972, ','net income" means the federal regu-             S .. For taxable year 1980 and subsequent
lated investment company taxable income or the            years, for a corporation or common law trust
                                        t
federal real estate investment trust taxable in-          which qualifies as a regulated investment com-
come of the corporation or, trust as determined           pany or real estate investment trust under the
       r
under the internal revenue code as amended to             internal revenue code as amended to December
December 31, 1972                                         31, 1:979 "net income" means the federal regu-
                                                                          t
   2 . For taxable year 1976, for a' corporation or       lated investment company taxable income or the
common law trust which qualifies as a regulated           federal real estate investment trust taxable in-
investment company or real estate investment              come of the corporation or trust as determined
trust under the inter nal revenue code as                 under the internal revenue code as amended to
amended to December 31, 1975, "net income"                December 31, 1979
means the, federal r egulated investment com-
                                                              (b) " Person" includes corporations, unless
pany taxable income or the federal real estate
                                                          the context requires otherwise,, and "corpora-
investment trust taxable income of' the corpora-
                                                          tion" includes corporations, joint stock compa-
tion or trust as determined under the internal
                                          e
                                                          nies, associations or common law trusts orga-
revenue code as amended to December 31, 1975,
                                                          nized or conducted for profit, unless the context
   3 For taxable year 197 '7, for a corporation or
                                                          requires otherwise
common law trust which qualifies as a regulated
investment company or real estate investment                 (c) "Paid" or ' "actually paid" are to be
trust under,- the internal revenue code as                construed in each instance in the lightt of the
amended to December , 31, 1976,; :or such code as         method used in computing taxable income
subsequently amended or changed by the US.,               whether on the accrual or receipt basis ; but the
congress and effective for the taxable year for,          deduction for, federal income and excess profits
feder al income tax purposes ; at the option of' the      taxes shall be confined to cash payments made
corpor ation or trust, "net income" means the             within the year covered by the income tax
federal regulated investment company taxable              return ,
income or the federal real estate investment
                                     e                       (d) All fiscal years ending between the June
trust taxable income of the corporation or trust          30 preceding and the July l following the close
as determined under the internal revenue code             of a calendar year shall correspond to such
as amended to December 31, 1976, or the code              calendar year for the purposes of this chapter,
                           Electronically scanned images of the published statutes.
  71 . 02 INCOME AND FRANCHISE TAXES                                                                                        1880

  and no fiscal year shall end on any date other                             code in effect on December 31,19 ' 76, except that
  than the last day of any month .                                           it includes section 214 of the code (relating to
     (e) "Entertainment corporation" means a                                 deduction of certain dependent care expenses)
  domestic or foreign corporation which derives                              as it existed immediately prior , to its repeal in
  income from amusement, entertainment or                                    1976 by section 504 (b) (1) of P L 94-455 and
  sporting events in this state or from the services                         it does not includethe changes to the code
  of'an entertainer- as defined in sub (2)' (p) .                            enacted in 1976 by section 21 12 (relating to tax
     (f) "Tax-option corporation" means a corpo-                             treatment of certain pollution control facilities)
  ration' which has elected and qualified to be                              of P L : 94-455 .. Amendments to the internal
  taxed under subchapter S of the internal revenue                           revenue code enacted after December '31,1976,
  code, and which has not terminated or had such                             shall not apply to this subsection with respect to
 election terminated                                                         the taxable year 1977 .
     (g) "Net income or loss" of a tax-option                                   4 For the taxable year 1978, "internal reve-
 corporation means gross income less the allow-                             nue code" means the federal internal revenue
 able deductions under s . 71 04, other than the                            code in effect on December 31, 19'7 7, except that
 deduction under s ., 71'..04 (4), and less any net                         it includes section 214 of the code (relating to
 business loss carry forward under s . '71 ..06 from                        deduction of certain dependent care expenses)
 taxable years prior to 19'79 : For purposes of this                        as it existed immediately prior to its repeal in
 paragraph, the total net business loss carry                                1976 by section 504 (b) (1) of l? L 94-455 and
 forward shall be offset against totall net income .                        it does not include the changes to the code
    (2) DEFINITIO NS APP LI CA BL E TO NATURAL                              enacted in 1976 by section 2112 (relating to tax
 PERSONS A ND FID UC IARIES , As used in this                               treatment of ' certainpollution control facilities)
 chapter :              _                                                   of P L : 94-4' 55 ; Amendments to the internal
   (a) "Federal taxable income" and "federal                                revenue code enacted af 'ter' December 31, 1977,
adjusted gross income" of natural persons and                               shall not apply to this subsection with respect to
fiduciaries, mean taxable income of adjusted                                the taxable year 19 ' 78 except that the provisions
                                                                            of section 157 (a) of P :L , 95-600 (relating to
gross income as determined under the internal
revenue code or, if'redetetmined by the depart-                             the period for making individual retirement plan
ment, as determined by the department under                                 contributions) apply to the taxable year 1978 ..
the internal revenue code or as may be deter-                                   5 . For the taxable year 1979, "internal reve-
mined on final appeal therefrom . . .                                       nue code" means the federal internal revenue
                                                                            code in effect on December 31,1978, except that
   NOT E: C hapter 1, laws o f 1977, p rov ides in section 2:
                                                                            it includes section 214 of -the code (relating to
    "The provisions of the federal internal reve nu e code enacted         deduction ofcertain dependent care expenses)
by P.L ., 94-267 (relating to cer tain employer ret irem e nt plan         as it existed immediately prior to its repeal in
dis tribution s) shall be effecti ve in d e terminin g a person 's "fed-
                                                                            1976 by section 504 (b) (1) of P . L . 94-455,
era] adjusted gross income" and "Wiscon sin adjusted gro ss i n-
come" for the taxable year 1974 under section 7 1.02. ( 2) (a)             section 218 of ' the code (relating to the deduc-
and ( e) of the statutes for distributions covere d by P;L . 94-           tion of political contributions) as it existed
267 which we re made on or after July 4, 1974,"                                           y
                                                                           immediately prior to its repeal in 1978 by sec-
   (b),, 1 . For the taxable year 1975, "internal                          tion 113 (a) of P : L 95= 600 and section 911 (c)
revenue code" means the federal internal reve-                             of ` the code (relating to the foreign earned
nue code in effect on December 31, 1974 and the                            income exclusion) as it existed on December 31,
amendments thereto enacted by P.L .: 94-267                                1977, and it does not include the changes to the
(relating to certain employer retirement plan                              code enacted by section 2112 ( r elating to tax
distributions) .. Except for-PL 94-267, amend-                             treatment 'of' certain pollution control facilities)
ments to the internal revenue code enacted after-                          of P: L . 94-455, section 164 (relating to employ-
December- 31, 1974, shall not apply to this                                ers' educational assistance plans) of P . L 95-600
subsection with respect to thee taxable year 1975 . .                      and sections 203 and 209 : (c) (relating to cer-
   2 ; For the taxable ,year 1976, "internal reve-                         tain expenses of living abroad) of''P . L, 95-615 .
nue code" means the federal internal revenue                               Amendments to the ' inteinal revenue code en-
code in effect on December 31, 1975 and the                                acted after December 31, 1978, do not apply to
amendments thereto enacted by P .L 94-267                                  this subsection with respect to the taxable year
(relating to certain employer retirement plan                              1979 .
distributions) Except for those amendments                                     6 : For the taxable year, 1980 and thereafter,
enacted by P :L . 94-267, amendments to the                                "inter nat revenue code" means the federal inter-
internal revenue code enacted after December                               nal revenue code in effect on December 31,
31, ' 1975, shall not apply to this subsection with                        1979, except that it includes section 214 of the
respect to the taxable year 1976 ..                                        code (relating to deduction of ' certain dependent
   3 For the taxable year 1977 "internal reve-                             care expenses) as it existed immediately prior to
nue code" means the federal internal revenue                               its r epeal in 1976 by section 504 (b) (1) of ' P L .
                      Electronically scanned images of the published statutes.
 1881                                                               I N C OM E AND FRANCHISE TAX ES 71 .02

94-455 ; section 218 of the code (relating to the                 sin adjusted gross income but not less than $300
deduction of political contributions) as it existed                                                    t
                                                                  and not more than $1,000, except that the
immediately, prior- to its repeal in 1978 by sec-                 combined Wisconsin standard deduction of
tion 113 (a) of'P :L : 95-600 and section 911 (c)                 married persons shall not exceed $1,000 .,
of the code (relating to the foreign earned                          (gh) For purposes of determining "Wiscon-
income exclusion) as it existed on December 31,                   sin taxable income" of the calendar year 1971
 197 7, and it does not include the changes to the                and corresponding fiscal years, "Wisconsin
code enacted by section 2112 . (relating to tax                   standard deduction" means 11 % of a natural
treatment of certain pollution control facilities)                person's Wisconsin ad justed gross income but
of P .L.. 94-455, section 164 (relating to employ-                not less than . $475 nor more than $1,250, except
ers' educational assistance plans) of P L, . 95-600               that the combined Wisconsin standard deduc-
and sections 203 and 209 (c) (relating to cer-                    tion of married persons shall not exceed $1,250 .,
tain expenses of living abroad) of PL . 95-615 ..                    (gn) For purposes of determining "Wiscon-
Amendments to the internal revenue code en-                       sin taxable income" of the calendar year 1972
acted after December 31, 1979, do not apply to                    and corresponding fiscal year 's, "Wisconsin
this subsection with respect to thee taxable year                 standard deduction" means 14% of' a natural
1980 and thereaften                                               person's Wisconsin adjusted gross income but
    (c) "Wisconsin taxable income" of estates                     not less than $1,000 nor more than $2,000,
and trusts means. federal taxable income with                     except that the combined Wisconsin standard
the modifications prescribed in s . 7105 (1) and                  deduction of married . persons shall not exceed
(4) .                                                             $2,000 . . With respect to nonresident natural
    (d) "Wisconsin taxable income" of natural                     persons deriving income from property located,
persons means Wisconsin adjusted gross income                     business transacted or personal or professional
less itemized deductionss or less the Wisconsin                   services performed in this state, including natu-
standard deduction..                                              ral persons changing their domicile into or f 'r' om
                                                                  this state in such year, the "Wisconsin standard
   (e) "Wisconsin adjusted gross income"
means federal adjusted gross income, with the                     deduction" shall be limited to such fraction of'
modifications prescribed in s . 71,05 (1) and                     the amount so determined, r egardless of
                                                                  whether the $1,000 minimum is used, as Wis-
(4)
  NOTE: See note following . ( 2) (a) concerning ch. 1, laws of   consin adjusted gross income is of federal ad-
1977„                                                             justed gross income .
    (f) "Itemized deductions" means deductions                       (gp) 1 . With respect to taxable years 1973 to
 from federal adjusted gross income allowable                     1976, except as otherwise provided, the Wiscon-
under the internal revenue code in determining                    sin standard deduction is the larger of the per-
federal taxable income, other than the federal                    centage standard deduction or the low-income
standardd deduction, low-income allowance and                     allowance as provided ' in this paragraph
deductions forr personall exemptions ; but with                      2 . The percentage standard deduction is an
respect to nonresidentt natural persons deriving                  amount equal to 15 % of adjusted gross income,
income from property located, business trans-                     but not to exceed $2,000 for an unmarried
acted of personal or professional services per-                   individual of $2,000 in the aggregate for a
formed in this state, including natural persons                   husband and wife .
changing their domicile into or from this state in                   3 . The low-income allowance is $1,300 for an
the calendar year 1972 or corresponding fiscal                    unmarried individual or ,$1,300 in the agg regate
year or .thereafter, : "itemizedd deductions" are                 for a husband and wife,
limited to such fraction of the amount so deter-                     4 . For a fiscal year taxpayer, any increase in
mined as Wisconsin adjusted gross income is of'                   the standard deduction, including the low-
federal adjusted gross income, except that for-                   income allowance, over the standard deduction
married persons "itemized deductions" are lim-                    permissible in the previous calendar year must
ited to such fraction of the amount so deter-                     be prorated by taking into account the number
mined as combined Wisconsin adjusted gross                        of days of the taxgayei's fiscal year falling into
income is of combined or',joint federal adjusted                  each calendar year . ,
gross : income .. In addition, for taxable year 1979                 5 .. In the case of a taxpayer with respect to
and thereafter, "itemized deductions" excludes                    whom a deduction under s . 71,09 (6m), 1977
deductions for taxes allowable under, section 164                 stats, or s„ 71 . . 09 .. (6p) is allowable to another
of the internal revenue code, .                                   taxpayer for the taxable year, the percentage
   (g) For purposes of determining "Wisconsin                     standard deduction shall be computed only with
taxable income" of the calendar year 1970 and                     reference to so much of adjusted gross income as
corresponding fiscal years and prior calendar                     is attributable to earned income, as defined in
and fiscal years, "Wisconsin standard deduc-                      section 911 (b) of' the internal revenue code as
tion" means 10% of 'a natural pet-son's Wiscon-                   of Januai y 1, 1973, and the low-income allow-
                                                                              ,
                   Electronically scanned images of the published statutes.
 71 .02 INCOME AND FRANCHISE TAXES                                                                1882

 ance shall not exceed earned income for the standard deduction is the larger of the percent-
 taxable year . age standard deduction or the low-income al-
    6 . With respect to nonresident natural per- lo wance as provided in this paragraph . The
 sons deriving income from property located, percentage standard deduction shall be an
 business transacted or personal or professional amount equal to 15% of Wisconsin adjusted
 services performed in this state, including natu- gross income but not to exceed $2,000 for an
ral persons changing their domicile into or from unmarried individual or $2,000 in the aggregate
this state, in 1973 and thereafter, the low-
         allowance authorized under this pai~a- for, a husband and wife, unless otherwise pro-
graph is limited by such fraction of ' that amount vided in this paragraph,
graph
as Wisconsin adjusted gross income is of federal
adjusted gross income, for unmarried persons,          2 For , the taxable year 1979 and thereafter,
and as combined Wisconsin adjusted gross in- except as otherwise e provided, the Wisconsin
come is of combined of ,joint federal adjusted standard deduction is the larger of the low-
gross income for married persons income allowance as provided in this paragraph
   (gq) 1 . For taxable years 1977 and 1978, or $2, .300 for an unmarried individual or $3' ,400
except as otherwise provided, the Wisconsin in the aggregate for a husband and wife . .

   3 . The low-income allowance shall be the total of the amount determined under ' one of the
following tables plus the amount determined under subd , 4 :
  a.: With respect to unmarried persons under 65 years of age : [See Figure 7102 (2) (gq) 3 . a
following]


  Figure 71 .02 (2) (gq) 3 , a :


If Wisconsin adjusted gross income is                         Low-income
At least .            But less than                            allowance is
$ 0            $3,200                                             $2,600
3,200           3,300                                              2,500
3, .306 3,400                                                      2,200
3,400 3,500                                                        1,900
3,500 3,600                                                        1,550
3,600 or over.                                                     1,300


  b„ For unmarried persons 65 years of age or over :- . [See Figure 71 . 02 (2) (gq) 3 . b following]


  Figure '71 . . 02 (2) (gq) 3 . b:

If Wisconsin adjusted gross income is Low-income
At least But less than allowance is
$       0       $4,200              $3,450
 4,200 4,300                                3,350
 4,300 4,400,                               3 1 000
 4,400         4,500               2,650
 4,500                  4,600        2,350
 4,600                  4,700        2,050
 4,700                  4,800        1,700
 4,800                  4,900        1,500
 4,900                or      over    1,300
                    Electronically scanned images of the published statutes.
1883                                                    INCOME AND FRANCH I SE TAXES 71 . 02

  c : For married persons if' both are under 65 years of age : [See Figure '71„02 (2) (gq) 3 ., c
following]


   Figure . 71 .. 02 (2) (gq) 3 . c :


If the combined total Wisconsin adjusted                   Low-income allowance
gross income of both spouses is                               of both spouses
At least But less than                                          combined is
$ 0 $5,200                                                         $4,000
 5,200         5,300                                                3,900
 5,300 :       5,400                                                3,600
 5,400 5,500                                                        3,300
 5,500         5,600                                                3,000
 5,600         5,700                                                2, 750
 5,700         5,800                                                2,500
 5,800         5,900                                                2,300
 5,900 6,000                                                        2,100
 6,000 6,100                                                        1,900 ,
 6,100 6,200                                                        1,700
 6,200 6,300                                                        1,550
 6,300 6,400                                                        1,350
 6,400 or over                                                      1,300


    d. For married persons if' one spouse is under 65 years of age and the other spouse is 65 years of age
or- over': jSee Figure 71 02 (2) (gq) 3 . d following]


   Figure ' 71 .. 02 (2) (gq) 3 d :
                              .

                                                        e
If the combined total Wisconsin adj usted Low-income allowance
gross income of both spouses is                 of both spouses
At least       _      But less than combined is
$ 0                   $6, 200          $4,800
 : 6,200 .               6,300            4,750 .
   6,300                    6,400          4,450
   6,40               6,500               4,150
   6, 500           6,600                 3,850
   6,600                    6,700          3,600
   6,700                    6,800          3,350
   6,80                ' 6, 90                3 ; 150
   6, 900           1,000                 2,950
   7,ooo                 7,1 oo                       2,8oo
   7;100 7,200 .                      2,600,
   7,200                    7,300          2,450
  7 1 300 7,400                                     i 2,250
  7,400 7,500•.                                       2,100
  7 ,500                 7,600            1,950
  7,600 7,700 .                                       1,750
  7,700                    7,800           1,600
  7,800                    7,900           1,450
  7,900               or        over        1,300
                    Electronically scanned images of the published statutes.
  71 .02 INCOME AND FRANCHISE TAXES .                                 1884

     e . For married persons if' both spouses are 65 years of'age or over : [See Figure 71 ..02 (2) (gq) 3,e
  following]


     Figure 71 . . 02 (2) (g9) 3 e :


 If the combined total Wisconsin adjusted Low-income allowance
 gross income of both spouses is of both spouses
 At least But less than combined is
 $        0       $7,200                     $5 ;700
   7,200             7,300                           5 ,600 .
   '7,300 7,400                                      5,300
  7 ;400             7,500              4,950
  7 , 500            7 ; 600         4,650
  7,600              7,700                           4,450
  7,700                  7,800          4,200
  7,800                  7,900          4,050
  7,900              8,000              3,850'
  8 ,000         8 , 100                      3 ,650
  8,100                 8,200           3,450
  8,200             8,300              3,300
  8,300                 8,400           3,100
  8,400                 8,500           2,950
  8,500 8 , 600 . . .                               2,800
  8,600 .           8, 7 00        2,600
 8,700              8,800              2,450
 8,800                 8,900            2,300
 8,900 9 , 000                                2, 150
 9,000                 9,100            2,000
 9 , 100         9 , 200                      1 , 900
 9 , 200            9,300                           1 , 800
 9,300              9 ,400          1,700
 9,400                 9,500            1,550
 9,500             or      over          1,450


   4 . . a . The following amounts shall be added to b . In this subdivision, "adjusted gross in-
the standa r d deduction and shall be utilized in come" means Wisconsin adjusted gross income
determining the low-income , allowance under        for resident natural persons and federal adjusted
subds 1 to 3 : if adjusted gross income is less gross income for, nonresident natural persons,
             I
than $5,000, add ' $800 for, each dependent ; if' including natural persons changing their, domi-
                                                             g
adjusted gross income is at least $5,000 but less rile into or ' from this state during the taxable
than $6, 000 , add $700 for each dependent ; if year .,
 adjusted gross income is at least $6,000 but less c
         d                                               . In this subdivision, for married persons
                                  h
 than $7,000, add $600 for each dependent ; , if 11 adjusted gross income" means the combined
 adjusted gross income is at least $7,000 but less total adjusted gross incomes of both spouses .
 than $8,000, add . $500 for each dependent; if '
                                                        d. In this subdivision, "dependent" means
 adjusted gross income is at least $8,000 but less
 than .$9 , 000 , add $400 for each dependent ;  if each person for whom the taxpayer is entitled to
 adjusted gross income is at least $9,000 but less an exemption for, the taxable ,year under section
 than $10,000, add $300 f 'or, each dependent; if ' 151 (e) of the internal revenue code .
 adjusted gross income is at least $10,000 but less 5 : For a fiscal yea r, taxpayer, any increase in
 than $11,000, add $200 for each dependent ; and the standard deduction, including the low-
i f adjusted gross income is at least $11,000 but income allowance, over the standard deduction
 less than $12 ;000, add $100 for each dependent permissible in the previous calendar year must
No amount may be added to the standard de- be prorated by taking into account the number
duction or low-income allowance f 'or, dependents of days of the taxpayer's : fiscal year falling : into
if adjusted gross income is $12,000 or, moi,e i,     each calendar year .
                   Electronically scanned images of the published statutes.
1885                                                       INCOME AND FRANCHISE TAXES 71 .03

   6 . In the case of a taxpayer with respect to         nal revenue code, or if' redetermined by the
whom a deduction under s . . 71 .09 (6p) is allow-       department, as determined by the department
able to another person for taxable year 19 ' 7 '7 or
                                               7         under such code or as may be determined on
 1978, the percentage standard deduction shall           final appeal theref'r' om .
be computed only with reference to so much of                (m) "Wisconsin net ope r ating loss" of per-
the taxpayer's adjusted gross income as is attrib-       sons other than corporations for years prior to
                                                                   r
utable to the taxpayer's earned income, as de-           1965 means Wisconsin net business loss as com-
fined in section 911 ( b) of' the internal revenue       puted pursuant to s . 71 .06, 1963 5tats ., and for
code as of December 31, 1976, and the low-               19,65 and thereafter means "federal net operat-
income allowance shall not exceed the tax-               ing loss" adjusted by the modifications pre-
payer's earned income for the taxable year . In          scr'ibedin s . 71 05 (1) and (4) .
the case of a taxpayer with respect to whom a                (p) Entertainer means a nonresident natu-
deduction under s . 71 .09 (6p) is allowable to          ral person who, . for consideration, furnishes
another person f'ar, taxable year 1979 or there-         amusement or entertainment, or performs in one
after, the Wisconsin standard deduction shall            or more sporting events in this state and includes
not exceed the taxpayer's earned income, - as            both employes and independent contractors ..
defined in section 911 (b) of the internal reve-             History :. 1971 c . 121, 125, 215, 30 7 ; 1973 c.. 13, 90, 243 ;
                                                         1975 c . 39, 224; 1977 c . 1, 29, 1 11, 142, 272, 418 ; 1979 c 1, 5,
nue code as of December 31, 1976 . ,                     34 ; 1979 c 174 s .. 16 ; 1979 c 22 1
    7 . W ith respect to nonresident natural per-             Department's computation of gains and losses on sale of
sons deriving income from property located,              property acquired prior to taxpayer's residency in state im-
                                                         properly created artificial gains and losses. . Dept . of Revenue
business transacted or personal or professional          v . Howick, 95 W (2d) 41, 289 NW (2d) 366 (Ct App . .
services performed in this state, including natu-        1980) ,
ral persons changing their domicile into or from              The deductibility of attorneys' fees for estate planning , .
                                                         Joseph, 1973 WBBNo . 4 ,
this state, f 'or the taxable year 1977 and there-
after-, the low-income allowance authorized              71 .03 Gross income and exclusions. (1)
under this paragraph ' is limited, and for the           INCLUSIONS, "Gross income", as used in deter-
taxable year 1979 and thereafter, the Wisconsin          mining taxable income of corporations under
standard deduction is limited, by such fraction
                                                         this chapter, shall include :
of that amount as Wisconsin adjusted gross                  (a) All fees derived from services, including
income is of f edeiaP adjusted gross income for
                  '                                      services performed for the United States or, any
unmarried persons, and as combined Wisconsin
                                                         agency or instrumentality thereof '.
adjusted gross income is of combined or joint
                                                            (b) All rent of Wisconsin real estate . .
federal adjusted gross income for mar ried
                                                            (c) All interest derived from money loaned or,
persons .
    (h) "Taxable income" and "adjusted gross             invested in notes, mortgages, bonds or other
                                                         evidence of debt of any kind whatsoever .
income," when not preceded by the word "fed-
eral" means ::Wisconsin taxable income and Wis-             (d) All dividends ..
consin adjusted gross income, respectively, un-             (g) All profits derived from the transaction
less otherw i se defined of the context plainly          of business or from the sale or, other disposition
requires otherwise                                       of real estate or other capital assets but :
    (i) "Person," "fiduciary ;" "income" and all            1 ; For, the purpose of ascertaining the gain or
other terms not otherwise defined, have the              loss resulting from the sale or other disposition
same meaning as in the internal revenue code             of property, real or personal, acquired prior to
unless otherwise defined or the context requires         January 1, 1911, the fair- market value of such
otherwise,                                               property as of ' Januar ,y. 1,1911, shall be the basis
    (j) ` "Person " includes natural persons and         for determining the amount of ' such gain or loss , .
fiduciaries, unless the context requires                    2 . . The cost o r other basis under subd 1, shall
otherwise         _                                      be diminished f'or, exhaustion, wear- and tear,
    (k) "Taxable year" means the taxable year            obsolescence, amortization, write-off 's and de-
upon the basis of which the taxable income of            pletion to the extent of the amount allowed as
the taxpayer is computed under- the internal             deductions butnot less than the amount allow-
revenue code . References to a particular, taxable       able in computing taxable income under all
year include the taxable year coinciding with the        Wisconsin tax laws .. Where no method has been
calendar year named ` and all other taxable years        adopted under s. 71,04 ( 13) (relating to depre-
ending on or, after July' 1 in such calendar, year or,   ciation deduction) the amount allowable shall
on or before June 30 following such calendar             be determined under s . 71 . 04 (13) (b) 1 .
year                                                        3, If property, exclusive of ' inventories (as raw
   (1) "Federal net operating loss" of persons           materials, - goods in process and finished goods),
other than corporations means net operating loss         as a result of its destruction in whole or in part
as determined by the taxpayer under the inter-           by fire or , other, casualty, theft or seizure, or, an
                    Electronically scanned images of the published statutes.
  71 .03 I N COM E . AN D FRAN C HI SE TAXES                                                                    1886

  exercise of power of requisition or condemnation         the gross income of ' a beneficiary, estate, trust or
  or the threat or imminence thereof, is involun-          any other person under subchapter J of' the
                    d
  tarily converted into money which is within 2            internal revenue code shall be treated for- pur-
  years from date of the conversion, or within            poses of this paragraph as a gift, bequest, devise
  extensions of such period as granted by the             or inheritance of income from property .
  department of revenue, actually expended, in               (b) All insurance received by any corpora-
  good faith under rules prescr ibed by the depart-       tion in payment of ' a death claim by any insurer,
  ment of r evenue, to replace the p r operty con-        including insurance paid to a corporation upon
  verted by the acquisition of other property lo-         the policies on the lives of its officers or em-
 cated in Wisconsin similar or related in service         ployes, but in computing net income, no deduc-
  or, use to the property converted, no gain shall be     tion may in any case be allowed in respect of
  recognized, and in the case of gain the p r operty
                                          e               premiums paid on any life insurance policy
 so replaced or newly acquired, for purposes of           covering the life of any of'f'icer or employe, or of
 depreciation and all other purposes of taxation,         any person financially interested in any trade or
 shall be deemed to take the place of the property        business carried on by the taxpayer, when the
 so converted . If any par t of the money is not so       taxpayer is directly or indirectly a beneficiary
 expended, the gain, if any, shall be recognized,         under the policy . :
 but in an amount not in excess of ` the money                (c) With respect to natural persons domi-
 which.h is not so expended . . A r eplacement of          ciled outside Wisconsin who derive income from
 property by an insurer shall be deemed to be an           the performance, on or after January 1, 1961, of
 expenditure by the taxpayer of insurance mon-             personal services in Wisconsin, such income
 eys received from the insurer for the purposes of        shall': be excluded from Wisconsin gross income
 this subsection ..                                        to the extent that it is subjected to an income tax
      4 . If shares of stock in a corporation acquired     imposed by the state of domicile ; provided that
  subsequent to January 1, 1934, are sold from             the law of the state of domicile allows a similar
  lots acquired at different dates or at different        exclusion of income from personal services
  prices, the basis for determining gain or loss          earned in such , state by natural persons domi-
  shall be that of' the specific shares sold If the       ciled in Wisconsin, or a credit against the tax
  identity of the lots cannot be determined, the          imposed by such state on such income equal to
  stock sold shall be charged against the earliest                                           h
                                                          the Wisconsin tax on such income . The em-
  acquisitions of such stock. The basis for deter-        ployer of any employe domiciled in a state with
                                                                                                      d
  mining gain or loss on sales of stock acquired          which Wisconsin has r eciprocity under this par-
  prior to January 1, 1934, shall be the average                                   d
                                                          agraph is not required to withhold under this
  cost of all such shares of the same stock, deter-       chapter from the wages earned . by such employe
  mined in accordance with the r ules of - the de-                s
                                                          in this state . .
  paitment of revenue in effect on January 1,                 (d) All payments received from the Milwau-
  1934                                                    kee public school teachers' annuity and reti r e-
     (i) All royalties derived from mines or the          ment fund, Wisconsin state teachers retirement
  possession or use of franchises or legalized privi-     system, employe's retirement system of the city
                y
  leges of any kind .:                                    of Milwaukee, . Milwaukee county employes' re-
     (k) And another gains, profits or income of "        tirement system, sheriff's annuity and benefit
 any kind derived f r om any source whatever'             fund of Milwaukee county, policemen's annuity
 except such as hereinafter exempted ..                   and benefit fund of Milwaukee, or, firemen's
     (2) Exct,ustorrs There shall be exempt from          annuity and benefit fund of Milwaukee, which
 taxation under' this chapter the following :             are paid on the account of ' anyperson who was a
     (a) The value of property acquired by gift,         member of the paying system or fund as of
                   e
 bequest, devise oi' inheritance, but such exemp-         December 31, 1963, or, was retired from any of
 tion shall not exclude from gross income the            the aforesaid systems or funds as of ' said date ..
 income from any such property, or, where the                (e) All amounts received in accordance with
 gift, bequest, devise or inheritance is of income       s : 13,123 (1) (a) which are spent for the
 from property or constitutes payment for a              purposes specified in s . 1 . .3 .. 12 .3 . (1) (a) . In this
 service, the amount of such income or payment . . .                   e
                                                         chapter, the place, of residence of a member of
 Where, under the terms of ` the gift, bequest,          the state legislature within the legislative dis-
 devise or inheritance, the payment, crediting or        trict which the member represents shall be con-
distribution "thereof is to be made at intervals,        sidered the member's home .
then to the extent that it is paid or credited or to        (f) Dividends received by a Wisconsin hold-
 be distributed out of income from property, it          ing company from a regulated corporation hav-
shall be treated for the purpose of this paragraph       ing 80% or more of itsxotal combined voting
as a gift, bequest, devise or inheritance of in-         power of all classes of stock owned by the
come f r om pr 'operty .. Any amount included in         Wisconsin holding company receiving the divi-
                   Electronically scanned images of the published statutes.
  1887                                                      INCOME AND FRANCHISE TAXES 7 1 . 0 3

   dends .: For the purposes of this paragraph,           ment, not including stock-in-trade or other prop-
    "regulated corporation" means a corporation           erty held primarily for sale, nor stocks, bonds,
    whose business is regulated by a federal or state     notes, chosen in action, certificates of trust or
   regulatory agency specifically created to regu-        beneficial interest, or other, securities or indebt-
   late such business, and which business is subject      edness or interest, is exchanged solely for prop-
   to limitations, restrictions or approvals by such      erty having a situs in Wisconsin, of a like kind, to
   agency as to the kind of entity under which            be held either for productive use in trade or
   business shall be conducted, the manner in             business or for investment . . The basis of the
   which distributions or transfers of assets may be      proper ty acquired on an exchange coming
   made by such entity, and the prices or rates to be     within this subsection shall be the same as in the
   charged for, or the manner in which, services or       case of the property exchanged .
   products are furnished to the public . For pur-           (b) If' an exchange would be within the
   poses of this paragraph, "Wisconsin holding            provisions of par . (a) if it were not for the fact
   company" means a corporation which has a               that the property received in exchange consists
   Wisconsin apportionment fraction of 95% or             not only of property permitted by such subsec-
   more under s, 71 .07                                   tion to be received without the recognition of
       (3) MINNESOTA INCOME TAX RECIPROCITY,             gain, but also of other property or money, then
   (a) For purposes of income tax reciprocity            the gain, if any, to the recipient shall be recog-
   reached with the state of Minnesota under sub..       nized, but in an amount not in excess of the sum
   (2) (c) ; whenever the income taxes on residents      of such money and the fair market value of such
   of one state which would have been paid to the        other property . . The basis of the "property of a
   2nd state without reciprocity exceed the income       like kind" acqui r ed on an exchange coming
   taxes on residents of ,the 2nd state which would      within this subsection shall be the same as in the
   have been paid` to the first state without reci-      case of`the property exchanged ; and the basis of
  procity, the state with the net revenue loss shall     such "other property" acquired (other than
   receive from thee other state the amount of the       money) shall be its fair market value at the date
  loss. . Interest shall be payable on all delinquent    of the exchange
  balances relating to taxable years beginning               (c) If an exchange would be within the
  after December 31, 1977 . . The secretary of           provisions of par . (a) i f it were not for the fact
  revenue may enter into agreements with the             that the property received in exchange consists
  state of Minnesota specifying thee reciprocity         not only of property permitted by such para-
  payment due date, conditions constituting delin-       graph to be received without the recognition of
  quency, interest rates and the method of com-          gain or loss, but also of other property or money,
  puting interest due on any delinquent amounts .        then no loss from the exchange shall be recog-
                                                                                            e
      (b) The data used for computing the loss to        nized. In such case, the basis of the property
                                                                                           s
  either state shall be determined by the respective     other ' than money acquired shall be the same as
  departments of revenue of both states on or            in the case of the property exchanged, , less any
  before November 1 of the year following the            money acquired . The basis provided in this
  close of the previous calendar ,year. If an            paragraph shall be allocated between the
  agreement cannot be reached as to the amount           properties (other than money) received and for
  of the loss, the secretary of revenue of this state    the purpose of the allocation ' there shall be
  and the commissioner of taxation of the state of       assigned to such "other property" an amount
 Minnesota shall each appoint a member of a             equivalent to - its fair market value at the date of
`board of arbitration and these members shall           the exchange .
 appoints 3rd member of the board The board
 shall select one of its members as chairman . The           (6) EXCHANGE OF . STOCK FOR STOCK OF
                                                        SAME CORPORATION . No gain or loss shall be
 board may administer, oaths, take testimony,
                                                        recognized to a corporation if common stock in a
 subpoena witnesses and require' their attend-
                                                        corporation is exchanged solely for common
 ance, requic•e the production of books, papers
                                                        stock in the same corporation, or if ' preferred
 and documents and hold hearings at such places
                                                        stock in a corporation is exchanged solely for
 As it deems necessary,.` The board shall then
' make a'deteimnation as to the amount to be                                     e     e
                                                        preferred stock in the same corporation. The
 paid the other" state which shall be conclusive, .     basis of the prope r ty acquired on an exchange
 This state shall pay no more than one-half of the      coming within this subsection shall be the same
                                                        as in the case of the property exchanged ,.
 cost of such arbitration .
                                                           History: 1973 c.. 90; 1975 c .. 214, 224, 421 ; 1979 c .. 102 ss ,
      (5) CORPORATE PROPERTY HELD FOR PRO-              17, 236 (3) ; 1979 6„ 221
 D UCTI VE USE AN D I NVESTM ENT ., (a) No gain nor         In computing capital gain on the sale of income property
loss shall be recognized to corporations if prop-       under sub (1 ' ) (g), the 1963 amendment which changed "de-
                                                        ductIons allowed f'or depreciation" to "the amount allowable"
 erty having a situs in Wisconsin and held for,                                   t
                                                        was not retroactive. Dept of Revenue v Dziubek, 45 W (2d)
 productive use in trade or business or for invest-     499,173 NW (2d) - 642. .
                       Electronically scanned images of the published statutes.
  71 .03 INCOME AND FRANCHISE TAXES                                                                                     1888
      Income of 'a partnership, not distributed before a partner's     not be applied in reduction of basis under s .
  death, is properly taxed as income even though it was also
  taxed as part of his estate for inheritance tax purposes . Amer-      71035 (2) shall be recognized For the pur-
  ican Bank & Trust Co v Deptt of R evenue, 60 W (2d) 660,             poses of this subsection, a distribution in cancel-
  211 NW (2d) 627 .
                                                                       lation or redemption (except a distribution hav-
                                                                       ing the effect of a dividend) of the whole or a
   71 .035 Exchanges and distributions in
                                                                       part of the transf'eror's own stock (not acquired
   obedience to orders of securities and ex -
                                                                       on the transfer) and a payment in complete or
   change commission . ( 1 ) NONRECOGNITION
                                                                       partial retirement or cancellation of securities
   OF GAIN OR Loss . In the case of any exchange or
                                                                       representing indebtedness of' the transfer-or or, a
   distribution described in pais ;(a) to (e), no
                                                                       complete or partial retirement or, cancellation of
   gain or loss shall be recognized to a corporation
                                                                       such securities which is a part of the considera-
   to the extent specified in such paragraph with
                                                                       tion for the transfer, shall be considered an
   respect to such exchange or distribution .
                                                                      expenditure for property other than nonexempt
      (a) Exchanges of stock or securities only . . No                property, and if, on the transfer-, a liability of the
  gain or loss shall be recognized to the transferor                  transferor is assumed, or property of ' the trans-
  if stock or securities in a corporation which is a                  feror is t r ansferred subject to a liability, the
  registered holding company of a majority-                           amount of such liability shall be considered to bed
  owned subsidiary company are transferred to
                                                                      an expenditure by the transferor for property
  such corporation or to an associate company
                                                                      other than nonexempt property . This subsection
  thereof which is a registered holding company of
                                                                      shall not apply unless the transferor corporation
  a majority-owned subsidiary company solely in
                                                                      consents, at such time and in such manner as the
  exchange for stock or securities (other than
                                                                      department of revenue may by rules prescribe,
 `stock or securities which are nonexempt prop-
                                                                      to the rules prescribed under s .. '71 .. 035 . . (2) in
  erty), and the exchange is made by the trans-
                                                                      effect at the time of filing its return for, the
  feree corporation in obedience to an order of'the
                                                                      taxable year in which the transfer occurs .
  securities and exchange commission ..
                                                                        (c) Drstr 7 bution of stock or securities only. If
     (b) Exchanges and sales of 'property by cor-
                                                                     the r e is distributed, in obedience to an order of
  poratons, No gain shall be recognized to a
                                                                     the securities and exchange commission, to a
  transferor, corporation which is a registered
                                                                     shareholder in a corporation which is a regis-
  holding company or an associate company of 'a
                                                                     tered holding company or a majority-owned
  registered holding company, if such corporation,
                                                                     subsidiary company, stock or securities (other
 in obedience to an bidet of the securities and
 exchange commission, transfers property in ex-                      than stock or securities which are nonexempt
 change for property, and such order recites that                    property), without the surrender by such share-
 such exchange by the transferor corporation is                      holder of' stock or securities in such corporation,
 necessary or appropriate to the integration or                      no gain to the distributee from the receipt of the
 simplification of the holding company system of                     stock or securities so distributed shall be
 which the transferor corporation is a member. If                    recognized . .
 any such property so received is nonexempt                                (d) Transfers within system group.. 1 . No
property gain shall be recognized unless such                          gain or loss shall be recognized to a corporation
 nonexempt property or, an amount equal to the                         which is a member of ' a system group (a) if ' such
fair market value of such property at the time of                      corporation transfers property to another corpo-
 the transfer, is, within 24 months of the transfer,                   ration which is a member o f the same system
 under rules prescribed by the department of                                                  r
                                                                      g r oup in exchange for other property, and the
 revenue, and in accordance with an cider of the                      exchange by each corporation is made in obedi-
 securities and exchange commission, expended                         ence to an order of .the securities and exchange
 for property other than nonexempt property or is                                                                d
                                                                      commission,; or (b) if"they e is distributed to such
invested as a contribution to the capital, or as                      corporation as a shareholder in a corporation
paid-in surplus, of another corporation, and                          which is a member of the same system group,
such order recites that such expenditure of in-                       property , without the surrender by such share-
vestment by the transferor, corporation is neces-                     holder , of stock or securities in the corporation
sary or, appropriate to the integration or simpli-                    making the distribution, and the distribution is
fication of the holding company system of which                       made and received in obedience to an or'der' of
the transferor corporation is a member:: Ifthe                       ,the securities and exchange: commission .. If an
fair' market value of such nonexempt property at                      exchange by or a distribution to a corporation
the time of the transfer exceeds the amount                           with respect , to which no gain or, loss is recog-
expendedd and the amount invested, as required                       nized under any of the provisions of this para-
in the second sentence of this paragraph, the                         graph may also be considered to be within the
gain, : if any, to the extent of'such excess, shall be                provisions of par ,, (a), (b) or (c), then the
recognized .. Any gain, to the extent that it can-                    provisions of this paragraph only shall apply ,
                   Electronically scanned images of the published statutes.
 1889                                                     INCOME -AND FR A N C HISE T AX E S 71 .035

   2 : If' the property received upon an exchange        company act of 1935,49Stat . 820 (US C , title
which is within any ofthe provisions of subd . 1          15, sec.. 79k (b)), (2) such order specifies and
consists in whole or in part of ' stock or securities    itemizes the stock and securities and other prop-
issued by the corporation       from which such pr op-   erty which are ordered to be acquired, trans-
ertywas received, and if in obedience to an order        ferred , received, or sold upon such exchange,
ofthe securities and exchange commission such            acquisition, expenditure, distribution or sale,
                                                                       ,
stock or securities (other than stock which is not       and, in the case of an investment, the investment
preferred as to both dividends and assets) are           to be made, and (3) such exchange, acquisition,
sold and the proceeds derivedtherefrom are               expenditure, investment, distribution or sale was
applied in whole or impart in the retirement or          made in obedience to such order ; and was com-
cancellation of stock or of securities of the            pleted within the time prescribed therefor .
recipient corporation outstanding at the time of             (g) Nonapplicati on of'otherprovisions . If an
such exchange, no gain or loss shall be recog-           exchange or distribution made in :obedience to
nized to the recipient corporation upon the sale         an order of the securities and exchange commis-
of the stock or securities with respect to which         sion -is within any of the provisions of this section
such order was made ; except that if any part of         and may also be considered to be within any of
the proceeds derived from the sale of such stock         the provisions of ss 71 . 301 to 71 . 372, then the
or securities is not so applied, or if the amount of     provisions of this section only shall apply
such proceeds is in excess of' the fair market
                                                            (2)   BASIS FOR DETERMINING GAIN OR LOSS .
value of such stock or securities at the time of
                                                          (a) Exchanges generally . If the property was
such exchange, the ga i n, if any, shall be recog-
                                                          acquired upon an exchange subject to s '71 . 035
nized, but in an amo unt not - in ' excess of the
                                                          (1) ` (a) or (e) the basis shall be the same as in
proceeds which are not so applied, or in an
                                                          the case ofthe property exchanged, decreased in
amount not more tha n t he amount by which the
                                                          the amount of ` any money received by the tax-
proceeds derived from such sale exceed such fair
                                                          payer and increased in the amount of gain or
market value, whichever is the greater .
                                                         decreased in the amount of loss to the taxpayer
     (e) Exchanges not solely in kind 1 . If' an
                                                          that was recognized upon such exchange under
exchange, not within any of the provisions of s .
                                                          the law applicable to the year in which the
                                                            e
 71 , 035 (1) (d), would be within the pr ovisions
                                                         exchange was made , Tf' the property so acqu i red
of s . 71 .035 (1)' (a) 'i f it were not for- the fact
                                                         consisted in part ofthe type of property perm i t-
that property received in exchange consists not
                                                         ted by s '71 „ 0 .35 (1) (a) to be received without
only of property permitted by such paragraph to
                                                                                                        t
                                                         the recognition of gain - or loss, and in 'part of
be received without the recognition of gain or
                                                         nonexempt property, the basis provided in this
loss, but also of" other, property or money ; then
                                                         subsection shall be allocated between the
the gain, if any, to the recipient shall be recog-
                                                         properties (other than money) recei ved, and for
nized, but in an amount not in excess ofthe sum
                                                         the purpose of the allocation there shall be
of such money and the fair market value of such
                                                         assigned to such nonexe m pt _ property (other
other property, and the loss, if ' any, to the
                                                         than money) an amount equivalent to its fair
recipient shall not be recognized .
                                                         market value at the date of the exchange .. . This
   2 , If an exchange is within subd 1 and if it
                                                         subsection shall not apply to property acquired
includes a distribution which has the effect of
                                                         by a corporation , by the issuance of" its stock or
the distribution of 'a taxable dividend, then there
                                                         securities as the consideration in whole or in part
shall be taxed as a dividend to each distributee
                                                         for the t r ansfer of the property to it. The gain
such an amount of the gain recognized unde r
                                                         not recognized upon a tr ansf 'er , by reason of s ..
subd : 1 as is not in excess of his ratable share of
                                                          71035 (1) (b) shall be applied to r educe the
the undistributed earnings and profits of the
                                                         basis for determining , gain of loss on sale or
corporation accumulated after January 1, 191: 1 . .
                                                         exchange ofthe following categories of property
The remainder, if any, of the gain recognized
                                                         in the hands ofthe transferor immediately after
under subd 1 shall be taxed as a gain from the
                                                         the transfer, and prope r ty acquired within 24
exchange of property
                                                         months after such transfer by an expenditure or
   (f) App6cation section, The provisions of this
                                                         investment to which s . 71035 (1) (b) relates on
section shall not apply to an exchange, expendi-
                                                         account of the acquisition of which gain is not
ture investment, distribution or sale unless ' (1)
                                                         recognized under such subsection, in the . follow-
the order of the securities and exchange com-
                                                         ing. order :
mission in obedience to which such exchange,
expenditures, investment, ` distribution or sale            1 . Property of a character sub j ect to the
was made recites that such exchange, expendi-            allowance for depreciation under s 71 . 04 (2) ;
ture, investment, distribution or sale is necessary         2. Stock and securities of corporations not
or appropriate to effectuate the provisions of           members of the system group of which the
section T1 (b) of the public utility holding             transferor is - a member (other than stock or
                     Electronically scanned images of the published statutes.
  71 .035 INCOME AND F RAN C HISE T A X E S                                                                  1890

  securities of a corporation of which the trans- is the lower ; or (2) as part consideration for the
  feror is a subsidiary) ; .                           property transferred to such corporation, then
     3 . . Securities (other than stock) of corpora-   the basis of such stock or securities shall be
  tions which are members of ' the system group of either (a) an amount which bears the same ratio
  which the transferor is a member (other than to the basis of the property transferred as the
  securities of the transferor or of a corporation of fair market value of such stock or securities at
                                                                                  h
  which the transferor is a subsidiary) ;             the time of their receipt bears to the total fair
     4 . Stock of corporations which are members market value of the entire consideration re-
  of the system group of which the transfer-or is a ceived, or (b) the fair market value of such stock
  member (other than stock of ' the transferor or of or ' securities at the time of their receipt, which-
  a corporation of which the transferor is a ever, is the lower .
  subsidiary) ;                                           (3) DEFINITIONS, (a) The term "order, of the
     5 . Ail other' remaining property of the trans- securities and exchange commission" means an
  feror (other than stock or securities of the order issued after May 28, 1938, by the securi-
  transferor or of a corporation of which the ties and exchange commission which requires,
  transferor is a subsidiary) . .                     authorizes, permits or approves transactions de-
    6 . The manner and amount of the reduction to            scribed in such older , to effectuate the provisions
 be applied to particular property within any of             of section 1 ' 1 (b) of the public utility holding
 the categories described in subds . 1 to 5 shall be         company act of 1935, 49 Sta1 . 820 (U .S . C, title
 determined under rules prescribed by the de-                15, sec . 79k (b) ), which has become or, becomes
 partment of revenue .                                       final in accordance with law .
     (b) Transfer to corporations . If, in connec-              (b) The terms "     `registered holding com-
 tion with a transfer- subject to s . 71035 (1) (a),         pany," "holding-connpany system," and "associ-
  (b) or (e), the property was acquired by a                 ate company" shall have the meanings assigned
 corporation, either as paid-in surplus or as a              to them by section 2 of the public utility holding
 contribution to capital, or in consideration for            company act of 1935, 49 Slat, 804 (US . C .,
 stock or- securities issued by the corporation              Supp. III, title 15, sec.. 79 (b), .(c)). .
 receiving the property (including cases where                                                  d
                                                                (c) The term "majority-owned subsidiary
 part of the consideration for- the transfer of such         company" of a registered holding company
 property to the corporation consisted of property           means a corporation, stock of which ; represent-
 or money in addition to such stock or securities),          ing in the aggregate more than 50 per , cent of ' the
 then the basis shall be the same as it would be in                         d
                                                            total combined voting power of all classes of
 the hands of the transferor, increased in the              stock of such corporation entitled to vote (not
 amount of gain or decreased in the amount of               including stock which is entitled to vote only
 loss recognized to the transferor upon such                upon default or nonpayment of dividends or
 transfer under the law applicable to the year in           other special circumstances) is owned wholly by
which the transfer was made ..                              such registered holding company, or partly by
    (c) Distributions of 'stock of, securities, If the      such registered holding company , and partly by
stock or securities were received in a distribution         one or more majority-owned subsidiary compa-
subject to s. 7. 1 .. 0.35 (1) (c), then the basis in the   nies thereof, or, by one or more majority-owned
case of the stock in respect of which the distribu-         subsidiary companies of such registered holding
tion was made shall be apportioned, under rules             company .
prescribed by the department of revenue, be-                     (d) The term "system group" means one or
tween, such stock and the stock or- securities               more chains of corporations connected through
distributed                                                  stock ownership with a common parent corpora-
    (d) Transfers within system group. : If the              tion if :
 property was acquired by a corporation which is                1 . At least 90 per cent of each class of the
 a member of a system group upon a transfer or               stock (other than stock which is preferred as to
 distribution described in ` s . . 71 „ 035 (1) (d) 1,       both dividends and assets) of each of the corpo-
 then the basis shall be the same as it would be in         rations (except the .e common parent corpora-
 the hands of the transferor ; except that if such          tion) is owned directly by one or , more of the
property is stock or securities issued by the               other corporations ; and
corporation from which such stock or securities                 2 . The common parent corporation . owns di-
were received and they were issued (1) as the               rectly at least 90 per cent of each class of the
                                                                                         t
sole consideration for the property transferred             stock (,other than stock which is preferred as to
to such corporation; then the basis of such stock           both dividends and assets ) of at least one of the
or securities shall be either, (a) the same as in           other corporations ; and
the case of the property transferred therefor', or              3 . Each of the corporations is either a regis-
(b) the fair- market value of such stock or h     k         ter ed holding company or a majority-owned
securities at the time of their receipt, whichever          subsidiary company . , .
                     Electronically scanned images of the published statutes.
 1891                                                     IN COM E AND FRA N CHISE TAXES 71 .04

    (e) The term "nonexempt property" means :           commissions or-bonuses in the taxable year 1969
   '1 . Any consideration in the form of evidences      or thereafter, if the department is satisf i ed that
of' indebtedness owned by the transferor or a           failure to report has resulted in no revenue loss
cancellation or assumption of debts or other            to the s l ate .
liabilities of`the transferor (including a continu-        (2) (a) Other ordinary and necessary ex-
ance of incumbrances subject to which the prop-         penses actually paid within the year out of the
erty was transferred) ;                                 income in the maintenance and operation of its
   2" Short-term obligations . (including notes,        business and property, including :
drafts, bills of exchange, and bankers' accept-            i With respect to calendar year 1963 and
ances) having a maturity at the time of issuance        corresponding f i scal years and prior calendar
of not exceeding 24 months, exclusive of days of        and fiscal years, but not t hereafter , a reasonable
                          _                             allowance for depreciation by use, wear and tear
grace ;
   3 Securities issued of guaranteed as to princi-      of property from which the income is derived
pal or interest by a government or subdivision             2 . In the cases of mines a nd qu arries an
thereof (including those issued by a corporation        allowance for depletion of ores and other natural
which is an instrumentality of a government or          deposits on the basis of their actual original cost
subdivision thereof) ; ;                                in cash or the equivalent of cash .
   4 Stock or securities which were acquired               3 . Interest and rent paid during the year in the
from a registered holding company or an associ-         operation of the business from which its income
ate company of' a registered holding company            is derived, except interest paid on money bor-
which' acquired such stock or securities after          rowed or interest on notes or securities issued by
February 28, 1938, unless such stock or securi-         a corporation to purchase its own capital stock ;
ties (other than obligations described as nonex-        if, the payor reports the amount so paid, to-
empt property in s 71 .035 . (3) (e) 1, 2 or 3 )        gether with the names and addresses of the
were acquired in obedience to an order of the           parties to whom interest or lent was paid as
securities and exchange commission or were              provided in s . 71 :. 10 (1) .
acquired with-the authorization or approval of             (b) Such ordinary and necessary expenses do
the securities and exchange commission under            not include:
any section of the public utility holding com-             1 Money or the value or cost of property
pany act of 1935, 49 Stat : 820 (U S . C ., title 15,   given to or spent on behalf of a public official . . In
sec 79k (b)) ;        ,                                 this subdivision, "public official" includes any
   5 Money, and the right to receive money not          elected o r appointed official, any candidate for -
evidenced by aseenrit,y other than an obligation        public office and any employe of the United
described as nonexempt property in s : '71 . :035       States or of ` any state or a political subdivision
(3) (e),2or 3 .                                         thereof.
   (f) The term "stock or securities" means                2 . Any expenses which are not deductible
shares of'siock in any corporation, certificates of     under section 274 of the internal revenue code . .
stock or interest in any " corporation, notes,             3 ., Athletic club, country club or social club
bonds, debentures and evidences of indebtedness         dues, expenses, initiation fees, special assess-
(including any evidence of an interest in or right      ments and taxes thereon, whether or not deduct-
to subscribe to or purchase any of the                  ible under section 274 of the internal revenue
for egging )                                            code.
  History: 1973 c . 12 s 37                                (2a) In lieu of the allowance for depreciation
                                                        for the calendar year 1964 or corresponding
71 .04 Deductions from gross income of                  fiscal year or any later year the amortization
corporations" . Every corporation, joint stock          deductions of any emergency facility provided in
company of association shall be allowed to make         section 216 of the revenue act of 1950 (section
from its ,glosss income the following deductions :      124A ofthe US, internal revenue code of 1939)
   (1) Payments made within the year for                and in Section 168 ,of the internal revenue code
wages, salaries, commissions and bonuses' of            of 1954, provided that :
employes and of officers if reasonable in                  (a) Written notice of election to take amorti-
amount ; for services actually rendered in pro-         zation of any emergency facility under this
during such income ; provided, there is reported        subsection is filedwith the department of reve-
the name, address and amount paid each such             nue on or before March 15, 1952, or, on or before
employe of officer residing within this state to        the filing date of the return forthe first taxable
whom a compensation of $500 or, more has been           year for- which an election under this subsection
paid during the assessment year The depart-             is made with respect to such emergency facility .
men t may waive the reporting requirement               Such notice shall be given on such forms and in
herein with respect to a corporation claiming           such manner as the department of' revenue may
                                                            h
deduction from gross income of wages ; salaries,        by rule prescribe .
                    Electronically scanned images of the published statutes.
 71 . 04 INCOME AND FRANCHISE TAXES                                                                       1 8 92

      (b) The taxpayer files with the department of     resources, department of health and social ser-
 revenue at the time of his election under this         vices, city council, village board or county board
 subsection copies of certificates of necessity for     pursuant to s . 59 .07 (53) or (85), 1971 stats , in
 such emergency facility issued by the appropri-        respect to such waste treatment plant and pollu-
 ate federal certifying authority, and such other       tion abatement equipment . .
 documents and data relating thereto as the                   (b) No deduction shall be allowed under this
 department of revenue may by rule require ..            subsection on other than depreciable property,
     (c) No deduction shall be allowed under this        except that where wastes are disposed of
 subsection on other than dep r eciable property .       through a lagoon process such lagooning costs
                                                                                      s
     (d) In no event shall amortization deductions       may be deducted, depreciated or amortized as
 be permitted for any period beyond that permit-         provided herein and the cost of land containing
 ted by section 216 of the revenue act of 1950           the lagoons may be deducted, depreciated or
 (section 124A of the United States internal             amortized as provided herein,
 revenue code) .                                              (c) In no event shall the sum of past and
     (e) Subsequent to the last amortization de-         current year deductions be permitted in excess
 duction of any emergency facility permissible           of' the cost of the asset subject to this subsection ..
 under this subsection, the taxpayer shall deduct             (2c) In lieu of the allowance for depreciation
 a reasonable allowance for depreciation at ordi-        for any taxable year or part thereof " after De-
 nary and usual rates on such of the depreciable         cember 31, 1952, the owner may elect the accel-
 emergency facilities as are continued in use in         erated amortizati on deduction for milkhouses
 the business . . The total amount of such deprecia-     purchased, constructed and installed pursuant
 tion subsequently allowable shall be limited to         to rule Ag 30 :03 (12) [Wis ., Adm .. Code] or
 the . unamoi•tized balance of such facilities :         wells required by law to conform to the Wiscon-
     (2b) The remaining cost of any waste treat-         sin well construction and pump installation code
 ment plant or pollution abatement equipment             or by county or municipal ordinance to conform
installed prior to the calendar year 1969 or             to the milk ordinance and code recommended by
corresponding, fiscal year, pursuant to order,           the US . public health service or bulk milk tanks
recommendation or approval of the committee              or milk pipe lines, purchased, constructed or
on water pollution, department of health and             installed, including cost of installation, on any
social services, city council, village board or          undepreciated portion of such milkhouse, well,
county board pursuant to s . 59 . . 07. (53) or (85),    bulk milk tanks or milk pipe lines computed on
 1971 stats which plant : or, equipment was not          an estimated life of 60 months . .
fully depreciated or amortized for Wisconsin                 (a) Written notice of election to take amorti-
franchise or income tax purposes at the end of          zation of 'a milkhouse, well, bulk milk tank or
the 1968 calendar , year of corresponding fiscal        milk pipe line under' this subsection must be filed
year, may be deducted in the calendar year 1969         with the department of revenue with the tax-
or corresponding fiscal year at the election of the     payer's return for the first taxable year for
taxpayer , Failure to :exercise such election on                      h
                                                        which such election under this subsection is
the 1969 return shall require continuation of the       made in respect to such milkhouse or ' well .
previous method of deducting cost of such prop-              (b) No deduction shall be allowed on other
erty . The cost of all waste treatment or pollution     than depreciable property, nor shall accelerated
abatement plant and equipment purchased or              amortization or depreciation and acceler ated
constructed, in the calendar year 1969 or corre-        amortization deductions be permitted in excess
sponding fiscal . year , or thereafter pursuant to      of the cost of' the asset subject to this subsection ..
order ; recommendation or approval of the com-               (2d) (a) The organizational expenditures of
mittee on water' pollution, department of re-           a corporation may, at the election of the corpo-
source development, department of natural re-           ration, be . treated as deferred expenses, and such
sources, department of health and social                deferred expenses shall be allowed as a deduc-
services,: city council, village board ; or county      tion ratably over such period of not less than 60
board pursuant to s , 59 .07 (53) or (85), 1971         months as is selected by the taxpayer corpora-
stats ., ; may be deducted in the year : paid (as       tion, beginning with the month in which the
defined in s. 71 „02 (1) (c)), may be depreci-          corporati on begins business .,
ated, or may ,be amortized over, a period of 5 d          (b) The term "organizational expenditures"
years . : The deduction election, once made,, can-      means any expenditure which ;.
                                                             s
not, be changed . ,                                        1 , Is incident to the creation of the
 <, (a) The taxpayer shall file with the depart-        corporation ;
ment of revenue at the time of his election under          2 Is chargeable to capital account ; and
this subsection copies of recommendations, or-             3 Is of a character which, if ' expended inci-
ders and approvals issued by the department of
                             d                          dent to the creation of" a corporation having a
resource development, department of natural             limited life, would be amortizable over suchh life .
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 1893                                                    INCOME AND FRANCHISE TAXES 71 . 0 4

   (c) The election provided by par. (a) may be         apply to all such expenditures . The method
made for any taxable year beginning after De-           adopted shall be adhered to in computing tax-
                                                                        l
cember 31, 1969, but only if made not later than        able income for the taxable year and for all
the time prescribed by law for filing the return        subsequent taxable years unless, with the ap-
for the taxable year, including extensions              proval of the department of revenue, a change to
thereof, in which the taxpayer , begins business .      a different method is authorized with respect to
The period so elected shall be adhered to in            part or all of` such expenditures
computing the taxable income of the corpora-                 (b) At the election of the taxpayer ; research
                    e
tion for- the taxable year for which the election is    or experimental expenditures paid or incurred
made and all subsequent taxable ,years . The            during a taxable year beginning after December
election shall apply only with respect to expendi-      3           in connection with the taxpayer's trade
tures paid or- ineuried on or after Febr uary 19,       of business, chargeable to capital account, but
1970 .                                                  not chargeable to property of a character which
    (2e) (a) Any trademark or, trade name               is subject to amortization, depreciation or, deple-
expenditure paid or incurred during a taxable           tion, and not treated as expenses under -par- . (a),
year beginning after December' 31, 1969, may,           may be treated as deferred expenses and such
at the election of the taxpayer, be treated as a        deferred expenses shall be allowed as a deduc-
deferred expense .. In computing taxable income,        tion ratably over such period of not less than 60
all : expenditures paid or incurred dur ing the         months as is selected by the taxpayer, beginning
taxable year which are so treated shall be al-          with the month in which the taxpayer first
lowed as a deduction ratably over, such period of       realizes benefits from the expenditures These
riot less than 60 months, beginning with the lst        deferred expenditures are properly chargeable
month in the taxable year, as is selected by the        to capital account under s . 71 . 03 (1) (g) . The
taxpayer, in making the election . The expendi-         election may be made for any taxable ,year ,
tures so treated are expenditures properly
                       e                                beginning after December 31, 1969, but only if
chargeable to capital account for purposes of 's
                              t                         made not later than the time prescribed by law
71 .03 (1 ) (g ) '                                     for filing the return for the taxable year includ-
    (l%)`For- purposes of par . . (a), "trademark or   ing extensions the r eof , The method so elected,
 trade name expenditur e " means any expendi-          and the period selected by the taxpayer, shall be
 ture which :                                          adhered to in computing taxable income for, the
    1 Is directly connected with the acquisition,      taxable year f 'or, which the election is made and
 protection, expansion, - registration (federal,       for all subsequent years unless, with the ap •-
 state or foreign), or defense of a trademark or       proval of ' the department of revenue, a change to
 trade name ;                                          a different method or to a different period is
    2 Is chargeable to capital account ; and           authorized with respect to part or all of such
    3 Is not part of the consideration paid for a                                                      y
                                                       expenditures . .- The election shall not apply to
trademark, trade name, or business .                   any expenditures paid o f incurred during any
    (c) The election provided by par-, (a) shall be    taxable year before the taxable year for: which
made within the time prescribed by law, includ-
              n                                        t h e taxpayer makes the election .,
ing extensions thereof, for- filing the return for          (c) This subsection shall not apply to any
the taxable year during which the expenditure is       expenditure paid or incurred for the purpose of
paid or incu t red . The period selected by the        ascertaining the existence, location, extent, or
taxpayer under par : (a) with respect to the           quality of any deposit of ore or other mineral,
expenditures pa id or incurred during the taxable      includ ing oil and gas; or any expenditure' for, the
year which are treated as deferred expenses            acquisition or improvement of' 1and, or for the
shall be adhered to in computing , his taxable         acquisition or improvement of property to be
income for the taxable year for which the elec-        used in connection with the research or experi-
tion is made and all subsequent years                  mentation and of a characte r which is subject to
    (2f) ` (a) Research or experimental expendi-       allowance for depreciation or : depleti on; but
tures ` paid or incurred during a taxable year         such depreciation o f depletion allowances shall
beginning after' December 31, 1969, in connec-
                                           n           be considered as expenditures for purposes of
tion with the taxpayer's trade or, business, may       this subsection,
at the - election of the taxpayer, be treated as            (2g) (a) The cost of the following described
expenses which are not chargeable to capital           property may be deducted -in - the year paid as
account . The expenditures so' treated shall be        defined in s7102 (1) (c), may be depreciated,
allowed as a deduction , The election of this          or, may be amortized over a period of 5 years :
method shall be made within the time prescribed        All property purchased or constructed as a
by law, including extensions thereof ; for filing      waste treatment facility utilized for , the treat -
the return for the taxable year , in which the         ment of" industrial wastes as defined in s . 144,01
expenditures are paid . or- incurred and shall         (5), or air contaminants as defined in s . 144 30
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  71 .04 INCOME AND FRANCHISE TAXES                                                                      1894

  (1) but not for other wastes as defined in s .         ration with respect to its common stock if the
  144 . 01 (9) and approved by the department of         corporation:.n receiving the dividends.s owned di-
 revenue under s,'70, 11 (21) (a) for the purpose        t-ectl ,y or indirectly during the entire income year
 of abating or eliminating pollution of surface          at least 80 % of the total combined voting stock
 waters, the air or waters of the state . . The          of the payor corporation .
                                                                 e
 deduction election, once made, cannot be                    (5) (a) Charitable contributions, as def i ned
 changed, and it may be claimed beginning with           in par , . (d), payment of which is made within the
 the month following the month in which the h            year', to an amount noY in excess of '5 per cent of
 facility is completed or acquired, or' with the         the taxpayer's net income of' the calendar or
 succeeding taxable year .                               fiscal year as computed without the benefit of
    (b) No deduction shall be allowed under this         this section,
 subsection on other than depreciable property,            (b) In the case of a corporation reporting its
 except that where wastes are disposed of               taxable income on the acc r ual basis, if 1 , the
 through a lagoon process such lagooning costs          board of directors authorizes a charitable con-
 may be deducted, depr eciated or amortized as          tribution during any taxable year, and 2 : pay-
 provided in this subsection and the cost of land       ment af ' suchcontribution is made after the close
 containing the lagoons may be deducted, depre -        of such taxable yea r and on or before the f 'if'-
 ciated or amortized as provided in this                teenth day of the third month following the close
 subsection .
                                                        of such taxable year, then the taxpayer may
      (c) Subsection (2b) applies to all property       elect to treat such contribution as paid during
  purchased prior to July 31, 1975 , or purchased       such taxable ,year . The election may be made
  and constructed in fulfillment of a written con-      only at the time of the filing of' the retain for
  struction contract or formal written bid, which       such taxable ,year, and shall be signifi ed in such
  contract was entered into or which bid was made       manner as the department of revenue may by
  prior to July 31, 1975 .
                                                        rule or instruction prescribe .
      (3) Taxes other than special improvement
                                                            (c) Any charitable contribution made by a
  taxes paid during the year upon the business or
                                                        corporation in a taxable year beginning after
 property from which the income taxed is de-
                                                        December 31, 1954, in excess of the amount
 rived, including therein taxes - imposed by this
                                                        deductible in such year under the 5 per cent
 state as income taxes, and taxes on all real
                                                        limitation, shall be deductible in each of the 2
 property which is owned and held for business
                                                        succeeding taxable years in order of' time, but
 purposes whether income producing or not . In-
                                                        only to the extent of' the lesser of' the 2 following
 come taxes imposed by this state shall accrue for      amounts: 1 the excess of` the maximum amount
 the purpose of this subsection only in the year in
                                                        deductible f'or' such succeeding taxable year
                        e                   s
 which such taxes ai•e assessed .. Sales and use
                                                        under the 5 per cent li mitation over the contri-
 taxes paid during the taxable ,year which under
 s. 7L043 (2) and (3) may be used to reduce a           butions made in such year; and 2 in the case of"
                                                        the first succeeding taxable year, the amount of
               s
 corporation's income or franchise tax shall not
                                                        such excess contribution, and in the case of the
 be deductible from gross income :
                                                        second succeeding taxable year the portion of
     ( 4) (a) . Dividends, except stock dividends
                                                        such excess contiibutitln not deductible in the
 not taxable under s 71 . .305, received from any       first succeeding taxable year ,
             n
 corporation conforming to all of the require-
 ments of' this subsection. The corporation must           (d) For ' purposes of this section, the term
                                                        "charitable contribution" means a contri bution
 have filed income tax returns as required by law,
 the income of' the corporation must have been          oz gift to or for the use of :
subject to the income tax law of this state, and            1 .. The state or any political subdivision
the dividend must not have been deductible f 'or        t hereof', bud only if the contribution or, gift is
tax purposes from the gross income of' the corpo-       made for exclusively public purposes ..
i ation . The principal business of ' the corporation      2 .. A corporation, trust or community chest,,
must be attributable to Wisconsin, and for the          fund or foundation, organized and operated
purpose of this subsection any corporation shall        exclusively for- r eligious, charitable, scientific,
be considered as having its principal business          literary or educational pu r poses or for the pre-
attributable to Wisconsin only if ' S0% or more         vention of cr uelty to children or animals, : no part
of the entire net income of loss of 'the corpora-       of the net earnings of which inures to the benefit
tion after adjustment for tax purposes (for the         of any, piivate shareholder or individual .
year preceding the payment of the dividends)                         t
                                                           3 . A post or organization of war veterans, or,,
was used in computing the taxable income under          an auxiliary unit or society of, or trust or foun-
ch . 71                                                 dation for, any such post or organization orga-
   (b) Fifty percent of the amount of cash              nized in the United States or any of its posses-
dividends received during the year f r om a corpo-      sions, and no part of the net earnings of which
                    Electronically scanned images of the published statutes.
  1895                                                        INCOME AND FRANCHISE TAXES 71 . 04

  inu r es to the benefit of any private shareholder        that within 30 days before or after the date of
 or individual :                                            such sale or other disposition the taxpayer has
    4 : A cemetery company owned and operated               acquired (otherwise than by bequest or inheri-
 exclusively for- the benefit of its members, or any        tance) or has entered into a contract or option to
 corporation chartered solely for burial purposes           acquire substantially identical property , and the
 as a cemetery cor poration and not permitted by            property so acquired is held by the taxpayer for -
 its charter to engage in any businessnot neces-            any period after such sale or other disposition . .
 sarily incident to that purpose, if the company or         Reserves for- contingent losses or liabilities shall
 corporation is not operated f 'or, prof i t and no part    not be deducted . .
                                                               t
                                         y
 of the net earnings of the company or corpora-                  (7a) (a) No deduction shall be allowed in
 tion inures to the benefit of any private share-           respect to losses from sales or exchanges of
 holder or individual , :                                   property (other than losses in cases of distribu-
    7 .. Any police officers' relief association orga-      tions in corporate liquidations) directly or indi-
 nized under s . 213 ll or firefighters' relief asso-       rectlybetween persons spec i f ied in par . . (b) 1, 2,
 ciation organized under s 21 ;3 .. 10.. Under this         3or4 .
 subdivision contributions include contributions                (b) The persons referred to in par (a) are :
 and donations, and other funds raised through                  1 . . An individual and a corporation more than
 the activities of such associations for- the relief of     50 per cent in value of the outstanding stock of
 surviving spouses and orphans.                             which is owned, directly or indirectly, by or for -
      (e) If the contribution is other than money,          such individual ; .
                       e
   the basis for the calculation of the amount                 2 : Two corporations more than 50 per cent in
   thereof shall be the fair market value of the            value of the outstanding stock of each of which is
   property at the time of the contribution, except         owned, directly or indir ectly, by or for the same
  that if ' the basis of the property was deducted          individual, if' either- of such corporations, with
  pursuant to sub. . (7) or charged down or of 'f' and      respect to the taxable year of the corporation
  deducted pursuant to sub (8) or the property
                                           e                preceding the date of the sale or exchange was,
  was depi ; eciable, amortizable or depletahle, such      under the federal internal revenue code , a per-
  fair market value shall be reduced by the lesser         sonal holding company or a foreign personal
  of 1) the amount which would have been treated           holding company ;
  (but was not actually treated) as gain if the                3 .. A fiduciary of a trust and a corporation
  proper ty contributed had been sold at its fair          more than 50 per cent in value of the outstand-
  market value determined at the time of such
         t                                                 ing stock of which is owned, directly or indi-
  contribution, or , 2) the amount of ' depreciation,      t ectly, by or for the trust or by or for a person
  amortisation, write-off or, depletion to the extent      w ho is grantor of the trust ;
  allowed as . deductions in computing taxable                 4 A person and an organization whose in-
' income under all Wisconsin franchise and in-             come is exempt under s 71 01 (3) (a) and
  come tax laws and which resulted in a tax                which is controlled directly or indirectly by such
  benefit, but not less than.n the amount allowable        person ..
  under all, Wisconsin franchise and income tax                 ( 8) The amount any asset has been charged
  laws .                                                   down or of'f by any corporation upon the demand
     (6) Amounts contributed f 'or, the given , pe-         of order of 'any state or federal regulatory au-
 riod to -the , unemployment reserve fund estab-            thority, body, agency or commission having
  lished ins. 108 ,; 16, but not the amounts paid out       power to make such demand or order, or by the
 of said fund .                                             examining committee of any state bank in ac-
     (7) Losses actually sustained within the year          cordance with s : 221 . . 09, provided all the t e-
 and not compensated by insurance or otherwise,             quirements of this subsection have been com-
 provided that no loss resulting from the opera-            plied with : the corporation must elect to make
 tion of business conducted ' without the state, or        deduction under this subsection by claiming a
 the ownership of property located without the             charge down` or write-off of' such asset, in an
 state, may be allowed as a deduction, and pro-            amount consistent with the terms of ' the demand
 vided further that no loss may be allowed on the          or order, in its return covering the first income
 sale of property purchased and held for pleasure          year in which the Charge down of write-of 'f ' is
 of recreation and which was not acquired or-              demanded or ordered „ When 'a demand or order
 used . torpro~t,` but this proviso shall not be
                         t                                 affects a charge down or write-off of more than
construed to exclude losses due to theft of to the         one asset, an election to claim the charge down
destruction of property by fir-e, flood or other'          or write-of'f' of one such asset shall be deemed an
casualty„ No deduction shall be allowed under              election to claim the charge down or write-off" of
this subsection for any loss claimed to have been          all assets affected by such demand or order An
sustained in any sale ' or other disposition :: of         election to claim or not claim a deduction under
shares of stock - or securities where it appears           this subsection with respect to any such order
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 7 1 .04 INCOME AND FRANCHISE TAXES                                                                       1896

 shall be irrevocable No deduction allowed                  (12) In computing net income no deduction
 hereunder shalll exceed the amount which would          shall be allowed under this section for, wages,
 have been deductible had the asset been sold for        salaries, bonuses, interest or other expenses:
 an amount equal to the value to which it is                (a) If such items of deduction are not paid
 written down .. The amount of any deduction             within the taxable year or by the fifteenth day of
 allowed hereunder shall reduce the cost or other        the third month after the close thereof; and
 basis of any such asset, and any amount recov-             (b) If, by reason of the method of accounting
 ered with respect to such an asset which: exceeds       of the person to whom the payment is to be
 the adjusted cost or basis shall be reported as
                   t                                     made, the amount thereof is not, unless actually
 income in the ,year , in which received of acc rued,    received, includable in the gross income of such
 depending on the method of accounting em-               person for the taxable ' year in which or with
 ployed by the taxpayer ..                               which the taxable year of the taxpayer ends ; and
                                                           (c) If ', at the close of ' the taxable ,year of the
    (9) (a) Savings and loan associations,, mu-
                                                        taxpayer of, at any time within 2 1/2 months
 tual loan corporations, mutual savings banks,
                                                        thereafter, the pe r son to whom the payment is to
 and credit unions may deduct amounts paid to,          be made was an officer o f such taxpayer corpo-
 or credited to the accounts of depositors or
                                                        ration or was the owner, directly or indirectly, of
 holders of accounts as dividends or earnings on        more than 20 per cent of its outstanding voting
 their deposits or withdiawable accounts, if' such      stock .
 amounts paid or credited are withdrawable on              (d) No deduction shall be disallowed under
 demand subject only to customary notice of             this subsection if the item would not be includ-
 intention to withdraw,                                 able in the Wisconsin taxable income of the
    (b) Savings and loan associations, mutual           creditor even if received in the taxable year or
 savings banks;' production credit associations         within 2 1/2 months after the close thereof '. .
 and credit unions may make a deduction for a                 (e) If a deduction, which is otherwise prop-
 reasonable addition to reserve for bad debts of         erly accruable,, is disallowed pursuant to the
 2/3 of' such sums as they are required to allocate      application of pans : ` (a), (b) and (c), such
 to their loss reserves pursuant to statutory provi-     deduction shall be allowed for the same item in
 sions or rules and regulations or orders of any         any subsequent year when actually paid .
 state ` or federal governmental supervisory                   (13) , (a) With respect to the calendar year,
 authorities .                                            1964 and corresponding fiscal years and there-
    (10) Amounts distributed to patrons in any           after, as a depreciation deduction a reasonable
year, in proportion to their, patronage of the           allowance for the exhaustion, wear and tear
same year, by any corporation, joint stock com-          (including a reasonable allowance for
pany or, association doing business on a co-             obsolescence) :
operative basis (hereinafter called "company"),               l . Of property used in the trade or business, or
whether organized under ch . 185 or otherwise,                2 . Of property held for- the production of
shall be returned as income or receipts by said          income .
corporate patrons but may be deducted by such                 (b) The term "reasonable allowance" as used
company as cost, purchase price or refunds ; but         in : par.. (a) includes (but is not limited to) an
no such deduction shall be made for amounts              allowance computed in accordance with rules
distributed to the stockholde r s or owners of such      prescribed by the department of ' revenue, under
                                                         any of the following methods :
company in proportion to their stock or owner-
ship, nor f'or, amounts retained by such company             1 . The straight line method,
and subject to distiibution in pioportion to stock           2 : . The declining balance method,, using a rate
                                                         not exceeding twice the rate which would have
or ownership as distinguished from patronage .
                                                        been used had the annual : allowance been com-
     (11) Amounts expended for the purchase of           puted under the method described in subd . 1,
seeds and tree plants for planting, and f'or, pre-           3 . The sum of the years-digits method, and
                                                                      e m
  paring land for planting and for plant ing , and           4. Any other consistent method productive of
  caring for, maintenance and fire protection of                       l
                                                         an annual allowance which, when added to all
  forest crops on "`Forest Clop Lands" under ch .       allowances for the period commencing with the
  77, but the taxpayer may elect to defer the           taxpayer's use of the property and including the
deduction of such amounts until the crop or the         taxable year, does not, during the first two-
                           n
  property, or, any portion thereof', is sold or        -thirds of the useful life of the piopefty, exceed
: disposed of; except that the method so elected        the total - of ' such allowances which would have
  must be followed without change ; and notice of       been used had such allowances been computed
the election of such method must be given to the        under-the ,method prescribed in subd . 2 , Noth-
assessing authority that such election is made . .      ing in this subsection shall be construed to limit
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 1897                                                      INCOME AND FRA NCHISE TAXES 71 .04

 or reduce an allowance otherwise allowable                 (14) (a) In the case of property to which this
 under par. (a) .                                        subsection applies the term "reasonable allow-
       (c) Paragraph (b) 2, 3 and 4 shall apply onlyy    ance" as used in sub (13) may, at the election of
 in the case of property (other than intangible          the taxpayer, include an allowance, for the f i rst
 property) described in pai r: (a) with a useful life    taxable year for which a deduction is allowable
 of ' .3 years or more:                                  under sub .. ( 13) to the taxpayer with respect to
     1 .: The construction, reconstruction or erec-      such property, ' of 20 per cent of the cost of such
 tion of which is completed after the end of the         property .
 taxpayer's calendar or fiscal year 1963 and then           (b) I f in any taxable year the cost of property
 only to that portion of the basis which is properly     to which this provision applies with respect to
 attributable to such construction, reconstruction       which the taxpayer may elect an allowance
 or- erection after the end of the taxpayer 's calen-    under par . (a) f'or, such taxable year exceeds
 dar or- fiscal year 1963, or                            $10,000, then par . (a) shall apply with r espect
  2 . Acquired after the end of the taxpayer 's          to those items selected by the taxpayer, but only
calendar or fiscal year, 1963, if' the original use of   to the extent of an aggregate cost of $10,000 .
such property commences with the taxpayer and               (c) 1 . The election under this subsection for
commences after such date .                              any taxable year shall be made within the time
     (d) Where, under mules prescribed by the            prescribed by law (including extensions
 department of revenue, the taxpayer and the             thereof) for- filing the return f'or, such taxable
 department have, af'ter' August 15, 1963 entered        year The election shall be made in such manne r,
 into an agreement in writing specifically dealing       as the depar tment by rule presc r ibes .
 with the useful life and rate of depreciation of           2 , Any election made under this section may
 any property,, the rate so agreed upon shall be         not be revoked except with the consent of the
 binding on both the taxpayer and the depart-            secretary of revenue or his delegate .
 ment in the absence 'of ' facts or circumstances            (d) 1 : For purposes of this subsection the
 not taken into consideration in the adoption of         term "property to which this subsection applies"
 such agreement ~ The responsibility of establish-       means tangible personal property :
 ing the existence of such facts and circum-                a Of a character subject to the allowance for
 stances shall rest with the party initiating the        depreciation under- sub . (13),
 modification Any change in the agreed r ate                b . Acquired by purchase after Decembe r 31,
 and useful life specified in the agreement shall
                e                                         1963 or after- the taxpayer's corresponding fiscal
 not be effective for taxable years before the           year for use in trade or bus iness or for holding
 taxable year, in which notice in writing by certi-      for production of income     e
 fied manor registered mail is served by the party          c . With ' a useful life (determined at the time
 to the agreement initiating such change .               of such acquisition) of` 6 years or more .
    (e) In the absence of an agreement under                2 . For purposes of subd 1 the term
 par (d) containing a provision to the contrary, a       "purchase" means any acquisition of proper ty,
 taxpayers may at any time elect in acco r dance         but only if
 with rules prescribed by the department to                 a . The property is not acquired by one mem-
 change ' f'rom the method: of depreciation de-          ber of an affiliated group from another member
 scribed in par , (b) 2 to the method described in       of the same affiliated group, and
 par (b) 1 .                                                b. The basis of the property in the hands of the
    (f) Under, rules prescribed by the secretary, a      person acquiring it is not determined in whole or
 taxpayer' may for- purposes of computing the            in part by ref'erence ` to the adjusted basis of such
allowance under pa t :' (a) ' with respect to per-       property in the hands of the persons fromwhom
 sonal property, reduce the amount taken into            acquired .
 account as salvage value by an amount which                3 . For purposes of this subsection the cost of
does not exceed l U per cent of the basis of such        property does not include so much ofthe basis of
 property (as determined under- par . (g) as of the      such property as is determined by reference to
time as of `which!such salvage value is required to      the basis of other property held at any time by
be determined) For purposes of' this paragraph           the person acquiring such property ,.'
the term "personal property" means depreciable              4 , For purposes of par (b),
personal property (other than livestock) with a             a All members of an affiliated group shall be
useful life of 3 years or more                           treated as one taxpayer, and
   (g) The basis on which exhaustion, wear and              b . The department of revenue shall apportion
tear and obsolescence shall be allowed in respect        the dollar limitation contained in par' :. (b)
to any property shall be the Wisconsin income            among the members of such affiliated group in
tax cost of such property, as determined by s .          such manner as it by rule prescribes :,
7L03 (l) (g) and other ' provisions of this                 5 . For purposes of this subsection, the term
chapter-, insofar as applicable ,                        "affiliated group" means one or more chains of
                     Electronically scanned images of the published statutes.
 71 . 04 INCOME AND FRANCHISE TAXES                                                                         1898

  includable corporations, connected through   d              determination of net income of the calendar
  stock ownership with a common parent corpora-               year 1972 for- federal income tax purposes . In
  tion which is an includable corporation if ' stock          determining the Wisconsin tax on or measured
  possessing more than 50 per cent of the voting                            e
                                                              by net income of any year subsequent to 1972,
  power of all classes of stock and more than . 50            "internal revenue code " means such code as
  per cent of each class of nonvoting stock of each           applicable to the determination of net income
  of' the includable corporations (except the com-            for such subsequent ,year for federal income tax
  mon parent corporation) is owned directly by                purposes or as applicable to determ ination of' net
  one or more of the other , includable corporations          income of 1972 for federal income tax purposes,
  and the common parent corporation owns di-                  at the option of the corporation . .
  rectly stock possessing more than 50 per cent of               (c) Effective as of the first day of ' each
  the voting power of all classes of' stock and more          corporation's 1972 taxable year, the Wisconsin
  than 50 per cent of each class of nonvoting stock           adjusted basis for all depreciable property sub-
  of at least one of the other, includable corpora-           ject to depreciation or, amortization under'- the
  tions The term "stock" as used in this subsec-              internal revenue code,, except pollution abate-
  tion does not include nonvoting stock which is              ment plants or equipment deducted,, amortized
  limited and pr ef 'ei red as to dividends . . As used in    or depreciated pursuant to sub , (2b), shall be
  this subsection the term "includable corpora-               identical to the adjusted basis of such property
  tion" means any corporation except corpora-                 on such date for federal income tax purposes
                                                                                                      x
                 e         e
  tions whose income is exempt from taxation                  under such code .. As of' the end of each corpora-
  under s . 71 . 01 (3) .                                                                           t
                                                              tion's 1971 taxable year-, the net difference
      6 „ In applying sub . (13) (g) the adjustment           between the Wisconsin and federal adjusted
  under s , ;71 .. 03 (1) (g ) resulting by reason of an      basis of all depreciable property subject to de-
 election made under this subsection with respect
                          r                                   preciation or, amortization for federal income
 to any "property" to which this subsection ap-               tax purposes, except pollution abatement plants
 plies shall be made before any other - deduction             and equipment covered by sub . (2b), shall be
 allowed by sub. (13) (a) is computed .                       aggregated If' the Wisconsin adjusted basis of
      (15) (a) With the exception of sub . (2b), all                                                       e
                                                              the aggregate of such property exceeds the fed-
 provisions of this section relating to amortiza-             eral adjusted basis of such aggregate, one-fifth
 tion or, depreciation of dep r eciable property by           of such difference may be deducted from gross
 corporations shall terminate as of the close of              income to arrive at net income (before appoc-
 each corporation's 1971 taxable year for all                 tionment, if any) for Wisconsin income and
 purposes of the Wisconsin tax on or measured by                            x
                                                              franchise tax purposes in respect of the income
 net income, including but not limited to subs . .            year 1972 and the next succeeding 4 income
 (2a), (2c), (13) and (14) ,. No loss or deduc-              years , If the federal adjusted basis of the
 tion shall be allowed to any corporation under              aggregate of ' such property exceeds the Wiscon-
 sub : (7) or- (8), respectively, with respect to            sin adjusted basis of such aggregate, the , other
 depreciable property in determining net income                                                         e
                                                             allowable deductions from gross income to ar-
 of the 1972 . T axable year or, taxable years there-
            .      t                                         rive at net income (before apportionment, if '
 after unless the loss or deduction is allowed as a          any) shall be reduced by one-fifth of such
 deduction under the internal revenue code for               difference with respect.t to the income year 1972
 federal income tax purposes . With the exception            and each of". the next succeeding 4 income years,
 of pollution abatement plants and equipment,                and such reduction shall be made rega r dless of
 waste treatment facilities and renewable energy             any disposition made of the underlying , depre-
 resource systems deducted, amortized or depre-              ciable property. If' a corporation is dissolved, o f
ciated under subs . (2b), (2g) and ( 16) for- all            merged into or consolidated with another - corpo-
purposes of' the. Wisconsin corporation tax on or            ration before the termination of, the 5-year pe-
measured by , net .t income of' the 1972 taxable             riod,any remaini ng balance of ' the net difference
year and taxable years thereafter', the amount of
                                        ,                                                   d
                                                             between the . Wisconsin and feder al adjusted
depreciation or, amortization on depreciable                 basis of ' such depreciable property as of the end
property allowable as a deduction from gross                 of such co r poration's 1971 taxable year shall be
incomeshall be limited to the amount allowable               deducted from gross : income or, used to reduce
as a deduction : from gross income under- the                otherwise allowable deductions from gross in-
internal revenue code for federal income tax                 come, as the case may be, in the year- of dissolu-
purposes; but no deduction for depreciation or
                   t                                         tion„ merger- or consolidation.
amortization for- depreciable property may ex- y                (d) Adjustments for capital expenditures and
ceed the Wisconsin "income tax cost" (basis) of              changes in the amount of depreciation or amor-
                                                                     s
depreciable property, .                                      tization of depreciable property, other , than pol-
   (b) In this subsection, "internal revenue                 lution abatement plants of equipment deducted,
code" means such code as applicable to the                   amortized or depreciated pur suant to sub . (2b),
                   Electronically scanned images of the published statutes.
 1899                                                   INCO M E AND FRANCHISE TAXES 71 .043

determined for federal income tax purposes by              (b) Expenses paid between April 20, 1977,
federal audit or otherwise affecting the net           and . December 31, 1978, may be deducted in
dif'f'erence between the Wisconsin and federal         either the taxable year in which paid or the next
adjusted basis of depreciable property at the end      taxable year ..
of the 1971 income year shall be reflected for -           (c) No expenses incurred after the close of a
Wisconsin income and franchise tax purposes by         corporation's 1979 taxable year may be de-
appropriate adjustments in the 5 amortization          ducted, depreciated or, amortized under par .
years and such adjustments and changes affect-         (a )
ing a corporation's net income of the 1972                (cm) No expenses incurred for alcohol fuel
taxable year or taxable years thereafter shall be      production systems prior to March 1, 1980 may
reflected for- Wisconsin income and franchise          be deducted , depreciated or amortized under
tax purposes in the ,year or years to which they       par, (a) .
relate . Additional assessments or refunds may            (d) No expenses may be deducted, depreci -
be made consistent with such adjustments or            ated or amortized under this subsection i f' a
changes and consistent with this subsection re-        credit has been received under s,'71 09 (12) or a
gardless of any limitations otherwise applicable       refund has been received under s 101 57 for the
to such year or ,years .                               same renewable energy resource system .
    (e) With respect to depreciable proper ty             History: 1971 c . 215; 1973 c. 90, 243 ; 1975 c 39, 94, 214,
disposed of i n a corporation's taxable year 1973      224, 422 ; 1977 c. 313 ; 1979 c . 1 ; 1979 c . 34 ss . 885w, 885y,
                                                       2102 (25) (b), (39) ( g) ; 1979 c. . 221, 329 ; 1979 c 350 ss . 10,
or thereafter, any difference in adjusted basis        2 7 ( .3 ) .
for purposes of ' the federal income tax and the         ; : . Interest paid on money used to purchase its own stock is
Wisconsin tax on or measured by net income,            not deductible since the fact that the stockholder might sell to
                                                       an outsider is not sufficient to show that the stock was
apart from any diffe r ence amortized pursu ant to     purchased to realign the corporate structure or was related to
par ; (c), shall be taken : into account in deter-     income production . Hoffman Co . v. Department of Revenue,
                                                       51 W (2d) 220,186 NW (2d) 228
mining net income in the . year of disposition .           Subsidiary is entitled to adopt new method of treating
   (f) With respect to any corporation which           amounts received from parent for purposes of computing de-
has, in any year prior to de r iving income with a     preciation expense deduction allowable under state corporate
                                                       franchise tax law, yet utilize old method for purposes of regu-
 Wisconsin situs for Wisconsin income or               lation by F' CC ; Dept: of Revenue v Ws Telephone Co . 72W
franchise tax purposes, taken depreciation or          (2d) 259, 240 NW (2d) 4 11
amortization of depreciable property f 'or, federal
income tax purposes, the federal adjusted basis         71 .042 Tax-option corporations . (1) Be-
of its depreciable property as of ' the beginning of   ginning with calendar year, 1979 or correspond-
the income year in which such corporation be-          ing fiscal year, the, amount of net income for the
gins operations in this state shall be the Wiscon-     current year of a tax-option corporation may be
sin adjusted basis of such property,                   deducted from gross income if the Wisconsin
    (g) With respect to the Wisconsin corpora-         adjusted gross income reported by all its r esident
 tion tax on or measured by net income of the          shareholders includes their proportionate share
 1972 Taxable, year , and taxable years thereafter     of the corporation's net income and the Wiscon-
 the special rule of exclusion prov ided in section    sin adjusted gross income reported by all its
 108 (a) of the internal revenue code shall apply      nonresident shareholders includes their propor-
if it applies for federal income tax purposes, and     tionate share of the corporation's net income
in such case a reduction of the basis of property      under s . 71 .07 (1) and (2m) . The proportion-
shall be effected for purposes of such Wisconsin       ate share of the net loss of a tax-option corpora-
tax in the same rrianner and to the same extent        tion for taxable year 1979 and thereafter shall
as for federal income tax purposes as pr ovided in     be attributed and made available to sharehold-
section T017 of the internal revenue code and the      ers but limited on a Wisconsin basis as pre-
applicable federal regulations .                       scribed by section 1374 (c) (2) of the internal
   (16) (a) All expenses for designing; con- ,         revenue code . Net operating losses of ' the corpo-
structing; equipping and installing a renewable        ration to the extent attributed or made available
energy resource system, as defined in s 101 57         to a shareholder may not be used by the corpora-
(8), in this state which are incurred on or after      tion for : further tax benefit,
April 20, 1977, maybe deducted in the year                (2) It is the intent of'' this section and other
paid, may be depreciated or may be amortized           sections relating to the treatment of'tax-option
over a ' period of 5 years .. Only a renewable         corporations and their shareholders to prevent
energy resour ce system which is installed and         the double inclusion: or- omission of any item of
which ' is certified in accordance with the pi oce-    income, deduction or basis .
dure specified ins, 101 .57 (3) is eligible for this     History : 1979 c 1, 34..
election:. The election, once made, may not be
changed and shall be made on the first tax             71 .043 Reduction of tax. ( 1 ) The tax im-
return filed after the expenses are incurred,.,                 n
                                                       posed upon or measured by corporation net
                     Electronically scanned images of the published statutes.
 71 .043 . INCOME AND FRANCHISE TAXES                                                                       1900

 income of the taxable year 1972 pursuant to s .              the holding period requirements of section 422
 '7 ..1 . .0 .1 (1) or (2) may be reduced by an amount        (a) (1),423 (a) (1)or424(a) (1), then any
 equal to so much of the sales and use tax under              deduction from the income of the employer
 ch 77 paid by the corporation in such taxable                corporation for the taxable year in which such
 year `on fuel and electricity consumed in manu-              exercise occurred attributable to such disposi-
 f acturing tangible personal property in this state          tion, shall be treated as a deduction from income
 as, was paid on fuel and electricity costs in excess         of the taxable year of ' such employer corporation
 of 2% of'the cost of manufacturing within this               in which such disposition occurred
 state as determined pursuant : to s . 71 .,07 .(2)
  (b), 1969 stats . Such deduction may not exceed             71 .046 Depletion; certain m i nes produc-
 50% of the tax computed without such                         ing ores of lead, zinc, copper or other
 reduction                                                    metals. ( 1) In lieu of depletion based on cost,
   (2) . The tax imposed upon or measured by                  there shall be allowed mines, which have a gross
corporation net income of the taxable year 1973               income from sales of ore or ore products in
and subsequent taxable years pursuant to s,                   calendar, year 1976 or the corresponding fiscal
71 .01 (l) or, (2) may be reduced by an amount                year of at least $100,000, and which are owned
equal to the sales and use tax under ch . 77 paid             by corporations producing ores of lead, zinc,
by-the corporation in such taxable year on fuel               copper or other metals exceptt iron, but including
and electricity ,consumed in manufacturing tan-               sulphur and iron resulting from the processing of
gible personal property in this state..                       lead, zinc, copper or other' metals except iron, or
    (3) If any corporation in any year is entitled            mills finishing the products of such mines for the
to a credit under this section, such credit, to the           smelter, or smelters located in Wisconsin
extent not offset by the tax liability of'the same            processing the products of the lead, zinc, copper,
year may be offset against against the tax liability of the   or other metal mines, except iron mines, or mills
subsequent year, and if not completely offset by              the following allowance for.r depletion :
the tax liability of such year, the remainder of'                (a) On the first . $100,000 of gross income
such credit may be offset against the tax liability           from sales of' ore or ore products or any part
of the following year . A credit under sub :_ (2)             thereof, 15 per cent ;
may be carried forward and offset against tax                    (b) On the second $100,000 of gross income
liabilityy in the next succeeding 5 years .                   fromsales of ore or ore products or any part
    (4) In this section :                                     thereof, 10 per cent ;
   (a) "Sales and use tax under ch 77 paid by                    (c) On the third $100,000 of gross income
the corporation"" includes use taxes paid directly            from sales of ore or, ore products or, any part
by the corporation and sales and use taxes paid               thereof, 5 per cent ;
by the corporation's supplier and passed on to                   (d) On alll gross income from sales of ore or
the corporation whether separately stated on the              ore products in excess of $300,000, 3 per cent . .
invoice or included in the total price
   (b) "Manufacturing" has the meaning desig-                    ( im) For taxes paid for calendar year 1977
nated in s77. .51 ; (27) .                                    or the corresponding fiscal year,, a depletion
   History 1971 c: 125, 211 ; 1973 c 90
   :                                                          allowance shall be allowed as a deduction which
                                                              is 90% of the amount computed under sub .. (1)
 71 . 045 AOlowability of certain deductions .                The percent of the amount computed under sub
 No deduction shall be allowable at-any . time to             (1) which shall be allowed as a deduction shall
 the employer corporation, or, to a parent or                 be reduced 10 percentage points each ,year for
 subsidiary corporation of such corporation, or a             the 9 succeeding year's after calendar year 1 :977
 corporation issuing of assuming a stock option in            or the corresponding fiscal year until the
 a transaction to which section 425 (a) of the                amount deducted shall be zero .
internal revenue code applies, if the stock option               (2) In no case shall the depletion allowance
 was exercised on or after June .30, 1965, by an              provided in sub .. (1) for taxes paid for calendar
 individual in a transfer, in respect of which the            year 1977 or the corresponding fiscal year be in
 requirements of section422 (a), 423 (a) or 424               excess of 45 % of net income as computed under
 (a) of the internal revenue code were met ; and              this chapter without the benefit of the depletion
 no amount othei> than the price paid under the               allowance provided by this section .: The maxi-
option shall be considered as received by any of              mum percentage of net income allowed as a
'such corpoc ations for the share so transferred . If'        depletion allowance under this section shall be
the transfer of 'a share of stock to an individual            reduced 5 percentage points each year for the 9
pursuant to his exercise of an option would                   succeeding years after calendar, year 1977 or the
otherwise meet the requirements of section 422                corresponding fiscal year until the maximum
 (a), 423 (a) or 424 (a) of the internal revenue              percentage of net income allowed as a deduction
code except that there is a failure to meet any of            shall be zero.'
                       Electronically scanned images of the published statutes.
  1901                                                                 INCO M E AND FRANCHISE TAXES 71 . 05

     (3) In computing depletion allowance there                     means), and substantially equivalent processes
  shall be first deducted from gross income all                     to bring to shipping grade and form, and loading
  sums paid for rents or royalties, or for the                      for shipment .
  purchase of crude ore or concentrates . .                             (3) This section is effective until January 1,
    (4) When depletion allowance is taken as a                       1988 .
 deduction pursuant to this section the savings in                       His to ry : 1977 c . 31, 447; 1979 c . 90.
                                                                         N OTE: C hapte r 31 , laws of 1977, repeal s thi s se ction effec-
 tax due to such depletion allowance shall be used
                                                                    ti ve January 1, 1988.
 by the taxpayer in prospecting for ore in Wis-
 consin, and proof thereof duly verified shall be
                                                                    71 . 05 Modifications, transitional adjust-
 furnished the department of revenue .
                                                                    ments and election of deductions for natu-
    (5) This section is effective until January 1,
                                                                    ral persons and fiduciaries . (1) MODIFICA-
  1988 . "
    History : 1977 e . .31 ; 1979 c . 90.                           TIONS Some of'the modifications referred to in
                                                                    .
    NOTE : Chapter 31, laws of 1977, repeals this section effec-    s . 71 .02 (2) (c), (e) and (m) are :
 tive January 1 , 1988 .                                               (a) Add :
                                                                       1 .. The amount of any interest, less related
   71 . 047 Depiction ; mines producing low-                        expenses, excluded solely by reason of section
   grade iron ore. (1) (a) Corporations having a                    103 of the internal revenue code (relating to
  gross income of at least $100,000 in calendar                     interest receivedd on state and municipal
   year, 1976 or the corresponding fiscal year from                 obligations) . .
   the mining of low-grade iron ore in this state                      2 . . Any amounts deducted under section 1202
   may deduct, in lieu of depletion based upon cost                 of' the internal revenue code (relating to the
  of such ore, percentage depletion in the amount                   deduction for capital gains) . .
  of ;15% of the gross income from mining of such                      3 . Losses not allocablee or apportionable to
  low-grade iron ore after first deducting from                    this state under' s . 71 ..0'7 . :
  such gross income all sumss paid for rents or                       4 . Any amount deducted as . a capital loss
  royalties„ For taxes paid for calendar year 1977                 carry-over from any taxable year prior to the
  or the corresponding fiscal ,year, a depletion                    1965 taxable year,
  allowance shall be allowed as a deduction which                     5 . Gain on the sale or exchange of a principal
  is 90% of the amount of depletion allowance for                  residence, excluded under section . 1034 (a) of
  1976 .: The amount computed under this para-                     the internal revenue code, if the "new residence"
  graph which shall be allowed as a deduction                      referred to therein is located outside this state ..
  shall be reduced 10 percentage points each yearr                    6 . Gain on the involuntary conversiop of
  for the 9 succeeding years after calendar year                   Wisconsin property by nonresident individuals,
  1977 or the corresponding fiscal ;year, until the                estates or, trusts excluded under section 1033 of
  amount deducted shall be zero .,                                 the internal revenue code if the replacement
      (b) For taxes paid for calendar year 1977 or,                property is located outside this state ..
 the corresponding fiscal year, the allowance                         7 . . Moving expenses incurred to move from
 provided in par . (a) shall not exceed 45% of the                 this state.
 taxpayer's taxable income from such mining                           8 . The amount of any lump sum distribution
 computed under this chapter `without the allow-                   taxable under section 402 (e) (1) of the internal
 ance for depletion provided by this section ... The               revenuee code (relating : to distributionss from
 maximum percentage of net income allowed as a                     employe benefit plans) .
 depletion .n allowancee under this paragraph shall                    9 Any amount deducted as a-capital loss
 be reduced :S percentage points each year for the                  carry-over from any taxable year prior to the
 9'succeeding years after calendar year 1977 or                     1975 taxable year, iif, capital asset which
 the corresponding fiscal year until the maxi-                      generated the losss had a situs outside of
 mum percentage of net income allowed as a                          Wisconsin .;
deduction shall be zero,                                               10 . Any amount received in taxable year 1979
     (2) As used in this section:                                  or, thereafter by a Wisconsin resident share-
     (a) "Low-grade iron ore" means such ore as                    holder as a proportionate share of the earnings
 defined ins 70„93 (1),' 1975 stats.                               and profits of a tax-option corporation which
     (b) "Mining" includes not merely the extrac-                  was accumulated prior to the beginning of its
 tion of low-grade iron ore from the ground                         1979 taxablee year and not considered a dividend
 (including extraction from the waste or, residue                  when received under section 1375 (d) 1 of the
of prior mining), but also the following treat-                    internal revenue code.
ment processes (and physical or chemical treat-                       13, Net gain on the sale or, exchange of capital
ment processes necessary or incidental thereto) :                  assets with Wisconsin sites under s, 71 .07 (1)
crushing ; grinding, sorting, concentrating, ag-                   by a nonresident alien to the extent not included
glomerating (by sintering, pelletizing, or other                   in federal adjusted gross income or federal tax-
                  Electronically scanned images of the published statutes.
 71 . 05 INCOME AND FRANCHI S E TAXES                                                                     1902

 able income whether or not subject to tax under         five share, for ' federal income tax purposes, of
 the internal revenue code..                             the item to which the modification relates .
    (b) Subtract, to the extent included in fed-         Where a partner's distributive share of any such
 eral taxable or adjusted gross income :                 item is not required to be taken into account
    1 The amount of any interest or dividend             separately for federal income tax purposes or the
 income, less related expenses , which is by fed-        modification relates to no ascertainable item of
 eral law exempt from taxation by this state,            the partnership income of the cu t rent year, each
    2 . Any amount included under section 668 of         pa r tner's share of such modification shall be
 the internal revenue code,                              proportional to his distributive share for federal
    3 ' Net income not allocated or apportioned to       income tax purposes of partnership taxable in-
 this state under s 71 .. 07 .                           come or loss generally
   4 . Any other amount not subject to taxation              (f) Add to or subtract from federal adjusted
under, this chapter-, less any amount allocable          gross income, as appropriate :
thereto which has been deducted in the compu-                1 . Any amounts excluded or included therein
tation of federal taxable or ad j usted gross            solely by reason of subchapter R (proprietor-
income                                                   ships or partnerships electing to be taxed as
   5 : Any interest received or accrued by prison-       corporations) of the internal revenue code
ers of war during their imprisonment or during               2 Any amount affecti ng the computation of a
the ,year of their ~ release on income which is         shareholder's federal adjusted gross income for
exempt from taxation under section 112 of the           taxable year ' 1979 under- section 1373 or 1374 of
internal revenue code                                   the internal revenue code as the shareholder's
   6 Any amount deducted under section 404 of           proportionate share of atax-option corpora-
the internal revenue code, as amended to De-            t i on's federal taxable income or loss for taxable
cember 31, 1975, if the contribution to the             year 1978,
individual r etirement plan is made for the 1975             3, The share holder's proportionate share of
taxable ,year, not later than the time prescribed       the amount by which net income or loss of a tax-
by law fo r filing the returns f'or, the 1975 taxable   option corporation subject to taxation under this
year, including extensions thereof                                                     l
                                                        chapter dif'f'ers fr om federal taxable, income or
    7 . Any amount expended by an adoptive              loss of the corporation fbr, the same year attrib-
parent or a prospective adoptive parent in adop-        uted to its shareholders, and any amount neces-
tion fees, court costs or legal fees relating to the    sary toprevent the double inclusion or omission
adoption of a child; whether or not the adoption        of any item of income, deduction or basis .
pr ocess is completed, to the extent that thist               (g)- Add or subtract from federal adj usted
amount, when added to allowable medical de-                gross income, as appropriate, on sale; exchange,
ductions under section 213 of the inter nal reve-          abandonment or other disposition in a transact
nue code, exceeds 3% of the - per'son ' s federal          tion in which gain or loss is recognized to the
adjusted gross income:                                     owner of property acquired, from a decedent, as
    (c) Add or` subtract, as appropriate, any              described in section . l0i4 of the internal revenue
transitional adj ustments computed under sub . .
    )                                                      code in effect on December :31,1975, by inheri-
 (2                                                       tance, exclusive of property constituting income
    (d) The carry back of losses to reduce income         under section 102 - (b) of the internal revenue
of prior ,years shall not be permitted, There shall       code, the difference between the federal basis
be added any amount deducted as a federall net            and the Wisconsin bas i s .: The Wisconsin basis of
operating loss car ry-over and there may be               property acquired from a decedent by inheri-
subtracted ,d any Wisconsin net operating loss            tance shall be determined under the internal
carry-f'orwaid in an amount not in excess ofthe           revenue code in effect on December 31, 1975,
Wisconsin taxable income computed before the              but the value of property properly includible for-
deduction of such Wisconsin net operating loss                        . inheritance tax purposes
                                                          Wisconsin shall , be                          "
carry-forward. A Wisconsin net operating loss,            used in lieu of the value of " property' includible
to the extent not offset against other income of          for federal e state . tax< pur poses . In this gaz'a-
the year, of loss may be carried forward against          graph, . the exemption under s . 72 ; 12 ( 6) (b)
Wisconsin taxable income of consecutive suc-              shall not be deemed property properly includible
ceeding years subsequent to the loss year for a           for inheritance tax purposes
period not to exceed S year s                                (h) The federal adjusted basis at the end of
   (e) In determining Wisconsin adj usted gross           the calendar; year 1968 -or - corresponding fiscal
income or Wisconsin taxable income of a part-             year of waste treatment plant or :pollution abate-
net, any applicable - modification described in           ment equipment acquired pursuant to order or
this section which relates: to an item of partner-        recommendation of the committee on water
                                                                            11
ship `i ncome, - ga in, loss or deduction shall be      . pollution, state board of health, city council,
made in accordance with the partner's distribu-           village board or county board pursuant to '' s .o
                     Electronically scanned images of the published statutes.
 1903                                                       INCO ME AND FR ANCHISE TAXES 71 .05

 59 , 07 ( 53) or (85), 1971 slats , may be treated        this paragraph . In no event may any amount in
 as a subtraction modification on the retur n of"          excess of cost be deducted .. Paragraph (h)
 the calendar year 1969 or corresponding fiscal            applies to all property purchased prior to July
 year but not in later years . . In case of' such          31, 1975, or purchased and constructed in ful-
 subtraction an add modif i cation shall be made           fillment of a written construction contract or
 in 1969 and later taxable years to reverse federal        formal written bid, which contract was ente r ed
 depreciation or amortization of such . basis or to        into or which bid was made prior to July 31,
 correct gain or loss on disposition . The cost of         1975 .
 such plant - or equipment acquired in 1969 or                (j) With respect to taxable years beginning
 thereafter pursuant to order, recommendation             after- December 31, 1969, there may be de-
 or approval of the committee on wate r pollution,        ducted from federal adjusted gross income the
department of resource development, depart-               amount of any long-term capital loss or long-
 ment of natural resources, state board of health,        term capital loss carry-forward permissible as a
city ` council, village board, or county board            deduction under ' the internal revenue code im-
pu r suant to s . 59 07 (53) or (85) ;1971 slats . ,      mediately prior to, but not af'ter' , adoption of the
 (less any federal depreciation or amortization           federal tax reform act of 1969 ..
taken) may be deducted as a subtraction modifi-                                                g
                                                             (k) For, purposes of determining the amount
cation or as subtraction modifications in the             of taxable unemployment compensation to be
year or years in which paid or- accrued, depen-           included in Wisconsin- adjusted gross income,
dent on the method of accounting employed : In            married persons reporting income under section
case of such election, appropriate add modifica-          85 of the inter nal revenue code (relating to
tions' shall be madein subsequent years to                unemployment compensation) ., may elect to
reverse federal depreciation or amortization or           combine their, federal adjusted gross incomes
to correct gain or loss on disposition .. . This          and compute the includable amount as persons
paragraph is intended to apply only to deprecia-                                             t
                                                          filing a j oint federal return, but each spouse
ble propei ; ty except that where wastes are dis-         shall include in Wisconsin adjusted gross in-
posed of '. through a lagoon process, lagooning           come her or, his share of the taxable unemploy-
costs and the cost of land containing such                ment compensation
lagoons may be treated as depreciable property               (L) Married persons electing to exclude the
for purposes of' this paragraph . In no event may         gain on the sale of a principal r esidence :under
any amount in excess of cost be deducted . The            section 121 of the internal revenue code may
taxpayer shall file with the department copies of         compute the amount to be excluded from in-
all recommendations, orders or approvals relat-           come on the same basis as married persons f i ling
                             h
 ing to installation of such property and such            a joint, federal return compute the exclusion
other documents or data relating thereto as the           amount. .
department requests . :                                      (2) TRANSITIONAL ADJUSTMENTS, It is the
     O The cost of the following described prop-          purpose of this subsection to prevent the double
 erty, less any federal depreciation or, amortiza-        inclusion or omission of any item of income,
 tion taken,- may be deducted as a subtraction            deduction or basis by reason .of ' change to report-
 modification or as subtraction modifications in          ing on the basis of federal taxable income or
the year or , ,years in which paid or accrued,            federal adjusted gross " income.. . :
dependent on the method of accounting em-
                                 d                                                             s
                                                              (a) Def nitr'ons . As used in this subsection :
ployed : All property purchased or- constructed                                             s
                                                              1 . "Transitional date" means the first day of
as a waste treatment fac i lity utilized for', the        the taxpayer's 1965 taxable year, as defined at s .
treatment of industrial wastes as defined in s „          71,02 (2 ) (k ) .
 144 .01 (5) ; or air contaminants as defined in s .          2 . "Federal ` adjusted basis" means the ad-
 144 , 30 (L: ) but not for, other wastes as defined in   j usted basis of the asset: or account for- the
s:: 144:01 (9) and approved by the department of                                   g
                                                          purpose of determining gain on the sale or- other
revenue under s . 70 11 (21) (a) for the purpose          disposition thereof' computed as of the transi-
of abating or eliminatin& pollution of surface            tional date for federal income tax pur-poses,
waters, the air or waters of the state . In case of           3 .: "Wisconsin adjusted basis" means the ad-
such election, appropriate add ` modifications            justed basis of the asset or account which would
shall be made in subsequent years to reverse                                                    g
                                                          have been applicable in determining gain on the
federal depreciation or, amortization or, x coi-to                                                    e
                                                          sale or, other disposition thereof on the day
                                                              e
rect gain or loss on disposition ,. This paragraph        preceding the transitional date,
is intended to apply only to depreciable property             4. The "adjusted basis" of a liability or re-
except that where wastes are disposed of                  serve; account created by accruals or other
through ' a lagoon process, lagooning costs and           charges deducted from income for federal or
the cost of land containing such lagoons may be           Wisconsin income tax purposes is the current
treated as depreciable property for purposes of           balance of such account on the transitional date . .
                   Electronically scanned images of the published statutes.
 71 .05 INCOME AND FRANCHISE TAXES                                                                      1904

     5 . "Constant basis assets" means assets, other        2 If the net difference as of the transitional
                                                                   e
 than inventories,.. the federal ad j usted basis of     date is not more than $5,000 the owner at its
 which does not affect and is not affected by the        election may take the entire amount thereof into
 computation of the taxpayer's federal taxable           account in the f irst taxable year ended after the
 income except , when such asset is sold, ex-            transitional date . .
 changed, abandoned or otherwise disposed of                (d) If the taxpayer's last Wisconsin taxable
     6 . "Changing basis assets" means inventories       year, subj ect to this chapter but not to s .. 7102
 and assets or , accounts, including liability and       (2), would otherwise include any period also
 reserve accounts created by accruals or other           included in the taxpayer' s first taxable year
 charges deducted from income, other than an-                                                           e
                                                         subject to ' s . '71 ..02 (2), such last taxable year
 nuity contracts or constant basis assets . Chang-       shall terminate with the day prior to the f i rst day
  ng basis assets include property subject to de-        of such first taxable year . Returns and payments
 pt eciation, depletion or amortization of cost,         of tax with respect to such last taxable year shall
                                                                                   o
 premium or discount ; capitalized intangible ex-        be due on the same date or dates as if ' such year
 penses such as trademark expense, research and          did not terminate until the day on which it would
development expense and loan expense if ' the            have terminated but for, this paragraph .
 same are being amortized for feder al income tax           (3) ELECTION OF DEDUCTIONS ; AND HUS-
 pu r poses; and accruals, reserves and defe r rals of   BAND AND WIFE DEDUCTIONS (a) Natural per-
either income or expense .                               sons electing the federal standard deduction, or
    7 "Owner" means successively the owner of            using federal tax tables based on federal ad-
changing basis assets or constant basis assets as        justed gross income, in filing their federal in-
of the transitional date and any subsequent              come tax return, may elect to take itemized
owner whose basis for such assets is found by            deductions in reporting Wisconsin taxable in-
reference to the basis therefor of'another- person       come of the same yea r .
     (b) With respect to a constant basis asset any         (b) Natural persons who have not elected the
excess of federal adjusted basis over Wisconsin          federal standard deduction, or tax tables based
adjusted :basis shall be added to, income, and any       on adjusted gross income, in filing their federal
excess of Wisconsin adjusted basiss over federal         income tax return, may elect the Wisconsin
adjusted basis shall be subtracted from income           standard deduction in reporting Wisconsin's
in the year in which such asset is sold, ex-             taxable income of the same year .
changed, abandoned or - otherwise disposed of by            (c) The standard deduction shall not be
the owner in a transaction in which gain or loss is      allowed to a married person whose spouse is
recognized to the owner ;'                               required to file a return, unless such spouse has
    (c) With respect to changing basis assets                                                         n
                                                         also elected to take the standard deduction in
compute the net difference between the federal
                                           e                                             e
                                                         reporting income of the same year . If' with
adjusted basis and the Wisconsin adjusted basis          respect to the calendar year 1972 or aoriespond-
of all such assets as of the transitional date .. . If   ing fiscal year or prior calendar year or fiscal
such net difference is a net excess of federal                s
                                                         years one spouse claims the minimum standard
adjusted ' basis it shall be ratably amortized and       deduction, the other spouse cannot claim any
subtracted from the amounts otherwise allow-             deduction .
able to the owner as deductions (under this                 (d) The standard deduction shall not be
chapter' and the internal revenue code) over             allowed in computing the taxable income of
such period of not more than 60 months com-                 1 . A nonresident alien individual ., ,
mencing with the first day of the first taxable             2 : A U S citizen entitled to the benefits of
year, ended after the transitional date as may be        section 931 of the internal revenue code for
                                                                             e
selected by the owner as of the transitional date . .    federal income tax purposes, applicable with
If such net d ( 'faience is a net excess of Wiscon-      respect to taxation of individuals on 1973 in-
sin adjusted basis it shall be ratably amortized         come, and income of subsequent years . . .
                                                                    d
and subtracted : fr om the income of the owne r
                                    e                       3 An individual making a return for a period
over , such period of not less than 60 months            of less than 12 months because of a change in h is
commencing with the first: day of the first tax-         annual accounting period ..
able year ended after the first transitional date           4 . An estate or trust, common trust fund or
as may be selected by the owner as of the
          y                                              partnership.. .
transitional date:. . In either event:                       (e) A change of election - with respect to the
    1 Any remaining balance of such difference           standard deduction for any taxable year may be
-shall be taken into account on the final Wiscon-        made after the filing of' the return for such year
 sin income tax return of' the owner or, in any ,year    If' the spouse of the taxpayer filed a separatee
 in which the owner d isposes of all or substan-         return for any taxable year corresponding to the
 tially all of its assets in a transaction in which      taxable year of the taxpayer, the change shall
 gain or loss is recognized ; and                        not be allowed unless 1) the spouse makes a
                            Electronically scanned images of the published statutes.
  1905                                                                         INCOME AND FRANCHISE TAXES 7 1 .07

  change of election with respect to the standard                            any Wisconsin net business loss sustained in any
  deduction for, the taxable year covered in such                            of the next 5 preceding income years to the
  separate return, consistent with the change of                             extent not offset by other items of Wisconsin
  election sought by the taxpayer ; and 2) the                               income in the loss year and by Wisconsin net
  taxpayer' and his spouse consent in writing to the                         business income of any year between the loss
 assessment, within such period as is agreed on                              year and the income year for which an offset is      s
  with the secretary of'revenue or his delegate, of                          claimed . For purposes of this section Wisconsin
 any deficiency, to the extent attributable to such                          net business income or loss shall consist of " all the
 change of election, even though at the time of                              income attributable to the operation of a trade
 the filing of such consent the assessment of such                           or business in this state, less the business ex-
 deficiency world otherwise be prevented by the                              penses allowed as deductions under s . . 7104.
 operation of any law or rule of law .                                       The Wisconsin net business income or loss of
     (f) Married persons electing itemized deduc-                           corpor ations engaged in business within and
 tions in determining Wisconsin taxable income,                             without the state shall be determined under s .
 may divide the total amount of their itemized                               71 .07 (2), (3) or (5), Nonapportionable losses
 deductions between them, as they choose .                                  having a Wisconsin situs under s . 7107 (lm)
      (4) MODIFICATION OF FE DE RA L, ADJUST ED                             shall be included in Wisconsin net business loss ;
 GROSS INCOME . (a) Whenever a person other                                 and nonapportionable income having a Wiscon-
 than a corporation acquires, after the transi-                                     s
                                                                            sin situsunder s . 71,07 (1'in), whether taxable or
 tional date, as defined in sub . . (2) (a) a con-                          exempt, shall : be included in other ' items of
                                                                                     ,
 stant basis asset, the federal basis of which is                           Wisconsin - income : and Wisconsin net business
 different from the Wisconsin basis, an appropri-                           income for purposes of ' this section ,
 ate modification of federal adjusted gross in-                                 (2) The addition to and deductions fr om
 come shall be made in the year of sale, exchange,                          income of urban transit companies under s
 abandonment or other disposition of such asset                             71 18 (1) shall also be used in determining the
 properly to reflect the income consequences of                             Wisconsin net business loss of such companies to
 such difference . Whenever such a person ac-                               be offset against the Wisconsin net business
 quires, after said transitional date, a changing                           income as deter m ined under s. 71 18 for pur-
 basis asset the federal basis of which is different                        poses of this section
 from the Wisconsin basis, appropriate modifica-
                                                                               (3) For insurance companies subject to' taxa-
 tions af` federal adjusted' gross income shall be
                                                                            tion under this chapter, Wisconsin net business
 made' each year properly to reflect the income
                                                                            loss shall be determined under s . 7101 (4),
 consequences of such 'difference; in any such
                                                                            except that s, 7101 (4) (a) 7, 9 and 10 may not
 case the secretary of revenue or his delegate may
                                                                            apply : .
 agree with the taxpayer for an amortization of
                                                                               History : 19 7 1 . c 125 ; 1975 c 224 ; 1977 c 203 s 106
 such difference in basis over a period of 5 years                              Corporation, which sold at loss real estate used in opera-
 or- less .                                                                 tion of its business of automobile sales because of economic
     (b) Whenever a person other than a corpora-                            deterioration of area, with proceeds of sale being used in con-
                                                                            tinuation of business at new site, suffered "net business loss" .
 tion sells, exchanges or otherwise disposes of an                                                             t
                                                                            Hall Chevrolet Co.; Inc . v Dept of Revenue, 81 W (2d) 477,
ownership interest in a partnership in a transac-                           260 NW (2d) 706 '
tion in which gain or,, loss is recognized, an
appr o priate modification to federal a djusted                              71 .07 Situs of income; allocation and ap-
gross income may be made in the year, of disposi-                            portionment. (1) All income or loss of aesi-
tion to reflect an increase or decrease in the basis                         dent individuals and r esident estates and trusts
of'the partnership interest equal to any reduc-                              shall follow the residence of the individual,
                                                                                                                     e
tions or additions in such basis occurring in                                estate ' or trust .. _ Income or loss of nonresident
calendar of fiscal years prior to 1975 as a result                           individualsand nonresident estates and trusts
oflosses or gains relating to business or property                           from business, not requiring apportionment
which had a sites outside of this state under, the                          under sub (2), (3) or (5), shall follow the situs
provisions of's . 71 . :07 in effect for years prior to                     of the business from which derived . All income
19'75 ..                                                                    or- loss of nonresident individuals ' and nonresi-
   History: 1971 c . 121,125,215 ; 1973 c . 90,141 ; 1975 c . .39,          dentestates and trusts derived from a tax-option
222, 224; 1 9 77 c. 29 4, 380, 4 1$ ;,1979 c . 1 ; 1979 c .. 3 4 ss 886f'
to 886r, 21 02 (3 9 ) (g) ; 1979 c„ 277 .                                   corporation not requiring apportionment under
   NOTE: Pat : ( 4) ( b) , as created by chapter 277, laws of               sub. (2m), shall follow the sites of the business
1979, applies to taxable year 1975 and thereafter .                         of' the corporation from which derived .. Income
                                                                            of loss of nonresident individuals and nonresi-
71 .06 Corporation business loss carry                                      dent :estates and trusts derived from rentals and
forward. (1) For calendar or, fiscal years end-                             royalties from real estate or tangible personal
ing on or after .July 31, 1976, a corporation may                           property, or from the operation of any farm,
offset against its Wisconsinn net business income                           mine or quarry, or , :from the sale of real property
                   Electronically scanned images of the published statutes.
71 . 07 INCOME AND FRANCHISE TAXES                                                                      1906

or tangible personal property shall follow the          the state The amount of such income attcibuta-
situs of the property from which derived . In-          ble to Wisconsin may be determined by an
come from personal ser vices of nonresident indi-                         d
                                                        allocation and separate accounting thereof,
viduals, including income from professions,             when the business of such corporation, nonresi-
shall follow the situs of the services . . All other-   dent individual or non r esident estate or trust
income . or- loss of nonresident individuals and        within the state is not an integral part of a
nonresident estates and trusts, including income        unitary business but the department of revenue
or loss derived from land contracts, mortgages,         may permit . an allocation and separate account-
stocks, bonds and securities or from the sale of        ing in any case in which it is satisfied that the use
similar intangible personal property, shall fol-
                  e                                     of such method will properly reflect the income
low the residence of such persons, except as            taxable by this state. In all cases in which
provided in sub . (7)                                   allocation and separate accounting is not per-
    (1m) CORPORATIONS . Income or loss from             missible, the determination shall be made in the
 business, not requiring apportionment under            following manner : for all business except finan-
 sub . (2), (3) or (5), shall follow the situs of the   cial .oiganizations and public utilities there shall
 business from which derived Income or loss             first be deducted from the total net income of the
 derived from rentals and royalties from real           taxpayer such part thereof (less related . ex-
 estate or tangible personal property, or- from the     penses, if' any) as follows the situs of the prop-
 operation of any farm, mine or quarry, or from         erty or the r esidence of ' the recipient; except that
 the sale of real property or tangible personal         in the case of ' income which follows the residence
 property shall follow the situs of the property        of the recipient, the amount of interest and
 from which derived,, except that gains or losses
             h                                          dividends deductible under this provision shall
 realized on disposals of real property or tangible     be limited to the total interest and dividends
 personal , property used in the ., production of       received which are in excess of the total interest
 business income shall follow the situs of the                                                     d
                                                        (or related expenses, i f any) paid and allowable
 business Income from personal services per-                                                         e
                                                        as a deduction under s , 71 . 04 during the income
 formed by employes of corporations, and from           year . The remaining net income shall be appor-
 patents, copyrights, trademarks, trade names,          tioned to Wisconsin by , multiplying such net
plans, specifications, blueprints, processes, tech-     income by a fraction, the numerator of which is
 niques, formulae, designs, layouts, patterns,                                                e
                                                        the sum of the property factor, the payroll factor
drawings, manuals and technical know-how                and the sales factor, and the denominator of
shall be deemed business income and shall fol-          which is the number 3 . Beginning with calendar
low the situs of the business . Gain or loss by a       year 1974, or corresponding fiscal year, and
corporation on redemption of' its own bonds shall       thereafter, in lieu of the equally weighted 3-
be deemed business income or loss and shall             factor apportionment fraction based on prop-
follow the situs of the business, and a corpora-        et ty; payroll and sales, there shall be used an
tion's bond premium or discount shall be                apportionment fraction composed of a sales fac-
deemed business loss or, income and shall follow        torrepresenting 50% of the fraction, a property
the s tus of the business .. All other income or        factor representing 25 % of the fraction and a
loss, including income or loss de r ived from land      payr oll factor representing 2S% of' the fraction .
contracts, mortgages, stocks, bonds and securi-
                                       s                   (a) 1 The property factor is a fraction, the
ties or . from the sale of similar intangible per-      numerator of which is the average value o£ the
sonal property, shall be deemed business income         taxpayer ' s real and tangible personal property
or loss and shall follow the situs of the business,     owned or rented and used in this state during the
except that such income or loss of a personal           tax period and the denominator , of which is the
holding company shall follow its residence For          average value of all the - taxpayer's real and
purposes of, this subsection, "personal holding         tangible personal property owned or rented and
company"< means "personal hold ing company"             used during the tax per rod ; Cash on hand or i n
as defined in section 542 of the i nternal revenue      the bank, shares of stock, notes, bonds, accounts
code in effect on December 31, 1974 . Interest          rece ivable; or other evidence of' indebtedness,
received on state and federal tax refunds when          special privileges, franchises, goodwill, or prop-
the tax refunded was on business income or              erty the income of which is not taxable or is
property shall, be deemed income from business          separately allocated, shall not be considered
and shall follow the situs of the business from         tangible property not, included in the
which derived .
     h                                                  apportionment,
   (2 ) Corporations, nonresident individuals              2 : Pr operty used in the production of nonap-
and nonresident estates and trusts engaged in           portionable income or, losses shall be excluded
business within and without the state shall be          from the numerator and denominator of the
taxed only on such income as is derived from            property factor Property used in the production
business transacted and property located within         of both apportionable and nonapportionable in-
                     Electronically scanned images of the published statutes.
  1907                                                      INCOME AND FRANCHISE TAXES 71 . 0 7

 come or losses shall be partially excluded from          taxpayer everywhere during the tax period . For
 the nume r ator and denominator of the property          calendar year 1979 or corresponding fiscal year,
 factor so as to exclude, as near as possible , the       and thereafter, with respect to sales oftangible
 portion of such property producing the nonap-            personal property the numerator of the sales            s
 portionable income or' loss .                            factor is the sales of the taxpayer during the tax
    3 Property owned by the taxpayer is valued            period under subd . 2 other than sales deemed to
 at its original cost . Property rented by the tax-       be in this state because the taxpayer is not within
                d
 payer is valued at 8 times the net annual rental         the jurisdiction of the destination state for in-
 Net annual rental is the annual rental paid by           come tax purposes plus 50 % of the sales deemed
 the taxpayer less any annual rental received by          to be in this state because the taxpayer is not
 the taxpayer- from sub-rentals.                          within the jurisdiction of the destination state
     4. The average value of property shall be            for income tax purposes .
 determined by averaging the values at the begin-             2 . . Sales of tangible personal property are in
 ning and ending of the tax period but the secre-         this state if: the property is delivered or shipped
 tary of revenue may require the averaging of             to a purchaser, other than the United States
 monthly values during the tax period if reason-          government, within this state regardless of the
 ably required to reflect properly the average            f .o. b . point or other conditions of' the sale ; or the
 value of the taxpayer's property                         property is shipped from an office, store , ware-
    (b) 1 . . The payroll factor is a fraction, the       house, factory or other place of storage in this
 numerator of which is the total amount paid in           state and the purchaser is the United States
 this state during the tax period by the taxpayer,       government or the taxpayer is not within the
 for compensation, and the denominator of which          jurisdiction, for income tax purposes of the
 is the total compensation paid everywhere dur-          destination state .. .
 ing the tax pe r iod                                         3 : Sales, other than sales of tangible personal
    2 Compensation related to the operation,             property, are in this state if the income-
 maintenance, pi oteetion or supervision of real or      producing activity is performed in this state . If
                    l
 tangible personal property used in the produc-          the income-producing activity is perfo r med both
 tion of nonapportionable income or losses shall         in and outside this state the sales shall be divided
 be excluded from the numerator and denomina-            between those states having jurisdiction to tax
 tor of' the pay roll factor                             such business in proportion to the direct costs of
    3 . Compensation related to the operation,           performance incurred in each such state in ren-
maintenance ; protection or supervision of real or       dering this service. Services performed in states
tangible and intangible personal property used           which do not have jurisdiction to tax the busi-
in the production of both apportionable and              ness shall be deemed to have been performed in
nonappoitionable income or losses shall be par-          the state to which compensation is allocated by
tiallyexcluded from the numerator and denomi-
nator of the payroll factor so as to exclude, as                                  l
                                                             (d) 1 , "Financial organization", as used in
                                     h
near as possible, the portion of such pay related                                               t
                                                          this section, means any bank, trust company,
to the operation, maintenance, p r otection and           savings bank, industrial bank, land bank, safe
supervision of real or tangible and intangible            deposit company, private banker, savings and
personal property used in the production of               loan association, credit union, cooperative bank,
nonappor tionable ' income :                              small loan ' company, sales finance company,
                                                               l
    4 . Compensation is paid in this state if : the      investment company, or any type of insurance
 individual's service is performed entirely within       company .
 the state ; or the individual's service is performed       2 . "Public utility", as used in this section,
 both within and without the state, but the service      means any busines s entity a) which owns or
 performed without the state is incidental to the
                                e                        operates any plant, equipment, property,
 individual's service within the state ; or some of      franchise, or license for the transmission of
the service is performed in the state and the base       communications, transportation of goods or per-
of operations or, if ' there is no base of operations,              e
                                                         sons or the production, transmission, sale, deliv-
the place from which the service is directed or          ery, or furnishing of electricity, water of~ steam ;
controlled is in the state, : or the base of opera-      and b) whose rates of charges fo r goods or
tons or , the place from which the service is            services have been established or approved by a
directed orcontt olled is not in any state in which      federal, state of, local government or governmen-
some part of the service is performed, but the           tal agency .
                                   s
individual's residence is in this state                     (e) The net business income of financial
    (c) 1 .: The sales: factor is a fraction, the        organizations; and public utilities requiring ap-
numerator of which is the total sales of the             portionment shall be apportioned pursuant to
taxpayer in this state during the tax period, and        rules of the department of revenue, but the
the denominator of which is the total sales of the       income taxed is limited to the income derived
                    Electronically scanned images of the published statutes.
 71 . 07 INCOME AND FRAN CHISE TAX ES                                                                               1908

 from business transacted and property located          cour ' t's jurisdiction . After jurisdiction is trans-
 within the state,                                      ferred, the trust shall be considered resident at
     (2m) Nonresident individuals and nonresi-          the place to which jurisdiction is transferred ..
 dent estates and trusts deriving income from a         The hearing to transfer j urisdiction shall be held
 tax-option corporation which is engaged in busi-       only after giving w r itten notice to the depart-
 ness within and without this state shall be taxed      ment of revenue under s 879 ..05 .
 only on the income of the corporation derived             2. Any other trust created by contract, decla-
 from business transacted and property located          ration of trust or implication of law shall be
 in this state and losses of the corporation deduct-    considered resident at the place where the trust
 ible by such shareholders shall be limited to          is being administered except as provided in par .
 their proportionate share of the Wisconsin loss .      (d) .
     (3) Where, in the case of any corporation,            (c) The situs of income derived by any tax-
nonresident individual or nonresident estate or         payer' as the beneficiary of` the estate of a
trust engaged in business within and without the
               d                                        decedent or of a trust estate, shall be determined
state of Wisconsin and required to appo r tion its      as if such income had been received withoutt the
income as herein provided, it shall be shown to         intervention of 'a fiduciary .
the satisfaction of the department of revenue,             (d) With respect to taxable years beginning
that the use o f any one of the 3 ratios above          after December 31, 1972, the situs of income
provided for gives an unreasonable or inequita-         received by a trustee, which income, under the
ble final average ratio because of the fact that        internal revenue code, is taxable to the grantor
such corporation, nonresident individual or non-        of the trust or to any person other than the trust,
resident estate or trust does not employ, to any        shall be determined as if such income had been
appreciable extent in its trade or business in          actually received directly by such grantor or
producing the income taxed, the factors made            such other person, without the intervention of
use of in obtaining such ratio, this ratio may,         the trust.
                                                           History: 1971 c 1 25 ; 1973 c. 90, 110; 1975 c.. 39, 189, 224 ;
with the approval of ` the department of revenue,       1979 c. 1, 34.
be omitted in obtaining the final average ratio             In (2) the phrase "total interest and dividends" means all
which is to be applied to the remaining net             interest and dividends received whether or not apportionable .
                                                        Transamerica Financial Corp . v Dept of Revenue. 56 W
income .                                                (2a ) 57,201 NW (2 a ) 552 .
     (5) If the income of any such corporation,            Globe-Union test applied to 7107 (2), Stars 1969 .
                                                        American Motors Corp . v .. Dept . of Revenue, 64 W (2d) 337,
 nonresident individual or nonresident estate or        219 NW (2d) 300 :. .
 trust properly assignable to the state of Wiscon-         A loss incurred by a Wisconsin resident as a result of inter-
                                                        est as a limited partner in a New York limited partnership is
 sin cannot be ascertained with reasonable cer-         allowable for the purpose of determining : personal income
 tainty by either of the foregoing methods, then        taxes under (1), Stats . 1969 Sweitzer v . Dept of Revenue,
 the same shalll be apportioned and allocated           65 W (2d) 235, 222 NW (2d)' 662
                                                           Apportionment of income of multistate corporation dis-
 under' such rules as the department of revenue         cussed Depa r tment of Revenue v . Exxon Corp. . 90 W (2d)
 may prescribe „                                        700,281 NW (2d) 94 (1979) .
                                                           Apportionment under 71:07 (1), 1967 stats ; of income
    (6) Liability to taxation for income which          from rental and sale of tangible personal property discussed .
 follows the residence of' the recipient, in the case   Kearney & Trecker Corp. v . Dept , of Revenue, 91 W (2d)
                                                        746, 284 NW (2d) 61 (19 79) .
of persons other than corporations, who move               Apportioning interstate corporation's income for state in-
into or out of the state within the year, shall be      come tax purposes discussed . Moorman Mfg Co v, . Bair, 437
                                                        US 267 (1978) ,
determined for such year on the basis of the               Apportionment of corporate income to the states for tax
income received (or accrued, if on the accrual          purposes, 61 MLR : 480 ,
basis) during the portion of the ";year that any
such .h person was a resident of Wisconsin . The                                           x
                                                        71 .08 Fiduciaries . . (1) The tax imposed by
net income of such person assignable to the state       this chapter on individuals shall apply to the
for-, such year shall be used in determining the        Wisconsin taxable income of estates or trusts
income subject to assessment under this chapter .       and shall be paid by the fiduciary ,
    (7) For purposes of determining the situs of           (2) The income of a trust distributable or
income under this section :                             distributed to a nonresident beneficiary shall be
    (a) The estate of a decedent shall be consid-       assessed as the income of other nonresidents is
ered resident at the domicile of the decedent at        assessed ., No personal exemptions shall be al-
the time of his death „
                 s                                      lowed in assessing - the income of such nonresi-
    (b) 1 ..A trust created by a decedent at death      dent beneficiary unless he makes a complete
by will, contract; declaration of trust or implica-     return under this chapter,
                                                                     r
tion of law shall be considered resident at the            (3) The. Wisconsin modifications applicable
domicile of the decedent at the time of the             to the Wisconsin taxable income o r Wisconsin
decedent's death until transferred by the court
                   h                                    adjusted gross income of estates, trusts and
having j urisdiction under s . 72 .27 to another'       beneficiaries thereof with respect to income
                     Electronically scanned images of the published statutes.
  1909                                                     INCOME AND FRANCHISE TAXE S 71 . 08

 derived from such estates or trusts shall be                 (6) (a) An executor, administrator, personal
 computed and allocated as follows :                     representative or, trustee applying to a court
    (a) A modification or portion ther'eof' which       having Jurisdiction for' a discharge of his trust
 relates to an item of income, gain, loss or deduc-     and a final settlement of his accounts, before his
 tion which affects the computation of ' the federal    application is granted, shall file with the
 distributable net income of the estate or trust for    department :
 the current year shall be apportioned among and             1 . Returns of' income received by the de-
 taken into account by the fiduciary and the            ceased, any previous guardian, executor, admin-
 beneficiary or beneficiaries in the same propor-       istrator-, personal representative or, trustee, dur-
 tion that the item to which it relates is co nsid-     ing each of the years open to assessment under ' s ..
 ered as distributed among them for- federal            71 .. 11 . (21 ), if such returns had not the r etofore
 income tax purposes . .                                been filed, including a return of income for the
    (b) Any remaining modifications or portions         year of death to the date of death ; and
 thereof shall be taken into account by the                 2 . Returns of income `received du r ing the
 fiduciary . ;                                          period of his administration or trust except for
    (c) If an additional assessment is made             the final income tax year, of the estate or trust ;
 against the fiduciary or, any beneficiary as a         and
 result of correct i on of an erroneous allocation of       3 . Gift tax returns or reports, sales and use tax
 the modifications applicable to the the income of      returns, and withholding returns or reports
 an estate or, trust, any overpayment resulting
            e                                           which were required to be filed, if ' not thereto-
 from consistent application of such correction to      fore filed .
 all other ' taxpayers interested in such estate or,                 n
                                                            (b) Upon receipt of such returns, the depart-
 trust shall be refunded notwithstanding any rule        ment shall immediately determine the amount
 of law .w which would otherwise bar such refund,        of taxes including interest, penalties and costs to
       (4) A personal exemption for' the decedent        be payable, as well as any delinquent income,
 under ' s ., 71,09 (6p) shall not be allowed the        withholding, sales, use and gift taxes, penalties,
 executor or, administrator-, except against the         interest and costs due, and shall certify such
 tax on income of the decedent in the year of           amounts to the court , The court shall thereupon
 death . If' the decedent would have been entitled      enter an order, directing the executor, adminis-
 to an exemption for the decedent 's spouse or a        trator, personal representative or, trustee to pay
 dependent under' s : 71 ..09 (6p), had the decedent    the amounts found to be due by the department
 lived, . such exemption shall be allowed to the        and take its receipt thecef 'or . The receipt shall
 executor or, administrator, so long as over one-       be evidence of the payment and shall be filed
 half of the support of the spouse or dependent is      with the court before a final distribution of the
 supplied by the decedent or by the executor , or       estate of trust is ordered and the executor,
 administrator' from the decedent's estate and the      administrator, personal representative or, trustee
 gross income of the spouse or - dependent for, the     is discharged . . . The filing of such receipt shall in
 calendar ,year .r in which the taxable year of the     no manner affect the obligation of ' the executor ' ,
 executor, or administrator begins is less than         administrator, personal representative or, trustee
 $500 „ If the decedent was a married person at         to file income, sales and withholding returns
 the date of death and if in any year , subsequent      covering transactions r eportable during the final
        e
 to the year' of death the decedent's surviving         income year of the estate of trust and to pay
 spouse is a head of family within the meaning of       income, sales, use and withholding taxes, penal-
 s . 71,09 (6p), and such surviving spouse does         ties, interest and costs due as the result of such
           e
 not take a head of family exemption on the             transactions
 individual`i etutn, the head of family exemption           (7) Any income, withholding, sales, use or
 may be taken on the .return of the executor or,        gift taxes, penalties, interest and costs found to
administrator of',the decedent's estate.:
                                   s                    be due from a decedent, an estate or a trust for
      (5) All income taxes levied against the in-       any of the years open to assessment under s ..
come of bene ficiaries shall be a lien on that          71,11 (21) and any delinquent income, with-
portion of the trust estate or , interest therein       holding, sales,, use or- gift taxes, penalties, inter-
from which the income taxed is derived , and            est and costs found to be due shall be assessed
such taxes shall be paid by the fiduciary, if not       against and paid by the executor, administrator ,
paid by the distributee, before the same becomes        personal representative or trustee ; any of such
delinquent . Every person who as a fiduciary            items found to be due after the executor, admin-
under the provisions of this chapter pays an            istrator, personal representative or trustee is
income tax, shall have all the rights and reme-         discharged shall be assessed against and pa id by
dies of reimbursement for any taxes assessed            the beneficiaries in the same ratio that their
against him or paid by him in such capacity, as is      interest in the estate or trust bears to the total
provided in s. 70 , 19 (1) and (2) .                    estate or trust . .
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71 . 08 INCOME AND FRANCHISE TAXES                                                                                    1 910

   (8) Returns of income required to be made                             (c ) On all taxable income exceeding $6,000
by sub .. (6) may be dispensed with by order of                       but not exceeding $9,000, 7% .
the court having jurisdiction in cases where it is                       (d) On all taxable income exceeding $9,000
clearly evident to the court that no income tax is                    but not exceeding $12,000, 8 . 2%
due or to become due from the trust or estate . .                        (e) On all taxable income exceeding $12,000
   (9) Trusts exempt from federal income tax                          but not exceeding $15,000, 8 ,'7 %
pursuant to subtitle A, chapter I, subchapter F                          (f) On all taxable income exceeding $15,000
of the internal revenue code shall to the same                        but not exceeding $20 , 000, 9 1 % ..
extent be exempt from taxation under this                                (g) On all taxable income exceeding
chapter                                                               $20,000, but not exceeding $40,000, 9 .5 %
  History: 1973 c . 12, 243 ; 1975 c . 94 s . 91 (5) ; 1975 c 199 ;
1977 c 142; 1979 c 174: s . 16                                           (h) On all taxable income exceeding
                                                                      $40,000, 10 % . .
71 .09 Rates of taxation, interest and per-                                                                  r
                                                                          (2) Commencing with calendar year 1980
sonal exemptions. (1) The tax to be assessed,                         and corresponding fiscal years and thereafter,
levied and collected upon taxable incomes of all                      the dollar amounts in sub .. (lb) shall be changed
persons other than corporations for the calendar                      to reflect the percentage change between the
years 1972 to 1978 and corresponding fiscal                           U : S, consumer price index for all urban consum-
years shall be computed at the following rates :                      ers, U . S .-city average, for the month of June of
   (a) On the first $1,000 of taxable income or                       the current year and the U . S consumer price
any part . thereof, at the rate of .3 . 1 % .
        t                                                             index for all urban consumers, U S , city aver-
    (b) On the second : $1,000 or any part thereof,                   age, for the month of June of the previous year,
 34% „                                                                as determined by the U S department of labor,
        (c) On the third $1,000 or any part thereof,                  but in no case shall the amounts be increased by
 3 ., 6 % .                                                           more than 10% The revised amounts shall be
                                                                      rounded to the nearest whole numbe r divisible
        (d) On the fourth $1,000 or, any part thereof ',
                                                                      by 100, and in no case shall be reduced below the
 4 .8% .
                                                                      amounts appearing in sub (lb) on February 28,
       (e) On the fifth $1,000 or any part thereof,
                                                                      1979,. The depa r tment oft svenue shall annually
 54% . :
                                                                      adopt by rule any changes in dollar amounts
       (f) On the sixth $1,000 or any part thereof',
                                                                      required under this subsection, and incorporate
 5 : 9% .
                                                                      them in the income tax forms and instructions .
       (g) On the seventh $1,000 or, any part
 thereof',. 6 . 5 %, .                                                     (2g) The taxes to be assessed, levied and
                                                                      collected upon taxable incomes of corporations
       (h) On the eighth $1,000 of any part thereof,
                                                                      for the calendar year 1972 and corresponding
 7 .. 6 :% . .
                                                                      f iscal years and for calendar and fiscal year s
       (i) On the ninth $1 . ,000 or any part thereof',
                                                                      thereafter shall ; be computed at the following
8 2% ..                                                               rates :
       (j) On the tenth $1,000 or any part thereof,
                                                                           (a) On the first $1,000 of taxable income or
8 ;8 % ,                                                              any part thereof, 2 . 3% :
       (k) On the eleventh $1,000 or any part
                                                                           (b) On the second $1,000 of any part thereof,
thereof; 9 3 % . ,
                                                                      18%
       (1) On the twelfth $1,000 or any part thereof ',
                                                                           (c) On the third $1 ;000 or any part thereof,
9 .. 9 % .
       (m) On the thirteenth $1,000 or any part                       3 .4%,
thereof , 10.. 5 % .                                                       (d) On the fourth $1 , 000 or any part thereof',
                                                                         :
                                                                      45%,
       (n) On the fourteenth $1,000 or any part
thereof', 1 L. 1 % .                                                       (e) On the fifth $1,000 o f any part thereof,
       (o) On all taxable income in excess of'                        5 ,6% ,
$14,000, 11 4% :                                                           (f) On the sixth $1,000 or any part thereof,
       (1b) The tax to be assessed, levied and                        6,8% .
collected upon taxable incomes of all persons                              (g) On all taxable income in excess of $6,000,
other than corporations for the calendar year                            .
                                                                      79% .
1979 and corresponding f iscal years and for,                              (2m) The corporation franchise tax imposed
                                                                                     e
calendar and fiscal years thereafter shall be                         under s 71 .,; 01 (2) and measured by net income
computed at the following rates :                                     of the calenda r ,year, 1972 and correspond ing
       (a) ' On all taxable income from $0 to $3,000,                                                             s
                                                                      fiscal years and calendar and fiscal years there-
                                                                                       d
3 .4% .                                                               after, shall be computed at the following rates :
      (b) ' On all taxable income exceeding $3,000                         (a) For the first $1,000 of net income or any
but not exceeding $6,000, 52% .                                       part thereof, 2 .3% .
                     Electronically scanned images of the published statutes.
 1911                                                         INCOME AND FRANCHISE TA X ES 71 . 09

        (b) For the second $.1,000 or any part
                r                       0                   amount of taxes due or the amount of taxes to be
 thereof ", 2 8% .                                          refunded .
        (c) For the third $1, ,000 or, any part thereof,       (5) (a) In assessing taxes interest shall be
 3 . . 4% . .                                               added to such taxes at 9% per year from the
        (d) For the fourth $1,000 or any part thereof,         e
                                                            date on which such taxes if originally assessed
 4 . . 5% .                                                 would have become delinquent if unpaid, to the
        (e) For the fifth $1,000 or any part thereof ',     date on which such taxes when subsequently
 5 ., 6% .                                                  assessed will become delinquent i f unpaid ..
        (f) For the sixth $1,000 or any part thereof ',
                                                                (b) Except as otherwise specifically pro-
 6,:8 % .                                                   vided, in crediting overpayments of income and
        (g) For all net income in excess of $6,000,         surtaxes against underpayments or against taxes
 7 .9%,                                                     to be subsequently collected and in certifying
    (3) The secretary ofrevenue shall prepare a             refunds of such taxes interest shall be added at
table from which the tax in effect on taxable               the rate of 9%' per year from the date on which
personal , income up to $10,000 shall be deter-             such taxes when assessed would have become
mined . Such table shall be published in the                delinquent if' unpaid to the date on which such
department's appropriate instructional book-                overpayment was certified on the refund rolls
lets The form and the tax computations of the               except that if any overpayment of ' tax is certified
table shall be substantially as follows :                   on a refund roll within 90 days af 'ter'- the last date
   (a) The title thereof shall be "Tax Table" .             prescribed for filing the return of' such tax or 90
   (b) The first 2 , columns shall contain the              days after, the date of actual fi ling of the r eturn
minimum and the. maximum amounts, respec-                   of' such tax, whichever occurs later, no interest
tively ; of taxable income in brackets of not more          shall be allowed on such overpayment . For- pur-
than $100, Computation of' tax on taxable                   poses of this section the return of such tax shall
income of $ 10,000 and over may be set forth at             not be deemed actually filed by an employe
the foot of such table .,                                   unless and until the employe has included the
    (c) The 3zd column shall show the amount of             written statement required to be filed under- s
the tax payable for each bracket before the                 71 .10 (8), However when any part of a tax paid
allowance of any deduction for personal exemp-             on an estimate of income, whether - paid in con-
tions or exemptions f "or, dependents . . The tax           nection with a tentative return or not, is re-
shall be computed at the rates in effect, which            funded or credited to a taxpayer, such refund or
rates shall . be applied to the amount of income at        credit shall not draw interest . .
the middle of each bracket .. . . The amount oftax
for- each bracket shall be computed only to the                 (6p) On income of the calendar year 1974
nearest, l0 cents                                          and corresponding fiscal years and thereafter,
 11 (4) (a) Commencing with the calendar year
                               h                           there may be deducted from the tax after it has
 1965 and with fiscal years ending after Decem-            been computed according to the rates of this
ber 31., 1965, natural persons whose total in-             section, personal exemptions for natural persons
                                                           as follows :
come, is not in excess of $10,000 and consists
entirely of wages subject to withholding for                  (a) An exemption of $20 f 'or the taxpayer and
Wisconsin tax purposes and not more than $200              an additional exemption of $20 for- the spouse of "
total of" dividends, interest and other , wages not        the taxpayer, to the extent such exemption is not
subject to Wisconsin withholding, and who have             used as a deduction on the separate tax of the
elected - the Wisconsin standard - deduction and           spouse, and provided the spouse is not the depen-
have not claimed either the credit for homestead           dent of another taxpayer ; but for each taxpayer
property tax relief or, deductions for expenses            and also for the spouse of a married : taxpayer
incurred in earning such income, shall, at their           who has reached the age of 65 prior to the close
election ; not be required to recordon their               of the calendar : or fiscal year, the exemption
income tax returns the amount of the tax im-               shall be $25 .. The determination of whether an
posed on their,` Wisconsin taxable income . . Mar-         individual is married shall be made as of the
riedpersons shall be permitted this election only          close of the taxable year, unless the spouse dies
if the combined income of the husband and wife                                 e
                                                           during the taxable year, in which case such
does not exceed $10,000, if both report their              determination shall be made as of the time of
incomes on the same combined income tax re-
                                 d                         death .. An individual separated from his spouse
turn, form, and if both make this election : :             under a decree of divorce or sepa r ate mainte-
   (b) . The - tax . on income reported by persons         nance shall not be considered married .
making : the election under ' par (a) shall be                (b) An exemption of $20 f"or, each person for
computed .d by the department of reuenue . After-          whom the taxpayer is entitled to an exemption
applying : all known applicable : credits, the de-         for the taxable year, unde r section 151 (e) of the
partment .shall notify the taxpayer by mail ofthe          federal internal revenue code .
                  Electronically scanned images of the published statutes.
 71 .09 INCOME AND FRANCH IS E TAXE S                                                                 1912

    (c) An additional exemption of $20 for a                                       d
                                                       other relief in kind supplied by a governmental
 head of family . In this parag r aph, a "head of      agency.
 family" means a taxpayer, deemed not mar r ied           2 "Household" mean s a claimant and an
 for purposes of par (a), who maintained a             individual related to the claimant as husband or
 household and supported therein himself and at        wife . .
 least one other individual with respect to whom         3 . "Household income" means all income
 the taxpayer was entitled to an exemption under      received by all persons of a household in a
 Par . . ( b) . .                                     calendar year while members of the household .
   (d) Beginning with the calendar year 1975   .         4 : "Homestead" means the dwelling, whether
   d               g
and corresponding fiscal years and thereafter,        owned or rented, and so much of the land
the deduction for personal exemptions provided        surroundi ng it, not exceeding one acre, as is
for in this subsection shall be limited as follows:   reasonably necessary for use of the dwelling as a
   1 With respect to persons who change their         home, and may consist of 'a part of a multidwell-
domicile into or from this state during the           ing or multipurpose building and a part of the
taxable ,year, personal exemptions shall be lim-      land upon which it is built . . ("Owned" includes a
ited to such fr action of the amount so deter-        vendee in possession under a land contract and
mined that the time of domicile within this state     of one or more joint tenants or tenants in com-
is of the total time during the taxable year, but     mon) It does not include personal property such
the total deduction for all personal exemptions       as furniture, furnishings or appliances, but a
shall not be less than $5 .                           mobile home may be a homestead ., ,
   2 With respect to nonresident persons, per-           5 . "Claimant" means a person who has filed a
sonal exemptions shall be limited to such frac-       claim under this subsection and who was domi-
                                  d
tion of the amount so determined as Wisconsin         ciled in this state during the enti r e calendar year
adjusted gross income is of federal adjusted          preceding the year in which the person files
gross income ; except that for married persons        claim for credit : under this subsection . When 2
personal exemptions shall be limited to such          individuals of a household are able to meet the
fraction of the amount so determined as com-          qualifications for a claimant, they may deter-
bined' Wisconsin adjusted gross income is of          mine between them as to who the claimant shall
combined federal adjusted gross income, but the       be, If they are unable to agree, the matter shall
total deduction for all personal exemptions shall     be referred to the secretary of revenue and the
not be less than $5                                   secretary's decision shall be f inal .
   (7 ) H OMESTEAD CREDI T, The purpose Of t his         6 . "Rent constituting property taxes accrued"
subsection is to provide credit to certain persons    means 25 % of' the gross rent actually paid in
who own or rent their homestead, through a            cash or its equivalent in 1964 or any subsequent
system of income tax credits and refunds, and         calendar year by a claimant and his household
appropriations from the gene r al fund .              solely for the right of occupancy of their Wis-
   (a) Defrriltlons, As used in this subsection,      consin homestead in such calendar year , and
unless the context clearly indicates otherwise :                                  e
                                                      which rent constitutes the basis, in the suc-
   1 . "Income" means the sum of adjusted gross       ceeding calendar year' of a claim for relie f under
income as defined in s . 71 02 (2) (e), mainte-       this section by such claimant
nance payments, support money, cash public               7 "Gross rent" means rental paid at arm's
assistance and relief (not including credit           length, solely for,the right of occupancy of a
granted' under this subsection), the gross
                 r                                    homestead, exclusive of " charges for any utilities,
amount of any pension or annuity (including           services, f'uinitui e ; furnishings or personal prop-
railroad retirement benefits, all payments re-        erty appliances furnished by the landlord as a
ceived under the federal social security act and      part of the rental agreement, whethe r expressly
veterans disability pensions) ; nontaxable inter-     set out in the rental agreement or not . In any
                                                                              l
est received from the federal government or any       case in which the landlord and tenant have not
of its instrumentalities, worker's compensation,      dealt with each other at arm's length and the
unemployment compensation, the gross amount           department is satisfied that the gross rent
of "loss of time" insurance and compensation          charged was excessive, the department may
and other cash benefits received from the United      adjust such gross rent to a reasonable amount
States for past or present service in the armed                                s
                                                      for- purposes of this subsection . "Gross rent"
foc •ces; and scholarship and fellowship gifts or     includes thespace rental paid to a landlord for
income, all regardless of the fact that they may      parking of a mobile home, exclusive of any
be excluded f rom adjusted gross income as de-        charges for utilities, services, furniture and fur-
fined in s71,02 (2) (e) . "`Income" does not          nishings or personal appl i ances furnished by the
include gifts from natural persons, cash reim-        landlord as a part of' the space rental . Twenty-
bui•semenfpayments made under title XX of the         five per cent of ' such annual gross rental plus the
federal social security act, or surplus food or       monthly ' parking permit fees paid during the
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 19'13                            INCOME AND FRAN CHISE TAXES 71 .09

 year shall 'be the annual "property taxes thereof shall be disbursed to another member ' of
 accr'ued' ''.,                                         the household as determined by the secretary of
      8 . . "Property taxes accrued" means property revenue If the claimant was the only member of
 taxes, exclusive of special assessments, delin- his household, the claim may be paid to his
 quent interest and charges for service, levied on executor or administrator, but i f neither is ap-
 a claimant's homestead in 1964 or any calendar pointed and qualif ied within 2 years of the filing
 year thereafter under ch . 70, less the tax credit, of the claim, the amount of the claim shall
 if any, afforded in respect of such property by s escheat to the state .
 79 . 10 (3), If a homestead is owned by 2 or more         (c) Subject to the limitations provided in this
 persons or entities as joint tenants or tenants in subsection, a claimant may claim as a credit
 common and one or more such persons or enti- against : Wisconsin income taxes otherwise due,
 ties is not a member of claimant's household, Wisconsin property taxes accrued, or t ent con-
 "property taxes accrued" is that part of property stituting property taxes accrued, or both . . If the
 taxes levied on such homestead . (reduced by the allowable amount of claim exceeds the income
 tax credit under s . 79 .: 10 (3)) as reflects the taxes otherwise due on claimant's income or if
 ownership percentage of the claimant and the the r e are no Wisconsin income taxes due on
claimant's household . . For purposes of this clai mant's : income, the amount of the claim not
 paragraph property taxes are "levied" when the used as an offset against income taxes shall be
 tax roll is delivered to the local treasurer with certif i ed to the department of administration for
 the warrant for collection . If ' a homestead is sold payment to the claimant by check drawn on the
during the calendar year of the levy the "prop- general fund .. No such check and no offset
 ec;ty taxes accrued" for the seller and buyer shall against income taxes otherwise payable, or re-
be the amount of the tax levy prorated to each in fund of income taxes paid in respect of any such
the closing agreement pertaining to the sale of claim shall be charged against any town, city,
the homestead oi, if not so pr ovided for in the village or county in the distribution of income
closing agreement, the tax levy shall be prorated taxes under this chapter . : No interest shall be
between seller and buyer in proportion to allowed on any payment made to a claimant
months of their respective ownership, provided pursuant to this subsection ,
                                                                t
that the seller and buyer occupy the homestead            (dm) No claim with respect to property taxes
during fhe periods of' their respective ownership . accrued or rent constituting property taxes ac-
If a household owns and occupies 2 or more cruel shall be allowed or paid unless such claim
                                     r
homesteads in the same calendar year "property is filed with the department of revenue on or
taxes accrued" shall be the sum of the prorated before Decembe r 31 of the ,year, following the
taxes attributable to the household for each of year for which the claim is filed,
such homesteads. If the household owns and (e) The amount of any claim otherwise pay
                                                                                  n
occupies the homestead for part of the calendar able under this subsection may be applied by the
year and rents a homestead for part of the department of revenue against any liability out-
calendar year, it may include both the proration standing on the books of the department against
of taxes on the homestead owned and " t ent claimant, or against any other individual who
                                                                                         d
constituting property taxes accrued" with re- was a membe r of his household in the year to
spect to the months the homestead is rented, in which the claim relatess
computing the amount of the claim under pa t s .         (f) Only one claimant per household per, year
 (gn) to (gp)If~ a homestead is an integral part      shall be entitled to credit under this subsection .,
of a larger , unit such as a farm, or a multipurpose (gn) The amount of any claim filed in 1976
of mult dwelling building, - property taxes ac-       and 1977 and based upon property taxes ac-
cruel shall be that percentage of the total prop- ' cruel or rent constituting property taxes ac-
eity taxes accrued as the value of the homestead cruel in 1975 and 1976, respectively, shall be
is of the total value, except that the claimant       limited as follows:
may use the total property taxes accrued for the 1 . If the household income of the claimant's
larger unit, but not exceeding 120 acres of land, household was $3,'750 or, less in the year to which
except as the limitations of par .: (h) apply . For the claim relates, the claim shall be limited to
claims for 1967 and subsequent years,, monthly 80 % of the property taxes accrued, or cent
parking permit fees collected ; under s . 66,058 constituting property taxes accrued, or both, in
 (3) (c) shall be cons idered property taxes ,        such year on the claimant's homestead .
  ` (b) The right to fi le claim under this` subsec- 2 . If the household income of the claimant ' s
tion shall be personal to the claimant and shall household was more than $3,750 in the year- to
not survive his death, but such right may be which the claim relates, the claim shalll be
exercised on behalf of a claimant by his legal limited to 80 % of the amount by which the
guardian or attorney in fact Whence claimant property taxes accrued, or rent constituting
dies after having filed a timely claim the amount property taxes accrued, or both, in such year on
                    Electronically scanned images of the published statutes.
  71 .09 INCOME AND FRANCHISE TA X ES                                                                     1914

   the claimant's : homestead is in excess of 14 . 3         clued, or both, in respect of ' any one household
   of household income exceeding $ .3, '150 ..               exceeds the following, the amount thereof shall,
        3 . No credit shall be allowed if household          for purposes of this subsection, be deemed to
   income of' a claimant exceeds $7,500 .                    have been the following :
        (go) The amount of any claim filed in 1978               1 . In calendar year 1975 or 1976, $535 . .
   or 1979 and based upon property taxes accrued                 2 . In calendar year 1977 or 1978, $800 . .
  or rent constituting property taxes accrued in                 3 . In calendar year 1979, or any subsequent
   1977 or 1978, respectively, shall be limited : as         calendar' year, $1,000
  follows :
                                                                 (hm) If the amount of' a qualified claimant's
       1 , If the household income was $4,000 or less
                                                             claim is more than zero but less than $10 the
  in the year' to which the claim relates, the claim
                                                             amount of credit paid or c r edited shall be $10 .
  shall be limited to 80% of the property taxes
 accr ued, of rent constituting property taxes ac-               (i) In administering this subsection, the de-
                                                             partment of revenue shall make available suit-
  crued, or both, in the year on the - claimant's
  homestead ..                                              able forms with instructions for claimants, in-
      2 . 1f ' the household income was more than           cluding a- form which may be included with or a
                                                                                              e
                                                            part of the individual income tax blank ., In
  $4,000 in the year, to which the claim relates, the
                                                            preparing homestead credit forms for the tax
  claim shall be limited to 80% of the amount by
  which the property taxes accrued, orient consti-          able year 1977 and thereafter, the department of
                                                            revenue shall provide a space for identification
  tuting property taxes accrued, or both, in such
                                                            of the county and city, village or town in which
  year on the claimant's homestead is in excess of
                                                            the claimant resides .
  I5% of household , income exceeding $4,000 .. .
      3 . No credit may be allowed if the household             (im) At the end of each fiscal year, the
  income of a claimant exceeds $9,300 ,                                                    l
                                                            department of revenue shall review the home-
      (gp) The amount of any claim filed in 1980            stead tax credit program and may propose legis-
 and based upon property taxes accrued or rent             lation to adjust the amounts of claims allowable
 constituting property taxes accrued in 1979, or            under- the program, taking into account findings
 claims filed in later calendar- years based upon           that social security benefits and the cost of
 property taxes accrued or rent constituting                living, as reflected in the index computed by the
 property taxes accrued in the preceding calen-                           u
                                                            US bureau of labor statistics, have increased or
 dar year shall be limited as follows :                    decreased .
     1 . If the householdincome was $5,000 or, less             (j) Every claimant under this subsection
 in the year to which the claim relates, the claim         shall supply to the department, in support of his
 shall be limited to 80% of the property taxes             claim, reasonable proof ' of` age, rent paid, prop-
 accrued, of rent ' constituting property taxes ac-        erty taxes accrued, changes of homestead,
 crued, or both; in the year', on the claimant's           household membership, household income, .: size
 homestead .                                               and nature of property claimed as the home-
       2 If the household income was more than             stead and a statement that the property taxes
    $5,000 in the year, to which the claim relates, the    accrued used for purposes of this section have
    claim shall be limited to 80% of ' the amount by       been or will be paid by him and that there are no
    which the property taxes accrued, or, rent consti-     delinquent property taxes on the homestead ,
    tuting-property taxes accrued, or both, in such            (m) In any case in which a homestead is
' .,year, on the claimant's homestead is in excess of      rented by a person- from another pe r son under
   one-ninth of household income exceeding
                                        e                  circumstances deemed by the department of
   $5,000.:                                                revenue to be not at arm's length, it may, with
    3 No credit may be allowed if the household            the aid of its property tax div ision, determine
 income of a claimant' exceeds $14,000 ..                  rent constituting property taxes , accrued as at
  ' (gz) 1 : The secretary of revenue shall pre-          arm's length, and, fo r purposes of this section,
 pare a table under which claims under ' this                   h
                                                          such determination shall,. be final .
 subsection shall be determined The table shall                (p) Property: taxes accrued orient constitut-
 be published in the department's instructional           ing property taxes accrued shall be reduced by
 booklets :.                                              one-twelfth for each month or portion of a
    2. The claimant shall, at the claimant's elec-        month for which the claimant received general
                                                                                                    d
tion, not be required to record on the claim the          relief f 'iom any municipality or, county equal to
amount claimed , The claim allowable to per-              or in excess of $400, or received assistance under
sons making this election shall be computed by            s 49.19, except assistance received :
the department which shall notify the claimant               1 , Under s 4919 (10) (a) _
by mail of the amount of the allowable claim                 2 . As a relative, other than a parent, with
    (h) In any case in which property taxes               whom any dependent child is living, if the assist-
accrued, or- rent constituting property taxes ac-         ance does not include aid to meet the needs of
                    Electronically scanned images of the published statutes.
  1915                                                    INCOME AND FRANCHISE TAXES 71 . 09

                t
 the -.claimant or the claimant's spouse or              and may from time to time cor rect its
 children.                                               computations . .
    (q) A claim shall be disallowed if the depart-          (b) If in calendar year 1976 or thereafter- a
 ment finds that the claimant received title to his      resident individual, estate or trust pays a net
 homestead primarily for the purpose of ' receiv-        income tax to another state upon income from
 ing benefits under this subsection ..                   business conducted in such state or upon income
    (r) No claim for credit under this subsection        from rentals and royalties from real estate or
 may be allowed to any claimant who was under            tangible personal property or from the operation
  18 years of age at the close of' the year the         of any farm, mine or quarry, or from the sale of
 property taxes were levied or rents were paid . .      real or tangible per sonal property located in
    (s) No claim f'or, credit under this subsection     such state, in calendar years 1975 to 1977 or
 may , be allowed to any claimant who was
                            y                           corresponding fiscal years, such resident indi-
 claimed as a dependent for federal income tax          vidual, estate or trust may credit the net tax paid
 purposes by another per son during the year the        to such other state on such income against the
                                                                        r
 taxes in question were levied or rents were paid       net income tax other-wise payable to this state on
 but this limitation shall not apply if the claimant    income of the same year ., The credit shall not be
 was 62 years of age or older at the close of the       allowed if such income was not considered in-
 year the claimed property taxes or rent consti-        come f'or' . Wisconsin tax purposes . . The cr edit
 tuting property taxes accrued .                        shall not be allowed unless claimed within the
    (t) No claim for credit under this section may      time provided in s . 71 . 10 (10) (bn) but s 7 L 10
 be allowed to any claimant who :                       (10) (d) does not apply to such credits . For
    1 . Resided for the entire calendar year to         purposes of this section amounts declared and
 which the claim relates in housing which was           paid pursuant to the income tax law of another
                                                                                               w
 exempt from taxation under ch 70, except hous-         state shall : be deemed a net income tax paid to
 ing fo r which payments in lieu of' taxes are made     such other state only in the year in which the
 under s 66 .40 (22) . If the claimant lived in         income tax return for such state was required to
 housing which was subject to taxation under ch .       be filed .
 70 for- any part of the calendar ,year, to which the        (c) If in calendar year 1979 or thereafter a
 claim relates, the property taxes accrued or rent      resident individual, estate or trust pays a net
 constituting property' taxes accrued ; - or both,      income tax to another state upon income taxable
 shall be based on the period dur ing which such        by such state f 'or calendar year 1978 or corre-
 housing constituted the claimant's homestead ..        sponding fiscal year or thereafter, such resident
   2 .: Resides in a nursing home and receives          individual, estate or trust may credit the net tax
assistance under S 49 : 45 at the time of filing .      paid to such other ' state on such income against
   (u) No lessor may charge a fee for supplying         the , net income tax otherwise payable to this
a claimant with the information necessary f 'or,        state on income of the same year The credit
the claimant to comply with par . . . (j),              shall not be allowed unless the income taxed by
       (8) ' (a) If in calendar year 1962 or there-     the other state is also considered income for
                                                           e                      o
  after- , a natural person domiciled in this state     Wisconsin tax purposes . The credit shall not be
  pays a net income tax to another state upon           allowed unless claimed within thetime provided
  income derived from the performance of per-           in s . 71 . 10 (10) (bn) buts ., 71 . 10 , (10) (d) does
  sonal services : outside Wisconsin in calendar        not apply to such czedits . For purposes of this
  years 1961 to 1977 or corresponding fiscal            section amounts declared and paid pursuant to
  years, such person may credit the tax paid to         the income tax law of another : state shall be
  such other, state on such income against the net      deemed a net income tax paid to such other state
  income tax otherwise payable to this state on         only in the year in which the income tax return
  income of the year, in `which such personal           for- such state was required to be filed .
  services wer e performed.. No such credit shall be        (d) In this subsection "state" includes the
  allowed unless claimed within the time provided       District of Columbia, - but does not include the
  ins 71 : 10 (10) (bn) buts . 7110 (10) (d) shall      commonwealth of Puerto Rico or the several
  not apply to such credits . Fo r purposes of this     territories organized by Congress .
  section, amounts withheld from wages or, de-              (9) In the case of married persons filing a
  clared and paid pursuant to the income tax law        joint return all or part of the amount of tax
  of• another state shall be deemed a net income        credits of one spouse in excess of the amount of
- tax paid to such other ' state only in the year, in   tax computed on the return as payable by such
  which the income tax return for such state was        spouse may be credited to the tax liability on
  required to be filed.: The department of't evenue     such return of ' the other: spouse .. This subsection
  shall compute the r evenue loss to the state,         applies only to couples who at e married at the
 county and various tax districts resulting from                                            d
                                                        close of their taxable year and at the time of
  the tax credits granted under this subsection,        filing their returns and have no action for di-
                    Electronically scanned images of the published statutes.
  71 .09 . INCOME AND FRANCHISE TAXES                                                                        1916

 voice or for legal separation pending between               close of' the income year' for which a credit under
 them at the time of filing their returns .                  this subsection is claimed which farmland, dur-
    (10) In the case of any overpayment, the                 ing that year, produced not less than $6,000 in
 department of` revenue, - within the applicable             gross farm profits resulting from the farmland's
 period of limitations, may credit the amount of             agriculturall use, as defined in s 91,01 (1), or
 overpayment, including any interest allowed,                which, during that year, and the 2 years immedi-
                                                                                                      s
 against any liability, in respect to any tax col-           ately preceding that year, produced not less than
 lected by the department, on the part of the                $18,000 in such profits.
 person who made the overpayment, and shall                     3m . "Gross farm profits" means gross re-
                                                                                                    s
 refund any balance to the person .                          ceipts, excluding rent, from agricultural use, as
    (11 ) FARMLAND PRESERVATION CREDIT ..                    defined in s . 91 .01 (1), less the cost or other
 The purpose of this subsection is to provide                                  k
                                                             basis of livestock or other , items purchased for
 credit to owners of farmland which is subject to            resale which are sold or otherwise disposed of
 agricultural use restrictions, through a system of                      e       e
                                                            during the income year .
 income tax . credits and refunds and appropria-                4. "Household" means an individual and h is
 tions from the general -fund..                             or her spouse and all minor , dependents . .
      (a) In this subsection :                                  5 . . "Household income" means all of the
      1 „ "Claimant" means an owner of farmland,            income of the claimant, the claimant's spouse
  as defined in s . 91 . 01 (9), domiciled in this state    and all minor dependents attributable to the
  during the entire year for- which a credit under,         income ,year while members of the household ..
  this subsection. is claimed „                                 6 . "Income" :
     a..' When 2 or more individuals of a household            a : For an individual, means income as defined
  are able to qualify individually as a claimant,           under sub (7) (a) 1, less the first $7,500 of
 they , may determine between them who the                  nonf'atm wages, tips and salaries earned by the
 claimant shall be . If they are unable to agree,           household .
 the matter shalll be referred to the secretary of               b.. For a corporate claimant; except a tax-
                                                                                                 ,
 revenue, whose decision is final ,                          option corporation, means the same as for, an
     b . If any person in a household has claimed or         individual claimant except that income as de-
 will claim credit under sub.. (7), all persons from         fined under s: 71 . 02 (l) (a) plus any business
 that household are ineligible to claim any credit           loss carry forward allowed under ' s. 71 , 06 shall
 under this subsection f'or' the ,year to which the          be included instead of income under ' sub, (7)
 credit under sub:. (7) pertained„                           (a) 1 and "income" of a corporate claimant
    c.. For partnerships, "claimant" means each              shall include all household: income of each of its
 individual partner :                                        corporate shareholders of record at the end of its
    d For purposes of filing a claim under this              income year
 subsection, the personal representative of an                   c.. For an estate or trust, means the same as
estate and the trustee of ' a trust shall be deemed          "income" for an individual except that the net
owners of farmland , "Claimant" does not in-                 income of the estate or trust before subtracting
clude the estate of a person who is a nonresident           any deductions claimed for income distributable
of this state on the person's date of death, a trust        to the estate's ' or, trust's beneficiaries shall . be
created by a nonresident person, a trust which              included instead of Wisconsin adjusted gross
receives Wisconsin real property from a nonresi-            income as defined in s . 71 .02 (2) (e) .
dent person or a trust in which a nonresident                   7 . "Property faxes accrued" means property
settlor retains a beneficial interest                                                                    ,
                                                            taxes, exclusive of special assessments, delin-
   e . For purposes of filing a claim under this            quent' interest and charges for service, levied on
subsection, when land is subject to a land con-             the farmland and improvements owned by the
tract, the claimant shall be the vendee under the           claimant or any member of the claimant's
contract..                                                  household in any calendar year, under ch „ 70, less
   f For, purposes of filing a claim under this                e
                                                            the tax credit, i f any, afforded in respect of the
subsection, when a guardian has been appointed              property by s . 79 .10 ( 3) . "Property taxes
under ch 880 for a ward who owns the farm-                 accrued" shall not exceed $6,000 , Iff'armland is
land, the claimant shall, be the guardian on               owned by atax-option corporation or by 2 or
behalf of the, ward .                                       more persons or entities as ;joint tenants, tenants
   g For atax-option corporation, "claimant"                in common or, partners and one or more such
means each individual shareholder .                                               s
                                                            persons or entities is not a member of the
   2 . "Depa t-tment" means the department of              claimant's household, "property taxes accrued"
                                                                         s
revenue.                                                                                y
                                                           is that part of property taxes levied on the
   3 . . "Farmland" means 35 or more acres of' real        farmland (reduced by the tax credit under ss .
property in this state owned by the claimant or            79 , 10 (3) ,-and 79 .25 (5)) as reflects the owner-
any member of the claimant's household at the              ship percentage of the claimant and the claim-
                   Electronically scanned images of the published statutes.
 1917                                                     INCOME AND FRANCHISE TAXES 71 . 09

  ant's household . For purposes of this paragraph,     which the farmland became subject to a certi-
  property taxes are "levied" when the tax roll is      fied exclusive agricultural use zoning ordinance
  delivered to the local treasurer with the warrant     under subch V of ch 91, using for such calcula-
  for, collection .. If farmland is sold during the     tions household income and property taxess ac-
  calendar year of the levy the "property taxes         crued of the ,year, for which the claim is filed
  accrued" for the seller and buyer shall be the           3 ., a . . If the farmland is located in a county
  amount of the tax levy prorated to each in the        which has a certified agricultural preservation
  closing, agreement pertaining to the sale of ' the    plan under subch . IV of ch . 91 at the close of the
  farmland or, if not so provided for in the closing    year for, which credit is claimed and is in an area
  agreement, the tax levy shall be prorated be-         zoned by a county, city or village for exclusive
  tween the seller and buyer in proportion to           agricultural use under ch „ 91 at the close of' such
  months of their , respective ownership,.              year ; the amount of the claim shall be that as
      (am) Subject to the limitations provided in       specified in subd, 2..
  this subsection, a claimant may claim as a credit        b. If the farmland is subject to a transition
  against Wisconsin income taxes : otherwise due,       area agreement under subch .. II of ch . 91 on July
  the amount derived under,, par . (b) . If the
               t                                        1 of the year for which credit is claimed, of the
  allowable amount of claim exceeds the income          claimant had applied for such an agreement
  taxes otherwise due on claimant's income or if'       before .July 1 of " such year and the agreement has
  there are no Wisconsin income taxes due on            subsequently been executed, and the farmland is
  claimant's income, the amount of the claim not        located in a city or village which has a certified
  used as an offset against income taxes shall be       exclusive .e agricultural use zoning ordinance
  certified to the department of ' administration for   under subch . V of ch 91 in effect at the close of
  payment to the claimant by check drawn on the         the year for, which credit is claimed, or in a town
  general fund . No -such check and no offset           which is subject to a certified county exclusive
  against income taxes otherwise payable, or re-        agricultural use zoning ordinance under subch .
  fund of income taxes paid in respect of any such      V of ch . 91 in effect at the close of the year for
 claim shall be charged against any town, city,         which : credit is claimed, the amount of the claim
 village or, county in the distribution of income       shall be that as specified in subd, 2 ,
                    s
 taxes under this chapter . No interest shall be            bm . . If the claimant or any member of the      e
 allowed on any payment made to a claimant              claimant's household owns farmland which is
 under this subsection,                                  ineligible for- credit under subd, 3 . a or b but was
     (b) The amount of any claim filed in 1978          subject to a farmland preservation agreement
 and based upon property taxes accrued in 1977 ,        under subch , III of ch . 91 on July 1 of the year
 or claims filed in later calendar , years based        for which credit is claimed, or- the owner had
 upon property taxesaccrued in the preceding            applied for such an agreement before July 1 of
 calendar year- shall be determined as follows :        such year and the agreement has subsequently
     1 . The amount of excessive pr operty taxes '      been executed, and if the owner has applied by
 shall be computed by subtracting from property         the end of the year in which conversion under s . .
 taxes accrued the amount of' 5 % of the 2nd            91,41 is first possible for ' conversion of the
 $S ;OQO of household income plus 7 % of the 3rd        agreement to a, transition area agreement under
 $5,000 of household income plus 9 % of the 4th         subch , II of ch. 91, and thetransition area
 $5,000 of household income plus 15 % of the 5th        agreement has subsequently been executed, and
 $5,000 of household income plus 25 % of " the 6th      the farmland is located in a city or "village which
 $5,000 of household income Plus 35% of house-          has a certified exclusive agricultural use zoning
hold income in excess of $30,000 . The maximum          ordinance under , subch. V of ' ; ch . 91 in effect at
excessive, property tax which can be utilized is        the close of the year f 'or, which credit is claimed,
$6,000 ;                                                or in a town which is subj ect to a certified county
    2 . The credit: allowed under this subsection       exclusive agricultural use zoning ordinance
shall be, limited to 90 % of the first $2 , 000 of      under subch ; V of ch . 91 in effect at the close of
excessive property taxes plus 70% of the 2nd            the year for which credit is claimed, the amount
$2,000 of excessive property taxes plus 50% of          of the claimshall be that specified in subd 2 „
the .3rd $2,000 of excessive property taxes.. The          c . If the claimant or any member of the
maximum credit shall not exceed $4,200 for any          claimant's household owns farmland which is
claimant., The credit for any claimant shall be         ineligible for credit under subd, 3 . a or b but
the greater of either, : the credit as calculated       which is subject to a farmland preservation
under this subsection as it exists at the end of the    agreement or, a transition area agreement under
,year - for which the claim is filed or as it existed   subch . II of ch. 91 on July 1 of the year ' fore which
on the date on which : the farmland became              credit is claimed, or the owner had applied for
subject to a current agreement under subch: II          such an agreement before July 1 of such year
or III of ch;, 91 or' as it existed on the date on      and the agreement has subsequently been exe-
                      Electronically scanned images of the published statutes.
  7 1 . 09 INCOME AND F RANCHISE TAXES                                                                            1918

  cuted, the amount of the claim shall be limited                tural use zoning ordinance under subch . V of ch
  to 70 % of that specified in subd 2 ,                          91 in effect on March 1, 1978, or in a town which
      cm . If the claimant or any member of the                  is subject to a county exclusive agricultural use
  claimant's household owns farmland which is                    zoning ord inance certified under subch . V of ch .
  ineligible for credit under subd 3 a, b, bur or c              91 on March 1, 1978
  but was subject to a farmland preservation                        c . Claimants may file under subd .3 . c or f if
  agreement under subcb . III of ch:~ 91 on July 1 of"           the claimant had applied for- a farmland preser-
     e
  the year f 'or which credit is claimed, or the owner           vation agreementt or transition area agreement
  had applied for such an agreement before July 1                under subch II or III of ch . 91 before March 1 ,
  of such year and the agreement has subse-                      1978, and the agreemen t has subsequently been
  quently been executed, and if ' the owner has                  executed ,
  applied by the end of the year in which conver-                   d Claimants may file under subd . 3 e if the
  sion under s : 91 . . 41 is f i rst possible for conversion    farmland was zoned for exclusively agricultural
 of the agreement to an agreement under subch .                            r
                                                                 use under an ordinance certified under subch . V
  II of ch . 91, and the agreement under subch II                of ch . 91 on March 1, 1978 ..
 of ch . 91 has subsequently been executed, the                     (c) All amounts allowed as credits under this
 amount of the claim shall be limited to 70 % of                 subsection constitute income for income and
 that specified in subd . 2 . :                                  franchise tax purposes and are reportable as
     d . . If' the farmland is located in an agricultural                    e
                                                                such in the year of receipt . .
 district under a certified county agricultural                     (d) No credit shall be allowed under this
 preser vation plan under subch IV of ch 91 at                  subsection unless a claim therefo r e is filed with
 the close of the year for- which credit is claimed,            the department within 12 months following the
    d
 and is located in an area zoned for exclusive                  close of the income year in which the property
                                                                                                    h
 agricultural use under a certified town ordi-                  taxes accrued
 nance under subch : V of ch 91 at the close of                     (e) The amount of any claim otherwise pay-
                                                                                                 m
 such ,year, the amount of the claim shall be                   able under this subsection may be applied by the
 limited to 70% of ; that specified in subd . 2..               department against any l iability outstanding on
    e If ' the farmland is located in an area zoned             the books of the department against the claim-
for exclusive agricultural use under a certified                ant or against any other individual who was a
county,- city. of village ordinance under subeh . V             member of the claimant's household in the year
of ch . 91 at the close of the year for which credit            to which the claim relates .,
is claimed, but the county in which the farmland                    (f) The department may disallow any claim
is located has not adopted an agricultural pres-                under this subsection if ` it determines that own-
ervation plan under subch . IV of ch 91 by the                  ership of the farmland has been transferred to
close of such year, the amount of ` the claim shall             the claimant primarily for the purpose of maxi-
be limited to 70% of` that specified in subd . 2 .              mizing benef i ts under this subsection ,
    f' If' the farmland : : is subject to a farmland                (g) The department shall prepare a table
preser vation agreement under subch . III of ch .               under which claims under this subsection shall
91 on duly 1 of the year for which credit is                    be determined .
claimed or the claimant had applied for such an                                                      s
                                                                   (h) Every claimant under this subsection
agreement before July 1 of such year and the                    shall supply, at the request of the department, in
agreement has subsequently been executed, the
                                            n                   support of the claim, a copy of' the property tax
                          m
amount of the claim shall be limited to 50 % of                 bill relating to the farmland, , a copy of the
that specified in subd. 2 .                                     farmland preservation agreement or a certifi-
    4.. Notwithstanding the time requirements of                cate of the appropriate zoning authority The
subd. 3, for claims filed in 1978 based on prop-                certificate of the zoning authority shall certify :
e rty taxes accrued in 1927 :
    y                                                               L. That the lands are within the boundaries of
    a Claimants may file under subd .3 a or d if                an agricultural zoning district which is part of
the farmland was located in an agricultural                     an adopted ordinance meeting the standards of
                             d
district under a certified county agricultural                  subch „ V of ; eh 91 and certified under s 91 .. 06 .,
preservation plan under subch . IV of ch 91 on                     2 That the ordinance has been approved,
March 1, 1978, and was zoned for exclusively                    where necessary,, by the board of the town within
agricultural use under an, ordinance certified                  which the lands are situated, as required by s ..
under subch. V of ch. 91 on March 1, 19 '78 .,                  59 97, and shall indicate the date of approval .,
   b Claimants may file under subd . 3 b if the                    3 That each structure or improvement on the
claimant had applied for- a transition area agree-              lands conforms to the requirements of the exclu-
ment undezsubch . II of ch 91 before March 1,                   sive agricultural use ordinance.
1978, and the agreement had subsequently been                      4 The portion of the claimant's farmland
executed and the farmland was located in a city                 which is within the area zoned for exclusive
or, village which has a certified exclusive agricul-            agricultural use . .
                  Electronically scanned images of the published statutes.
- 1919                                                   INCOME AND FRANCHISE TAXES 71 . 09

   (o) No credit may be allowed under this              tions as meeting the standards specified in s .
subsection if the claimant has been notif i ed of a      101,57 (5) ; of
violation ofs 91 . 13 (8) (d) .                            2 Based on design calculations or other
   (p) No credit shall be allowed under this            appropriate documentation, specified by the de-
subsection for property taxes accrued on farm-          partment of industry, labor and human relations
land zoned f 'or, exclusive agricultural use under      by rule, and submitted by the owner of a renew-
an ordinance certified under subch . V of ch 91         able energy r esource system, the system has
which is granted a special exception or condi-
                                       n                been certified by the department of industry,
tional use permit fo r a use which is not an            labor and human relations as meeting the stan-
agricultural use, as defined in s . 9101 (1) .          dardsspecified in s . 101 . 57 (5)
     (12) (a) For calendar years 1977 and 1978             (dg) The department of industry, labor and
and corresponding fiscal years, any natural per-        human relations shall inspect selected renew-
son owning a renewable energy resource system           able energy resource systems which have been
installed on the person's property in this state        installed and certified for purposes of this sub-
may credit against income taxes due the follow-         section to ensure compliance with the standards
ing percentage of' the total cost of the design,        established under s . 101 :. 57 (5) .
construction, equipment and installation of the            (dr) Any per-son who intentionally files
renewable energy resource : system, but not ex-         fraudulent information with the department of
ceeding $10,000' of such costs, incurred during         industry, labor and human relations for pur-
the taxable year if such costs exceed $500 in a         poses of obtaining the certification of a renew-
single year and the system is certified under par .     able energy resource system as meeting the
(c ) :                                                  standards established under s . 101 . 57 (5) for
    1 . If' the real property improvements on           purposes of this subsection is subject to the
which the system' is installed appeared on the          penalties under s . 71,11 (42) or (43) . .
local tax roll prior to April 20, 1977 :                   (e) If more than one person owns a renewable
   a . For, 1977 and 1978 , .30 % .                     energy resource' system eligible for the credit
                                                        under this subsection, such persons may divide
   b For 1979 and 1980 , 24 % .
                                                        the credit among themselves as desired .. If ' a
   c For 1981 and 19. 82, 18 % . .                      business partnership owns such a system, each
   d . For , 198 3 and 1984,12%, . _                    partner may claim the credit under par . (a) for
   2 If the real property improvements on which         up to $10,000 of costs per partner, but the total
the system is installed appeared on the local tax       claimed by the partnership may not exceed
roll on or , after April 20, 1977 :                     $50,000 of costs per system.. . Once credit is
   a For 1977 and 1978 , 20 % . .                       claimed for a renewable ene r gy resource system
   b For 1979 and 1980, 16 %, .                         under this section, subsequent owners of the
   c.. For 1981 and 1982, 12 %                          system are not eligible for credit under this
  A For 1983 and 1984, 8%                               subsection for, the same system ..
   (b) Applications for credit unde r this subsec-          (f) No credit may be granted under ' this
tion shall be made on a form prescribed by the          subsection if: a credit has been received under
department of revenue and attached to the ap-           this subsection in a prior taxable year for, the
                                                                       n
plicant's state income tax return If the allow-         same renewable energy resource system or if
able amount ' of claim under this subsection            expenses relating to the same system have been
exceeds the income taxes otherwise due on the           deducted, depreciated of amortized under s .
claimant's income or if there are no Wisconsin          71 . 04 (16) .
income taxes due on the claimant's income, the             (g) Expenses incurred between April 20,
amount of the claim not used as an of 'f 'set against   1977, and December 31, 1978, may be used to
income taxes shall be ! certified to the department     compute the credit in either the taxablee year in
of administration f"or payment to the claimant          which incurred or the next taxable year
by check from the appropriation under s . 2 .0.. 835       (h) No person may claim the credit under
 (2) (e) No interest shall be allowed on any            this subsection for expenses incurred before
payment made to a claimant under ' this para-           April 20, 1977, or after the close of the person's
gcaph :. No claim filed under this subsection shall     1978 taxable year .
be allowed unless the claim is filed within 4              (i) In this subsection "renewable ene r gy re-
years of the taxable year in which the costs upon
             e                                          source system" has the same meaning as desig-
which it (is based were incurred                        nated unders ,: 101,57 (8) (a)
   (c) The department of revenue shall approve             (13) (a) Whenever an audit of any claim
the credit under this subsection if :                   filed under sub . (7), (11) or (12) indicates that
  ° l . The renewable energy resource system is a       an incorrect claim was filed, the departmentt of
specified model which has been certified by the         revenue shall make a determination of' the cor-
department of industry, labor and human rela-           rect amount and notify the claimant of the
                      Electronically scanned images of the published statutes.
  71 .09 INCOME AND FRANCHISE TAXES                                                                                           1920

    determination and the reasons therefor . Notice            with respect to income tax cases, and review of
   of the determination shall be given to the claim-           the commission's decision may be had under s .
   ant within 4 years of ' the last day prescribed by          7 .3 ..015 .. For appeals brought under this para-
   law for filing the claim . If the claim has been            graph, the filing fee required under s . 73 Ol (5)
   pai d, or , credited against income taxes otherwise         (a) does not apply .
   payable, the credit shall be reduced or canceled,               Hi story: 1971 c 40 ; 1971 c,125 ss. .375 to 384, 521 ; 1971 c .
   and the p r oper portion of any amount paid shall            164s. 92 ; 1971 c 181, 215; 1973 c. 90 ss . 353 to 356, 560 (2) ;
                                                                1973 c, 139; 1975 c . 39, 104 ; .1975 c . 147 s . 54; 1975 c 199 ;
   be similarly recovered by assessment as income              .1977 c 29 ; 19'7'7 c . 105 s . 59 ; 1977 c. 142, 143, 169, 272, 273,
   taxes are assessed and the assessment shall bear            313, 418, 447 ; 1979 c . 1 ss. 27 to 34, 75 ; 1979 c 32, 34 ; 1979c
                                                                1 10 s .. 60 (13) ; 1979 c 154 ; 1979 c. 174 ss . 1, 2,16 ; 1979 c .
   interest at 9 % per year       from the due date of' the    221 ; 1979 c 329ss 3 to 6, 8 to 13, 25 (1), (3) ; 1979 a 350 ss .
   claim ; Any per son feeling aggrieved by the                27 (1), (3) ; .1979 c 355
                                                                   Note : Chapter 418, l aw s of 1977, section 923 ( 42), as af-
   dete r mination may, within 60 days after receipt,          fected by ch apter s Land 2, laws of 1 979, provid es a special
           n
   petition the department for redetermination                 prope rty tax cre dit to certain natural person s for the 1978 cal-
   The department shall make a redetermination                 enda r year..
  on the petition within 6 months after it is filed                Requirement of (7) (b) that homestead credit claim be
                                                               filed during lifetime of claimant does not deny equal protec-
  and notify the claimant . If no timely petition for          tion Bonneville Estate v . Dept .t of Revenue, 91 W (2d) 726,
  redetermination is filed with the department, its            284 NW (2d) 52 (1979) .
  determination shall be final and conclusive .
      (b) A claimant who has f iled a timely claim             71 . 095 Designation of payment to cam -
  under sub . . (7), (11) or ( 12) may file an                 paign fund . (1) Every individual filing an
                         h
  amended claim with the department of revenue                 income tax statement may designate $1 for the
  within 4year•s of' tbe last day pr escribed by law           Wisconsin election campaign fund for the use of
  for filing the original claim                                eligible candidates under s . . 11 . . .50..
      (c) In any case in which it is determined that                (2) The secretary of revenue shall provide a
 a claim under sub (7 ), (11) or (12) is or was               place for such designationss on the face of" the
 excessive and was filed with fraudulent intent ,              individual income tax teturn . Annually on Au-
            m
  the claim shall be disallowed in full and, if the            gust 15, the secretaryy of revenue shall certify to
 claim has been paid or a credit has been allowed              the electionss board, the department of adminis-
 against income taxes otherwise payable, the                   tration and the state treasurer under s . 11 .50 the
 credit shall be canceled and the amount paid                  total amount of designations made by taxpayers
 may be recovered by assessment as income taxes               during the preceding fiscal year Ifany taxpayer
 are assessed and such assessment shall bear                  attempts to place : any condition or restriction
 interest from the due date of the claim, until
                                e                             upon a designation, such taxpayer is deemed to
 refunded or paid, at the rate of 1 . 5 % per month . .       have refused any such designation for his or her,
 The claimant in such case, and any person who                tax . .
 assisted in the preparation or f i l i ng of the exces-         (3) The names of per-sons making designa-
 sive claim or supplied information upon which                tions under' this section shall be strictly
 the excessive claim was prepared, with fraudu-               confidential
 lent intent, shall be guilty of a misdemeanor In               Hi s tory : 1977 c, 107,
 any case in which it is determined that a claim is
 or was excessive and was negligently prepared,
         s                                                     71 . 10 Filing returns ; payment of tax; tax
 10% of" the corrected claim shall be disallowed               refunds and credits ; nonresident contrac-
and, if' the claim has been paid or cr edited                  tor's surety bond; withholding statements
 against income taxes otherwise payable, the                   and wage reports. (1) Every corporation,
credit shall be reduced or canceled and the                    except corporations all of whose income is ex-
proper portion of any amount paid shall be                     empt from taxation, shall furnish to the depart-
similarly recovered by assessment as income                   ment a true and accurate statement, on or before
taxes are assessed and the assessment shall bear              March 15 of each year (except that returns for
interest at L. 5% per month from the due date of'             fiscal years ending on some other date than
the claim                                                     December 31 shall be furnished on or before the
     (d) Any per-son aggrieved by the department               15th day of the 3rd month following the close of
of revenue's redetermination under sub . . (7),               such fiscal ,year) in such manner and form and
(11) or (12 ), except when the denial is based                setting forth such facts as the department deems
upon late filing of ` claim for credit or is based            necessary to enforce this chapter : Such state-
upon a redetermination under sub : (7) (m) of                 ment shall be subscribed by the president, vice
rent constituting property taxes accrued as at                president, treasurer, assistant treasurer, chief'
arm's length, may appeal the redetermination to               accounting officer or any ~other, oofficer duly
the tax appeals commission by filing a petition               authorized so to-act ., In the case of a return
with the commission within 60 days after the                  made for a corporation by a fiduciary such
redetermination, as provided under s . . 73 .01 (5)           fiduciary shall subscribe the return . The fact
                   Electronically scanned images of the published statutes.
 1921
  .                                                         INCOME AND FRANCHISE TAXES 71 .1 0

  that an individual's name is subscr ibed on the            (2 ) . The following shall report in accordance
  return shall be prima facie evidence that such          with this subsection :
  individual is authorized to subscribe the r eturn          (a) 3 . This subdivision applies with respect to
  on behalf " of the corporation :                        income o f the calendar year 1973 or correspond-
     (a) All corporations doing business in this          ing fiscal years. Every person having a gross
  state shall also f ile with the department on or
      e                                                   income of $1,800. or more if under 65 years of
  before March 15 of each yea r on forms pre-             age, or if 65 years of age or over $1,950 or more,
  scribed by- the . department, a statement of ' such     and every married person receiving any gross
  transfers of its capitalstock as have been made         income during the year when the combined
                                                                e
  by or to residents of this state during the p t eced-   gross income of such married pe r son and his or
  ing calendar year . Such schedule shall contain         her spouse is: a) $2,300 or more if both are
  the name and address of the seller, date of             under 65 years of age ; b) $2,450 or mot e if' one
  transfer, , and the number of shares of stock           spouse is under 65 years of' age and the other
  transf'er t ed ; and such corporation shall also file   spouse is 65 years or over ; or c) $2,600 or more,
  with the department on or before March 15 of            if both are 65 years of age or over.
. each year any information r elative to payments            4 For, the 1974, 1975 and 1976 ca lend a r
  made within the preceding calendar year of              years or corresponding f iscal years, every person .
  rents, royalties, interest, dividends and liquidat-     having a gross income of ' $1,950 or more if under
  ing dividends to persons taxable thereon under          65 years of age, or if 65 years of age or over
  this chapter in amounts and in the manner and           $2,150 or more, and every married person re-
  form prescribed by the department .'                    ceiving any gross income during the year when
     (b) Whenever a corporation has been com-             the combined gross income of such , marr ied
 pletely inactive for an 'eritire taxable year, in lieu   persons is $2,600 or more if ' both are under 65
                                                                                                  e
 of filing the statements and information other-          years of age ; $2,750 of more if ' one spouse is
 wise required by this subsection, it may f ile a         under 65 years of age and the other spouse is 65
 declaration, on a form to be provided by the             years of age or 'ove t ; or $2,900 or more, i f both
                                     s
 department ; subscribed by its president, if ' a         are 65 years of age of over
 resident of this state, and, if ' not a resident, then      5 For, the 1977 calendar year or correspond-
 by another officer residing in this state, attesting     ing fiscal year and thereafter :
 to such inactivity ., Such declaration must be              a . Every natural person domiciled in this state
 filed prior to the otherwise due date for its            during the entire ` taxable year, having gross
 Wisconsin return for such taxable year There-            income of $3,200 or more if under 65 years of
,after- the corporation need not file such state-         age, or $4,200 or more if 65 years of age or over,
                                                                         0
 ments or , information for any subsequent ,year,         and every married person domiciled in this state
 unless specifically requested to do so by the            during the entire taxable year having gross
 department: or unless in a subsequent year the           income during the year when the combined
 corporation has been activated or reactivated . If'      gross income of the married person and his or
 a corporation files a false declaration of " com-        her spouse is $5,200 of more if'both. are under 65
plete inactivity, or, after filing a declaration,         years of age; , $6,200 of more if one spouse is
 becomes activated or reactivated and fails to file       under 65 years of age and the other spouse is 65
timely statements and information hereunder               years of age or over ; or $7,200 or more if both
covering such year or years of 'acti'vity or reactiv-     are 65 years of age or ove r,
ityits officers at the time of such filing or failure        b . Every nonresident person and every person
shall be jointly and seve r ally liable f 'or, a civil    who changes domicile into or out of this state
penalty-of $25 for such filing or each such               during the taxable year shall file a return i f the
                                                                     e
failure,' which penalty may be assessed and               person is unma r ried and has gross income of
collected as income taxes are assessed and                $2,000 or more, or if the person is ma rr ied and
collected.                                                the combined gross income of the person and his
    (c) Nothing contained in this subsection              or her spouse is $2,000 or , more,
shall preclude the department from requ i ting               c .-Except as provided in pair. (c) and s 71 . 11
any corporation to file a return when in the                            s
                                                          (3), persons having gross income less than the
judgment of the ; departmenY a return should be           amounts stated in this subdivision shall not be
filed                                                     required to file an income tax return .
   (d) A tax-option corporation shall file with              (b) Such> i:eports shall be made on or before
its state franchise or income t ax return an exact        April 15 following the close of a yeari~ef'erred to
copy of its federal income tax r eturn for the            in par., (a) :(or when such person's fiscal year, is
same : year and shall file any other return or            other than the calendar year, then on or before
statement filed with or made to, or any docu-             the 15th day of the 4th month following the close
                                                                                 h
ment received from, the US, internal revenue              of such fiscal year) to the department of ieve-
service affecting the taxation of its sha r eholders .    nue, in the manner and form pr escribed by the
                   Electronically scanned images of the published statutes.
  71 . 10 INCOME AND FRANCHISE TA X ES                                                                 1922

 department of ' revenue, whether notified to do so     return is, to the best of his knowledge and belief,
 or, not .. Such persons shall be subject to the same   true and correct.
 penalties for failure to report as those who               ( f) Except as otherwise provided by this
 receive notice .. lithe taxpayer is unable to make     subsection, any return, statement or other docu-
 his own return, the return shall be made by a          ment required to be made under this chapter
 duly authorized agent or by the guardian or            shalll be signed in accordance with rules promul-
 other person cha r ged with the care of the person     gated by the depa r tment .
 or- property of such taxpayer                              (g) The fact that an individual's name is
    (c) Nothing in this subsection precludes the        signed to a return, statement or other document
 department of revenue from requiring any per-          shall be prima facie evidence for- all purposes
 son other than a corporation to file an income         that the return, statement or other document
 tax return when in the judgment of ' the depart-       was actually signed by him .
 ment a r eturn should be filed .                           (3m) . (a) Corporations may not change
    (3) (a) Every partnership shall furnish to          their basis of' reporting from a calendar year- to a
 the depar tment a true and accurate statement,         fiscal year, from a fiscal ,yea r to a calendar year,
 on or before April 15 of each ,year ' , except that    or, from one fiscal year to another without first
 returns for fiscal years ending on some other          obtaining the approval of the department of
 date than December .31, shall be furnished on or       revenue .
 before the 15th day of the 4th month following             (b) If a ' corporation changes its basis of
 the close of such fiscal year, in such manner and      reporting from a calendar year, to a fiscal year a
 form and setting forth such facts as the depart-       separate return shall be made for the period
 ment deems necessary to enforce this chapter . .       between the close of the last calendar year and
 The statement shall be subscribed by one of the        the date designated as the close of the fiscal
 members of' the partnership .                          year . If the change is from a fiscal year to a
                    t
     (b) The net income of ' the partnership shall      calendar , year, a separate return shall be made
  be computed in the same manner and on the             for- the period between the close of the last fiscal
 same basis as provided f'or, computation of the        year and the following December' 31 I' f ' the
 income of persons other than corporations              change is from one fiscal year to another fiscal
     (c) If ' a receiver, trustee in bankruptcy or
                                  e                     year a ' separate return shall be made for- the
 assignee, by order of a court, by operation of law     period between the close of the former fiscal
 or otherwise, has possession of" all or substan-       year and the date designated as the close of the
 tially all of' the property or business of a corpoia-  new fiscal year . In no case shall a separate
 tion, whether or not such property or business is      income tax return be made for a period of more
 being operated, such r eceiver, trustee or as-         than 12 months.
 signee shall make the return of income for such            (c) When a separate corporation income tax
 corporation in the same manner and form as             return is made for a fractional part of a year the
 corporations are required to make such returns .       income shall be computed and reported on the
    (d) 'If ' an individual is deceased, the return of' basis of the period for which the separate return
                                                             s
 such individual required under, sub .. (2) shall be    is made, and such fractional part of a year shall
made: by his executor ; administrator or other          constitute an income year,
 person charged with the property of such dece-                                       e
                                                           (d) ; If a separate income tax return is made
 dent If an individual is unable to make a return for a short period under ' par. (b) on account of ' a
 required under sub.. (2) the return of' such change in the income year-, the net income for          e
individual shall be made by the guardian, custo-
                            e                           such short period s hall be placed on an annual
dian or other person charged with the care of the                                 e
                                                        basis by multiplying the amount thereof by 12
person or property of such individual.                  and dividing by the number of months included
    (e) Annual returns of income of ' an estate or a in the period for which the separate return is
                  l                                                              h
trust shall be made to the department by the            made , The tax shall be such part of the tax
fiduciary thereof at or before the time such computed on such annual basis as the number, of
income is required to be reported to the internal months in such short, pe r iod is of 12 months,
revenue service under the internal revenue code . .        (4) In their return for- purposes of assessment
Under such rules as the department prescribes, a        persons .: deriving incomes from more than one
return made by one of 2 or, more j oint fiduciaries     political subdivision of the state shall compute
shall be sufficient compliance with the require- the . amount of income properly assignable to
ments of this section . A retain made pu rsuant to each political subdivision of the state- in such
this paragraph shall contain a statement that the form and manner as the department of revenue
fiduciary has sufficient knowledge of the af 'f'airs prescribes .
of the person for whom the return is made to               (5) (a) In the case of a corporation required
enable him to make the return, and that the to file. a return , when sufficient reason is shown,
                  Electronically scanned images of the published statutes.
1923                                                       INCOME AND FRANCHISE TAXES 71 .10

 the department of revenue may on written re-            subch . II of ch . 619 sha l l indicate on the return
 quest allow such furth e r time for- making and         that the person is such a self '-insurer..
`delivering such return as is considered necessa r y           (7) Each person, firm or corporation except
                                y
 not to exceed 30 days:. Any extension of time           farmers and wholesalers subject to s : 78 . 66
 granted by law or by the internal revenue service       required under this chapter' to fi le a return of
                                                                               s
 for the filing of corresponding federal returns         income in which inventories are a factor shall on
 shall extend the time for- filing under this chap-      o before the due date of his income tax return
 ter if a copy of any extension r equested of the        file for each taxing district on a form to be
 internal revenue service is filed with the return       provided by the department of revenue the fol-
 in the case of an automatic 3-month extension,          lowing information : (a) the inventory at the
 and if' a copy of any additional extension granted      beginning and at the end of" the fiscal year; (b)
                                   e
 by the internal revenue service is submitted to         the total of merchandise purchased during the
the department within 10 days of its receipt by          year; and (c) the total, sales during the ,year . .
 the taxpayer Termination of an automatic                Failure of any ' person to f i le the information
 extension by the internal revenue service, or its       required by this subsection shall be deemed a
 refusal to grant such automatic extension, shall        failure to file a return and subject such person to
 similarly iequ iie, that any returns due under this     the penalties provided in s . 7111 (40) and in
 chapter are due on or before the date fo r termi-       addition such person shall be denied any right of
 nation fixed by the internal revenue service .          abatement by the board of review on account of
 Except as provided in s„ 71,22 (9) (b) income           the assessment of such personal property unless
 taxes payable up on the filing of the tax return        such person, f irm or corporation shall make such
 shall not become d eli nquent during such exten-        return to such board of review together with a
 sion period, but shil l be subject to interest at the   statement of' the reasons for the failure to make
 rate of ' 9% per- yea r during such period.,            and file the return in the manner and form
                                                         required by this section.. Such information shall
    (b) In the case of returns of natural persons
                                                         be forwarded by the depar tment to the assessor
 and fiduciaries which require a statement of
                                                         in the local taxation district concerned within 45
 amounts or information contained or entered on
 a corresponding return under the internal reve-         days after, the statutory filing date for corporate
                                                                                           e
                                                         returns and 30 days after the statutory filing
 nue code, such returns shall be f iled within the
                                                         date for noncorporate returns .
time fixed, under said code for the filing of the
                              e
coiiespon i ng •federal return . Any extension of
                         l                                   ` (8) (a) Every person or partnership required
time granted by law or by the internal revenue           to deduct and withhold from an employe under
service for the filing of such corresponding fed-        the general withholding provisions of this chap-
eral return shall extend the time for filing under       ter' during the calendar yea r 1962 or in any
                                                         calendar year thereafter shall furnish to each
this chapter pr ovided a copy of any extension
                                                         such employe in respect of the remuneration
granted : by the internal revenue service is filed
with the return under this chapter or at such            paid by such person or- partnership to such
                                                               d                 n                p
                                                         employe during the calendar year, on or before
earlier d a te as the department by rule
                                                         January 31 of the succeeding year, or if his
prescribes extensions : for periods of" 30 days
                                                         employment is terminated before the close of
may also b e granted by the department in any
                                                         any such calendar year on the day on which ' the
case for cause satisfactory to it, Taxes payable
                                                         last payment of remuneration is made, 2 legible
upon the filing of the ' teturn shall not become
delinquent dazing the period of an extension but         copies of a written statement showing the
                                                         following :
shall b e subject to interest at the rate of 9% per-
year- during such period                                    1 . The name of such person or, partnership,
                                                         and his of its Wisconsin income tax identifica-
   (6) To the extent necessary for the adminis-
                                                         tion number, if ` any . .
tration of the tax imposed by this chapter, when
                                                       2 . The name of such employe,, - and his social
required under rules prescr i bed or or ders issued
                                                    security number, if ' any :
by the department or upon the written request of
the department, natur al persons and f iduciaries      3 The total amount of wages as defined in s .
subject to this chapter shall file withthe depart- 71,19 (1) .
              s
ment a true and complete copy of their federal                                     d
                                                       4 . The total amount deducted and withheld as
income tax return and any other return or required by the, general withholding provisions
statement filed with, or made to, or any docu- of this chapter.;.
ment received ' from, the internal revenue             (b) The employe shall furnish the depart-
service: .                                          ment of revenue one copy of such written state-
   (6m) A person who is required to file an ment along with his return for the ,year ,
annual withholding report under s 71 . 20 (4)          (8m) Every person required to deduct and
and who is a self insurer for the purposes of withhold from an employe under this chapter
                    Electronically scanned images of the published statutes.
 71 .10 INCOME A DD FRANCHISE T A XE S                                                                  1924

  shall furnish to the department of revenue at its        notice to the taxpayer. Such amounts of taxes
  offices in Madison, in respect to remuneration due shall not be subject to any interest, other
  paid by such person to such employe during the           than extension interest, prior to the date of
  calendar- year-, on or before Janua r y 31 of the delinquency. Taxes due on returns filed af 'ter'
  succeeding year, one legible copy of the written         the date on which returns are required to be filed
  statement referred to in sub. (8) .                      shall be deemed delinquent as of' the due date of
      (8n) Every resident of this state and every the return ,
  nonresident carrying on activities within this               (d) Back assessments of income taxes omit-
  state, whether taxable or not under this chapter, ted from initial rolls and additional income taxes
  who or- which shall pay in any calendar year fo r assessed under- s . . 71 . 11 (16) and (20) shall
  services performed within this state by an indi-         become due and payable on entry upon the
  vidual remuneration which is excluded from the           assessment roll.
  definition of wages in s 71 .19 (1), in the                 (e) The department of revenue shall accept in
  amount of $500 or more, shall, on or before advance income taxes and surtaxes from taxpay-
 January 31 of the succeeding year furnish the ersdesirous of making such payments before the
 department of revenue at its offices in Madison, same shall become due and payable . Advance
                                                                                  e
 a written statement in such form as required by payment of taxes under this provision shall not
                                        e
 the department, disclosing the name of the relieve the taxpayer from additional taxes which
 payoff; the name and address of the recipient and may result from subsequent legislation or from
 the total amount paid in such year to such additional taxable income disclosed or discov-
 recipient . . In any case in which an individual ered subsequent to such payment .
 receives wages, as defined in s . . 71 '. 19 (1) and         (10) (a) Except as provided in ss ., 71,04
 also remuneration for- se rvices which remunera- (15) and 71 '.. 11 (21) (d) and (g) 2, the provi-
 tion is excluded from such definition, both from          sions for refunds and credits provided in this
 the same payor, the wages and the excluded subsection shall be the only method for, the filing
                      l
 remuneration shall both - be reported in the re- and review of claims for refund of income and
 port ;equir•ed by sub. (8m) in a manner satisfac- surtaxes, and no person may bring any action or,
 tory to the department, regardless of the amount          proceeding for the recovery of such taxes other
 of the excluded remuneration.                            than as provided in this subsection ..
     (9) All income and franchise taxes shall be              (bn) With respect to income taxes, franchise
 paid to the department of revenue, at its office at taxes and surtaxes assessed or based on incomes
 Madison or at - such other place the depa rtment received in the calendar year 1962 or corre-
 designates..                                             sponding fiscal year, and subsequent years, ex-
     (a) Corporation franchise and income taxes cept as otherwise provided in par' . . (e) and s .
 not paid on or' before the 15th day of the 3rd 7' 1 .: 11 (2T) (g) 2, refunds may be made if the
 month following the close of the income ,year, claim therefor is filed within 4 years of ' the date
 shall be deemed delinquent .                             the tax return was filed, but for purposes of ' this
    (b);With respect to the payment of taxes on paragraph a return filed before the last day
 income of the calendar year 1962 and corre- prescribed by law for the filing of the return
 sponding'fiscal year 's, and thereafter, the final shall be considered as filed on such last day and
payment of taxes on incomes of persons other no refund may be made of any income taxes
 than corporations who ale on a calendar year, withheld ` and paid or declared and paid with
basis shall be made on or before April 15 follow - respect to which a tax return was not filed when
ing the close of the calendar year, except for            due unless claim therefor is filed within 4 years
persons electing to have the department com- of the date such return was due , .
pute their tax under s . 71 : . 09 (4) . If the return of     (c) No refund shall be made on the over-
a person other than a corporation is made on the withholding or over-declaration of estimated
basis of a fiscal year,, such final payment shall be income taxes or franchise taxes with respect to
                                                                             y
made on or before the 15th day of the 4th month any person for any income year in an amount
following the close of such fiscal year, except for less than $2 unless such refund is specifically
persons electing to have the department com-              applied for on the return of such person report-
pute their tax under s.. 7109 (4) .                       ing his income for such year .
    (c) If the taxpayer elects under s. 71,09 (4)            (d) No refund shall be made and no credit
                                                                                    y
(a) to have the department compute the tax on shall be allowed for any year, the income of
his income and the taxpayer files his return on or        which was -assessed -as a result of a field aud it,
                                                                                                    d
before the date on which such return is required          and which assessment has become final under s..
to be filed, the amount of taxes due thereon; as 71 .12 (1), (3), 73,01 or 73,015 and, exceptt as
stated in the notice from the department under s . provided in pai r (e), no refund, shall be made
7109 _ (4) (b), shall become delinquent if not            and no credit shall be allowed on any item of
paid on or before the due date stated in the              income or deduction, assessed as a , result of an
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 1925                                                     INCOME AND FR ANCHISE TAXES 71 .10

office audit, the assessment of which shall have            (13) Documents and payments required or
become final under s . 7112 (1) and (3), 73 . 01        pe r mitted by this chapter shall be considered
or 7 3 .. 015 .                                         furnished, reported, filed or, made on time, if
    (e) A claim for refund may be made within 2         mailed in a properly addressed envelope, with
years of the assessment of a tax or an assessment       postage duly prepaid , which envelope is post-
to recover all or part of any tax credit under this     marked before midnight of the date prescribed
chapter,, assessed by office audit if the assess-       for, such furnishing, reporting, filing or making,
ment was not protested by the filing of a petition      provided such document or payment is actually
for- redetermination and the taxable year had           received by the department within 5 days of ' such
not been closed by field audit under .par . . (d)       prescribed date .
piior, to the filing of the claim . No claim may be             (14) . (a) All nonresident persons, whether
allowed under' this paragraph for any tax paid                           d
                                                            incorporated or not, engaging in construction
with respect ' to any item of income, credit or             contracting in this state as contractor or subcon-
deduction self-assessed or determined by the                tractor and not otherwise regularly engaged in
taxpayer or, assessed as the result of any assess-          business in this state , shall file a surety bond
ment made by the department with respect to                 with the department, payable to the department
which all the conditions specified in this para-            of revenue, to guarantee the pa yment of income
graph are not met . . This paragraph does not               taxes, required unemployment compensation
extend the time to file under s . 71 .09 (7) (dm)           contributions, sales and use taxes and income
or (11) (d)                                                 taxes withheld from wages of employes, together
   (f) Every cla im for . refund or credit of income        with any penalties and interest thereon , The
or surtaxes shall be filed with the department of           department shall approve the form and contents
revenue and° shall set forth specifically and ex-           of` such bond, The amount of' the bond shall be
plain in detail the reasons for and the basis of the      .3% of the contract of subcontract price on all    l
claim .. After the claim has been filed it shall be         contracts of $50,000 or more or 3 % of contrac-
considered and acted upon in the same manner                tor 's or subcontractor's estimated cost-and-
as are additional assessments made under s .
                                         e                  profit under a cost-plus contract of $50,000 or
71,11 (16) and (20) .                                       more , When the aggregate of 2 or, more con-
   (g) The department of 'r evenue is directed to           tracts in one calendar year is $50,000 or more
act on any claim for refund or ' credit within one          the amount of the bond or bonds shall be 3 % of
year after : receipt and failure to act shall have          the aggregate amount of such contracts Such
the effect of" allowing the claim and the depart -          surety bond must be filed within 60 days after
ment shall certify the refund or, credit.                   construction is begun in this state by any such
    (1 1) If the renegotiation or price redetermi-          contractor or subcontractor ' on any contract the
nation of any corporation defense contract or '
               y                                            price of which is $50,000 or more (or the
subcontract by the government of the United                 estimated cost-and-profit of which is $50,000 or
States or any agency thereof or, the volunta ry             more), or within 60 ' days after construction: is
adjustment of prices, costs or profits on any such          begun in this state on any contract for less than
contract or subcontract results in a reduction of       ..: $50,000, when. - the amount of such contract,
                                                                                e                  h
income, the amount, of any repayment or' credit           when aggregated with any other contracts, con-
pursuant to such renegotiation, price redetermi-          struction on which was begun in this state in the
nation or , adjustment, including any federal in-         same calendar ,year, equals or exceeds $50,000 .
come taxes credited as a part thereof, shall be
     e                                                      If the department concludes that no bond is
allowed as a deduction from the corporate tax-            necessary to protect the tax revenues of the
able income of the year in which said income              state, including contributions under ch. 108, the
was reported for, taxation .. Any federal income          requirements under this subsection may be
tax previously paid upon any income so repaid or          waived by the secretary of revenue or his des ig-
credited shall be disallowed as a deduction from          nated departmental representative :, The bond
income of the year in which such tax was of igi-          shall remain in force until the liability there-
nally deducted, to the extent that such tax               under is released by the secretary or his desig-
constituted an allowable deduction for ' said ,year ,     nated departmental representative ,
Any corporate taxpayer affected by such rene-
                          ,                                (b) A construction contractor required to file
gotiation, price redetermination or voluntary           a surety bond under pan (a) may, in lie of such
adjustment may within one year after the final          requirement, but subject . to approval by the
determination thereof file a ' claim for refund and     department, deposit with the state treasurer an
secure the same without interest, and the de-           amount of cash equal to the face of the bond that
                                                               t
partment, of' revenue shall make appropriate
                                     e                  would otherwise be requit ed . . If an offer : to
adjustments on account of said tax deductions
                                  d                     deposit is made the department shall issue a
without interest, notwithstanding the limita-           certificate to the state treasurer authorizing him
tions of sub.. (10) of other , applicable statutes .    to accept payment of such moneys and to give
                    Electronically scanned images of the published statutes.
 7 1 .10 INCOME AND FRANCHISE TAXES                                                                 1926

his receipt therefor . A copy of such certifi cate      tax payable shall be such proportion of the tax
shall be mailed to the contractor who shall,            computed on such annual basis, after deduction
within the time fixed by the department, pay            of personal exemptions, as the number of
such amount to said treasurer . A . copy of" the        months in such shor t period is to 12 . If the
receipt of the state treasurer shall be filed with      person's personal exemption status changed
the department.: Upon fi nal determination by          during the short period, such status shalll be
the department of -such contractor's liability for      determined - as of the end of such short period .
state . income taxes, requi r ed unemployment              (iZ) (a) Use of whole dollar amounts.. : .With
compensation contributions, sales and use taxes         respect to any amount required to be shown on a
and income taxes withheld from wages of em-                                  r
                                                        form prescribed for any return, statement or
ployes, interest and penalties, by reason of such       other document required by this chapter, if the
contract or contracts, the department shall cer-        amount of ' such item is other than a whole dollar
tify to the state treasurer the amount of taxes,        amount . the fractional part of a dollar shall be
penalties and interest as f inally determined,          disregarded unless .s it amounts to 50 cents or
shall instruct him alto the proper distribution of      more, in which case the amount (determined
such amount, and shall state the amount, if any,
                             e                         .without regard to the fractional part of a dollar)
to be refunded to such contractor . The state           shall be increased to the next whole dollar
treasurer shall make the payments directed by              (b) Election not to use whole dollar amounts .
such certificate within 30 days after receipt
                                  s                    Any person making a , retutn, statement or other
thereof . Amounts refunded to the contractor           document required by this chapter shall - be
shall be without interest                              allowed to make such return, statement or other
     (c): All persons subject to this subsection       document without regard to par : (a) .
 shall notify the department of revenue of the            (c) Inapplicability to computation of
 completion of a construction project in this state    amount: Paragraph (a) does not apply to items
 within 30 days after such completion .                which must be taken into account in making the
     (d) Any per-son who fails or refuses to comply    computations necessar y to determine the total
 with the provisions of this subsection shall be       amount r equired to be shown on a form, state-
 fined not less than $300 nor', more than $5,000 . .   ment of other document but applies only to such
     (15) Persons deducting rent, interest, divi-      final amount
                                                           l
 dends or royalties in deter-mining taxable in-           (18) (a) Every resident employer of an
 come, shall inform the departmentt of the             entertainer or entertainment corporation which
 amounts and of the name and address of all            performs inthis state for a contract price which
 residents of this state to whom interest, divi-       exceeds $1,950 shall, within 90 days of such
 dends or royalties of $100 or more were paid          pet f 'ormanCe, furnish the department oft eyenue
 during the income year ; and of the amounts and       with a written statement showing the following :
 of the name and address of' residents and nonies-        1 The name of the employer and the em -
 idents to whom rent of $100 or more is paid           ploye i 's Wisconsin income tax identification
 during the income year for property having a          number ; if any . .
 sites in this state . . Such information shall be        2 : The name and address of the entertainer
 submitted on forms prescribed by the depart-          and the enter tainer's social security number, if
 ment and shall be filed at the time of filing the     any .,
 income tax return on which such payments are             3 The pseudonym or stage name of the
deducted, : or at such other time as the depart-       entertainer, if any,
ment prescribes .                                          4 The name and address of the entertainment
     (16) (a) Where a natural person or fiduci-        corporation, if any ,
ary files' a federal income tax , return for a             5 . The total amount of remuneration received
fractional part of the year or where a Wisconsin       by the entertainer , or entertainment corporat ion
income tax return for a fractional part of the         for each performance and the date and place of
year is necessary in making transition to report-      each performance If the total contract price is
ing on the basis of income reported for- federal       not readily determinable, an estimate of " the
tax purposes, the person shall file : a Wisconsin      total remuneration shall be provided .
income tax return f'or such fractional year, and           (b) In this subsection, "employer" means the
such fractional year shall constitute an income        r esident person of firm which engages the ser-
year                                                   vices of an entertainer, or an entertainment
    (b) The Wisconsin taxable income, in case of       corporation or, in the absence of the above, the
reporting income for a fractional part of a year       resident person last having receipt, custody or
under , par . (a), shall be placed on an annual        control of the proceeds ~ of the entertainment
basis by multiplying the amount thereof by 12          event .                _
and dividing by the number of ' months included            (c) An ,y, employer who fails to comply with
in the period for- which the return is made.. The      par . (a) shall be subject to a penalty of $25 per
                        Electronically scanned images of the published statutes.
  1927                                                                     I N COM E AND FRAN CHISE TAXES 71 .11

 entertainer or entertainment corporation for                              ing income of the calendar year 1968 or corre-
 each entertainment event . This penalty shall be                          sponding fiscal year or any prior calendar or
 assessed, levied and collected inthe same man-                            fiscal year or making an incorrect income or
 ner as additional income or franchise taxes, and                          franchise tax report with respect to any such
 shall be in addition to any other penalties im-                           taxable year, with intent in either case to defeat
 posed under this chapter                                                  or evade the income or, franchise tax assessment
    Hi s tory: 1971 c. 40, 125, 215 ; 1973 c. 90 ; 1975 ,c . .39, 104,     required by law, shall be assessed at twice the
 214; 224, 422 ; . 1977 c. 29, 111, 142, 143, 418 ; 1979 c 1, 34 ;
  1979 c 110 s 60 (13) ;' 1979 c, 221, 313 ;,                              normal income or franchise tax : rate by the
    Cross Reference : See 185 .50,: exempting co-operative as-           . department.. Such increased assessment shall be
 sociations organized under ch, 185 from filing state income                                                         s
                                                                           in addi tion to all other penalties in this section ..
 tax returns unless subject to a state income tax .
     Existence of a partnership between husband and wife in                   (b) With respect to the calendar year 1969 or
 operating a farm discussed . Skaar v. Dept . of Revenue, 61 W
 (2d) 9 .3,:'211 NW (2d) 642 ..                                            corresponding fiscal year and subsequent calen-
     W here a taxpayer for income tax purposes, but without                dar or fiscal years, any person failing to make an
 the filing of partnership returns, claimed the existence of a             income or franchise tax report or making .g an
 partnership between himself and his wife in an interior deco-
 rating business by reporting one-half of the income therefrom            incorrect report with intent, in either case, to
 to each, the department correctly determined no partnership              defeat or evade the income or franchise tax
 existed i Stern v, Dept of Revenue, 63 W (2d) 506, 217 NW
 (2d)'326 `                                                               assessment r equired by law , shall have added to
                                                                          the tax an amount equal to 50 % of the tax on the
  71 . 11 ' : Administrative provisions; penal-                           entire underpayment . No amount paid under
  ties. (1) GENERAL, The department of'revenue                            this paragraph may be deducted from gross
  shall assess incomes as provided in this chapter                        income and assessments hereunder may be
  and in performance of such duty the department                                e
                                                                          made with respect to decedents .           Amounts
  shall possess all power's now or hereafter granted                                        x
                                                                         added to the tax under this paragraph shall be
  by law to the department in the assessment of                                   d
                                                                         treated as additional taxes for all purposes of
  personal property and also the power to estimate                       assessment and collection ,
  incomes                                                  ( 7 ) ASSESSMENT WHEN PRICES AFFECT TAX-
      (3 ) R E P O R TS R EQUESTED BY DEPARTMENT .     ABLE INCOME, (a) When any corporation liable
  Whenever in the judgment of the department           to taxation under this chapter conducts its busi-
  any person other than 'a corporation is subject to   ness in such a manner as either directly or
  income tax under this chapter, the department        indirectly to benefit the members or stockhold-
  shall notify the person to report on or before       ers thereof ' or any person interested in such
  April 15 of each year in such manner and form        business, by selling its products or the goods or
 as the `department prescribes, specifying in de-     commodities in which it deals at less than the
  tail the amounts of income received from all        fair price which might be obtained therefor, or
 sourcess and such other information as the de-       where a corpo r ation, a substantial portion of
 partment deems necessary to enforce this             whose capital stock is owned either directly or
 chapter . .                                          indirectly by another corporation, acquires and
     (4) DEFAULT ASSESSMENT, Any person re-           disposes of the products of the corporation so
 quired to make an incomee or franchisee tax          owning a substantial portion of its stock in such
 return, who fails, neglects or refuses to do so in   a manner' as to create a loss or improper net
 the manner and :formm and within the time pre-                     e               t
                                                      income, the department may determine the
 scribed `by this chapter-, of makes a r eturn ;that  amount of taxable income to such corporation
 does not disclose the person's entire net income,    for the calendar, or, fi scal year;, having due regard
 shall be assessed by the department according to     to : the reasonable profits which but for- such
 its best ,judgment                                   arrangement or under standing might or could
     (5) DEFAULT ASSESSMENT In case- of the           have been obtained from dealing in such prod-
                                                            e
 failure' on the part of any person to make a         ucts, goods or commodities .
report of income within the time and in the               ('b) For the purpose of ' this chapter, whenever
manner : prescribed by law, the department may        a corporation which is required to file an income
 enter an assessment against the person upon 10       tax retu r n, is affiliated with .or related to any
:days' `written notice in a sum of not less than      other corporation through stock ownership by
$500 The notice may be served by mail After           the same interests or as parent or subsidiary
the tax on the assessment has been entered on                                                e
                                                     corpo r ations, or whose income is regulated
the assessment roll the person assessed shall be      through contract or other arrangement, the de-
forever barred from questioning the, correctness     pai;tment ofi revenue may require such consoli-
of the same in any action or, proceeding, :          dated statements as in its , opinion are necessary
    (6) ATTEMPT T O D EFEA T OR EVADE TAX ; IN-      in order to determine the taxable income re-
.CREASED ASSESSMENT . (a) Any person failing to      ceived by any one, of the affiliated or related
make an income or franchise tax report cepor ;t-     corporations ,
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71 . 11 INCOMEAND FRANCHISE TAXES                                                                     1928

     (711'1 ) ' ALLOCATION OF G R OSS INCOME, DE-       those adjustments which are determined to be
 DUCTIONS, CR EDITS B E TWEEN 2 OR MOR E BUSI-          necessary solely by reason of'the change in order
 NESSES, I n any case of 2 or more organizations,       to prevent amounts from being duplicated or
 trades or businesses (whether or not incorpo-          omitted, except there shall not be taken into
 rated, whether or not organized in the United          account any adjustment in respect of any tax-
 States and whether or not affiliated) owned or         able year to which this section does nott apply,
 controlled directly or, indirectly by the same         and except that this rule shall not modify or
 interests, the secretary or his delegate may dis-      change the rule as to federal income and excess
 tribute, apportion or allocate gross income, de-       profits taxess set forth in s .. 71 .02 (1) (c) .
 ductions,` credits or allowances between or                (9) INVENTORIES, W HEN REQ UIRED . . When-
 among such organizations, trades or businesses,        ever in the opinion of the department the use of
 if' he determines that such distribution, appor-       inventories is necessary in order to clearly deter-
 tionment or allocation is necessary in order to        mine the income of any person, inventory shall
 prevent evasion of taxes or clearly to reflect the     be taken by such person upon such basis as the
 income of any of such organizations, trades or         department may prescribe, conforming as
 businesses                                             nearly as may be to the best accounting practice
                                                        in the trade or business and most clearly reflect-
     (7r) COMBINING NET INCOME OF DISC , PAR-
                                                        ing the income . .
 ENT A ND AFFILIATED CO RP ORA T I ON, In the case
 of`a parent corporation, its DISC or affiliate, the       (1 0 ) R ECORD S MAY BE REQUIRED OF TAX-
 net income of a DISC derived from business             PAYER . Whenever the department deems it nec-
 transacted with its parent shalll be combined          essary t h at a person subject to an income tax
 with the income of the parent corporation and          should keep records to show whether or not the
 the net income of a DISC derived from business        person is liable to tax, the department may serve
 transacted with the parent's affiliated corpora-       notice upon the person and require such records
 tion shall be combined with the net income of the      to be kept as will include the entire net income of
 affiliated corporation to determine the amount         the person and will enable the department to
 of income subject to taxation under this chapter       compute the taxable income . . Thereafter, any
 for the DISC, the parent corporation or the            taxes assessed upon information not contained
 affiliate of the parent corporation as separate        in such records shall carry a penalty of 25 % of
taxable entities . The net income of the parent         the amount of the tax The penalty shall be in
corporation shall not include dividends received        addition to all other penalties provided in this
 from the DISC paid from income previously              chapter ..
combined for taxation under this subsection,               (11) TAX RECEIPTS, (a) The department of
 "DISC" (domestic international sales corpora-         revenue shall accept payments of income taxes
tion) has the meaning specified in section 992 of       in accordance with this chapter, and upon re-
the internal revenue code as amended to Decem-         quest shall give a printed or written receipt
ber ,31,1979 . For purposes of this subsection, a      therefor .
corporations is affiliated if' at least 50% of its         (12) TAX RECEIPTS TRANSMITTED TO STATE
total combined voting stock is owned directly or        ixEnsuREx:. Within 15 days after receipt of any
indirectly by its parent corporation . .               income tax payments the department of revenue
    (8) ' METHOD OF ACCOUNTING ; GENERAL .             shall transmit the same to the state treasurer, .
R U LE ; CORPORATIONS (a) The income and                   (13) RETURN PRES UMED C ORR ECT ; ROLL S, .
profits of`corporations for the income year shall      The department shall presume the incomes re-
be computed in accordance with the method of"          ported on the cur Tent return to be correct for the
accounting regularly employed in keeping the           purpose of preparing initial assessment rolls,
books of the taxpayer, but if no such method of        and shall enter the taxable income on initial
accounting has been so employed, of if the             assessment rolls : by taxation ; districts . .' Such
method employed does not clearly reflect the           assessment rolls and all subsequent assessment
income, the, computation `shall be made upon           r olls shall remain on file in the office of the
such basis and in such manner as in the opinion        department . Additional assessment rolls shall
of'the department of'ievenue does clearly reflect      be prepared from time to time which shall
the income                                             include corrections made by office auditss of
    (b)` In computing a corporation's taxable          current returns, initial assessments on any ae-
income for any taxable year', commencing after         turn omitted from the first initial roll, initial
                                                       assessments of fiscal year returns and coirec-
December 31, 1953, if' such computation is
under a"method of'accounting different from the        tions made after field audit pursuant to this
method under which the taxpayer's taxable in-          section
come for- the preceding taxable year was com-              (15) NOTICE TO TAXPAYER BY DEPARTMENT,
pu ted , then there shall be taken into account        The department of' revenue shall notify each
                   Electronically scanned images of the published statutes.
 1929                                                       I NCOME AND FRANCHISE TAXES 7 1 . 11

taxpayer by mail of the amount of income taxes            against the treasurer so neglecting or refusing to
appearing against him on said rolls, of the               refund such overpayment, without filing a claim
amount paid thereon, of the balance due, of the           for refund with such treasurer, provided that
date when such balance shall be paid and of the           such action "shall be commenced within one year
date when thetaxes become delinquent, .                   after the certification of such overpayment .
   '(16) OFFICE AUDIT, The department of reve-               (20)   VERIFICATION O F RET U RN ; FIELD AU-
nue shall as soon as practicable office audit such        DIT' (a) Whenever' the department deems it
returns as it deems advisable and ifit is found           advisable to verify any return directly from the
from such office audit that a person has been             books and records of any person, or from any
over or under assessed, or found that no assess-          other sources of information, the department
ment has been made when one should have been              may direct any return to be so verified .
made, the department of revenue shall correct or             (b) For the purpose of ascertaining the cor-
assess the income of such person Any assess-              rectness of any return or for the purpose of
ment, correction or adjustment made as a result           making a determination of the taxable income of
of such office audit shall be presumed to be the          any person, the department may examine or
result of an audit of the return only, and such           cause to be examinedd by any agent or represent-
office audit shall not be deemed a verification of        ative designated by it, any books, papers, records
any item in said return unless thee amount of             or, memoranda bearing on the income of the
such item and the propriety thereof shall have            person, and may require the production of the
been determined after hearing and review as               books, papers, records or memoranda, and re-
provided ins 71 .12 (1) . Such office audit shall         quire the attendance of any person having
not preclude the department of revenue from               knowledge in the premises, and may take testi-
making field audits of the bookss and records of          mony and require proof material f'or, its infotma-
the taxpayer and from making further adjust-              tion . Upon such information as it may be able to
ment, correction and 'assessment of income. .             discover, the department shall determine the
    (17) NOTI CE -To TAXPAYER OF ADJUSTMENT               true' amount of income `received during the year
The department shall notify the taxpayer, as              or years under investigation .
prodded in sub : (22), of any adjustment, cor-               (c) If it appears upon such investigation that
c ection and assessment made under sub .. . (16)          a person has been over or under assessed, or that
    (18) ADDI TIONA L TAX EN T E RED I N NEXT             no assessment has been made when one should
ROLL In all cases where theree has been no                have been made, the department shall make a
request for hearing, and after decision :where a          correct assessment in the manner provided in
hearing has been requested, the additional tax or         this section .
overpayment shall be entered on the next roll .              (21) ADDITIONAL ASSESSM E NTS AND RE-
    (19) COLLECTION OF ADDITIONAL TAX (a)                 FU NDS ; WHEN PERMITTED, (a) Additional as-
                                                          sessments and corrections of assessments by
If the tax is increased the department shall
                                                          office audit or field investigation may be made
proceed to collect the additional tax in the same
                                                          of income of any taxpayer if' notice under sub .
manner as other income taxes are collected ., If
                                                          (22) is given withinn the time specified in this
the income taxes are decreased upon direction of
the department the state treasurer shall refund           subsection ..
to th e taxp ayer, such p art of' t he, over payment as      (bm) With respect to assessments of income
was actuallyy paid in cash, and the certification                                            .or
                                                          received in the calendar year 1954 corre-
of the overpayment by the department shall be             sponding fiscal year, and in subsequent years,
sufficient authorization to the treasurer for the         such notice shalll be given within 4 years of the
refunding of ;the overpayment, . No refund of'            date the income tax or franchise tax return was
income tax shall be made by the treasurer, unless         filed ..
the refund is ;so certified The part of the                  (c) Irrespective of par (bm), ifany person
overpayment paid to the county and the local              has made an incorrect income tax or franchise
taxation district shall be deducted by thee state         tax return for any, of the years since January 1,
treasurer in the treasurer's next settlement with         1911, withh intentt to defeat or evade the income
the county and local treasurer ;                          tax or franchise tax assessment provided by law,
   (c) No action or proceeding whatsoever, shall          of, has failed to file any income tax or franchise
be bi-ought against the state or : the treasurer          tax return for any of such years, income of any
thereof for the recovery, refund of credit of any         such year may be assessed when discovered by
income or surtaxes ; except in case the state             the proper assessing authority .
treasurer shall neglect or refuse for a period of            (cm) I rrespective of par . . (c), if additional
60 days to refund any overpayment of any                  assessments are made f'or, any period more than
income of surtaxes certified, the taxpayer may            6 year-s, before the year in which thee assessment
maintain an action to collect the overpayment             is made, the burden of proof shall rest with the
                     Electronically scanned images of the published statutes.
 71 .11 I N CO M E A ND FRANCHISE TAXES                                                                  1930

 state to prove their case by a preponderance of          an amended return with the internal revenue
 the evidence .                                           service, or with another state ifthere has beenn
      (d) The limitation periods provided in this         allowed a credit against Wisconsin taxess for-
 subsection may be extended by written agree-                  :paid to that state, shall also
                                                          taxes file, '90                         within
 ment between the taxpayer and the department             days of'such filing date, an amended return with
 of ' revenue entered into prior to the expiration of     the department if any information contained on
 such limitation periods or any extension of such         the amended return affects the amountt of in-
 limitation periods . During any such extension           come reportable or tax payable under this
 period, the department may issue an assessment           chapter
 or a refund relating to the year which the                 (21n) ' ADDITIONA L ASSE SSMEN TS AGAINST
 extension covers, Paragraph (cm) shall not              DISSOLVED CORPORATIONr If all or substantially
 apply to any assessment made in any such                all of-the business or property of'a corporation is
 extended period                                         transferred to one or more persons and the
    (e) Section 990,06 shall have no application         corporation is liquidated, dissolved, merged,
 to the provisions of this section ..                    consolidated or otherwise terminated, any tax
    (g) Notwithstanding any other limitations            imposed by this chapter on such corporation
 expressed in this chapter, an assessmentt or re-        may be assessed and collected as prescribed in
 fund may be made :                                      this section against the transferee or transferees
      1 If ' notice of assessment is given within 6      of such business or property Notice shall be
 years after, a return was filed, if the taxpayer
                              s                          given to such transferee or transferees under
 reported for taxation on his or her return less         sub.. (22) within the time specified in sub . (21)
 than 75 % of the net income properly assessable,        irrespective of any other limitations imposed by
         t
 except that no assessment of additional income          law If such corporation has dissolved, such
 may be made under this paragraph for any yea r          notice may be served on any one of the last
 beyond the period specified in par . (bm) unless
                                                         of'f'icers or members of'the board of'directors of
                                 s
 the aggregate of' the taxes on the additional           such corporation .
 income of such year, is in excess of $100 ..
     2 . If notice of assessment of refund is given to        (22) NOTICE OF ADDITIONAL ASSESSMENT
 the taxpayer within 90 days of " the date on which       No additional assessment by office audit or field
 the department receives a report from the tax-           investigation shall ' be placed upon the assess-
payee under sub . . (21m) of within such other            ment roll without notice in writing to the tax-
period specified in a written agreement entered           payer . Such notice shall be served as a circuit
into prior to the expiration of such 90 days by           court summons or by registered mail . Service of
the taxpayer and the department . If the tax-             such notice by regular, mail shall also be suffi-
payer does not r eport to the department as               cient notice of such assessment if receipt thereof
i equired under sub (21 m ) ; the department may          is admitted by the person assessed, or if there is
make an assessment against the taxpayer after             other satisfactory evidence of the receipt
discovery by the depar tment of the requirement           thereof.
of ' such reports within 10 years after the date on           (23) ADDITIONAL REMEDY TO COLLECT TAX .
which the tax return is filed . This 10-year time        The department of revenue may also proceed
limitation shall not apply to assessments made           under s; 71 .13 (3) for the collection of any
unde r pa t : (c)                                        additional' assessment` of income taxes or suc-
   (h) For pur poses of this subsection, a return        taxes, after` notice thereofhas been givers under
filed before the last day prescribed bylaw for the       s. . 71 ..1I (22) and before the same shall have
filing thereof shall be consider ed as filed on such     become delinquent, when it has reasonable
last day .                                               grounds to `believe that the collection of such
     (21m) INTERNAL REVENUE SERVICE ADJUST-              additional- assessment will be jeopardized by
MENTS AND AMENDED RETURNS , Ifthe amount                 delay., In such cases notice of the intention to so
of'` taxable income for any ,year, of ' any taxpaye r    proceed shall be given by registered mail to the
as reported to the internal revenue service is           taxpayer, and the warrant of the department of
changed ' or corrected by the internal revenue           revenue shall not issue if the taxpayer within 10
service of other officer , `of the United States,        days after such notice furnishes a bond in such
such taxpayer- shall report such changes or cor-         amount, not exceeding double the amount of the
i`ected income to the department within 90 days          tax, and with such sureties as the department of
after its final determination and shall concede          revenue shall approve, conditione d upon the
the accuracy of such determination or state how          payment of so much of thee additional taxes as
the determination is erroneous, Such changesoi           shall finally be determined to be due, together
corrections need not be reported unless they             with interest thereon as provided by s . 71 : .09 (5)
af'f'ect the amount of" income reportable or tax         (a) . Nothing in this section shall affect the
payable under . this chapter.. . Any taxpayer filing     review of additional assessments provided by ss,
                  Electronically scanned images of the published statutes.
1931                                                        INCOME AND FRANCHISE TAXE S 71 .11

71 . 12 (1),71 12 (3), ' 7 .3 01 and ' 73 ..015, and any   deposits or payments as required by s 71 20 (4
amounts collected under this section shall be
         s                                                 or wilfully lenders a false or fraudulent state-
deposited with the state treasurer and disbursed           ment required by s 71 .10 (8), (8m) or (8n) or
after- final determination of the taxes as are             deposit report or withholding repoii required by
amounts deposited under , s '11 .. 12 (2) .                s 7120 (4), such person shall be guilty of a
   (24) DEPARTMENTAL RULES ; COLLECTIONS ;                 misdemeanor and may be fined not more than
EMr LOYES . (a) The department of ' revenue may            $500 or imprisoned not to exceed 6 months or,
make such rules and regulations as it shall deem           both, together with the cost of prosecution ..
necessary in order, to carry out this chapter .               (4 2 ) SAME ;` FA LSE INCOME TAX RETURN ;
   (b) The department of revenue may employ                FRAUD ; FELONY,, Any person, other than a corpo-
such clerks and specialists as are necessary to            ration, who renders a false or fraudulent income
carry into effective operation this chapter . Sala-        tax 'return with intent to defeat or evade any
iies and compensations of such clerks and spe-             assessment required by this chapter shall be
cialists shall be charged to the proper appropria-         guilty of 'a felony and may be fined not to exceed
tion for- the department of revenue                        $10,000 or be imprisoned not to exceed 5 years
   (c) Representatives of the department of                or both, together with the cost of prosecution
revenue directed by it to accept payment of                   (43) SAM E; OFFI CER OF A CORPORATI ON ;
income taxes shall file bonds with the state               FALSE FRANCHISE OR I NCOM E TAX R E T U R N; FEL-
treasurer in such amount and with such sureties            ONY Any officer of a corporation required by
as the state treasurer shall direct and approve .          law to make, tender, sign or, verify any franchise
In collecting income taxes as providedin this              or income tax return, who makes any false or
chapter, the dep ar tment of revenue shall be              fraudulent franchise or income tax return, with
deemed to act a s a gents of the state, counties           intent to defeat or evade any assessment re-
and towns, cities or villages entitled to receive          quired by this chapter shall be guilty of 'a felony
the taxes collected                                        and may be fined not to exceed $10,000 or be
    (25) - FAILURE OF NATURAL PERSONS AND FI-              imprisoned not to exceed 5 years or both, to-
 DUCIARIES TO FILE INFORMATION RETURNS . The               gether with the cost of prosecution .
 department may assesses an addition to taxable               (44) S AME; . DIVU LGI NG INFORMA T IO N., (a)
 income the amount of deductions taken in arriv-           Except as provided in par, (c), no person may
 ing at federal adjusted gross income or federal           divulge or circulate or offer, to obtain, divulge or
 taxable income by natural persons and fiducia-            circulate any information derived from an in-
 ries for wages, lent, interest or loyalties, upon         come, franchise, withholding, fiduciary, part-
 failure to file information returns concerning            neiship or gift taxx return or tax credit claim,
 such payments where, required under s . 71 . 10           including information which may be furnished
 (8), (8m), (8n) and (15) Such assessments                 by the department of revenue as provided in this
 shall be made and reviewed in the same manner             subsection. . This paragraph does not prohibit
as other incometax assessments .                           publication by any newspaper of information
    (40) PENALTIES If any person required                  lawfully derived from such returns or claims f'or
 under this chapter to file an income or franchise         purposes of argument or prohibit any public
 tax return fails to file a return within the time         speaker from referring to such information in
prescribed by law, ores extended under s . 71 .10          any address .. This paragraph does not prohibit
 (5), the department shall add to the tax of the           the department of revenue from publishing sta-
person , $10 in the case of corporations and in the        tistics classified so as not to disclose the identity
case of persons other, than corporations $2 when           of particular returns, or claims or reports and
the total normal income tax of the, person is less         the items thei eof'.
than $10, $3 when the tax is $10 or more but less             (b) The department shall, make available
than $20, $5 when the tax is $20 or mole. If no            upon suitable forms prepared by the department
tax is 'assessed against any. such person the
                 d                                         information setting forth the net . Wisconsin in-
amount of this fee shall be collected, as income           come tax, Wisconsin franchise tax of Wisconsin
taxes are collected, and . no person shall be al-          gift tax reported as paid or payable : in the
lowed in any action or proceeding to contest the
                    n                                      returns filed by any individual or corporation f'or
imposition of such fee . . .                               any individual year upon request . B efore the
    (41) SAME FAILURE TO FILE RETURN OR RE-                request is granted, the person desiring to obtain
PORT'; FALSE RETURNS ; FRAUD ; MISDEMEANOR. If             the information shall prove his or her, identity
any pet-son, including an officer- of a corporation        and shall be required to sign a statement setting
required by law : to make, render, sign or verify          forth the person's address and reason for ma king
any return, wilfully: fails or, refuses to make a          the request and i ndicating that t he person un-
r eturn at the time required ins 71 10 (l ) ; (2)          derstands the provisions of this subsection with
and (3), or, wilfully fai ls , or,:; iefuses to make       respect to the div ulgement, publication or dis-
                     Electronically scanned images of the published statutes.
 71 .11 INCOME AND FRANCHISE TAXES                                                                          1932

  semination of information obtained fr om re-                  4 , Public officers of' the federal government or,
  turns as provided in par . (a) , The use of a            other state governments or the authorized
                      s
  fictitious name is a violation of this subsection .      agents of such officer s, where necessary in the
  Within 24 hou r s after any information from any         administration of the tax laws of such govern-
  such tax return has been so obtained, the depart-        ments, to the extent that such government ac-
  meat shall mail to the person from whose return          cords similar rights of examination or informa-
  the information has been obtained a notification         tion to officials of this state .
  which shall give the name and address of the                 5 . The person who filed or submitted the
  person obtaining the information and the reason          return or claim, or to whom the return or claim
 assigned for requesting the information The               relates or by the person's authorized agent or
 department shall collect from the pe r son re-            attorney .
 questing the information a fee of $1 for each                 6 . . Any person examining a return or clai m
 return ,                                                  pursuant to a court order duly obtained upon a
     (bm) The information described in par . (b)                      g
                                                           showing to the court that the information con-
 shall not be made available to any nonresident or         tained in the return or claim is relevant to a
 to any resident who is making the request for
        y                                                  pending court action or pursuant to a subpoena
 such information for the use or benefit, directly         signed by a judge of a court of record or dering
 or, indirectly, of a nonresident person or firm or a      the department ' s custodian of returns or claims
 foreign corporation except to the extent that           to produce a return or' claim in open court in a
 similar information in the state of residence of        court action pending before the judge .
 such per son or, firm or the state of incorporation           7 . Employes of this state, to the extent that
 of such foreign corporation is made available to        the department ofrevenue deems the examina-
 residents of Wisconsin or Wisconsin corpora-            tion necessary for, the employes to perform their ,
 tions . As part of the statement required by par .      duties under contracts or , agreements between
 (b), the department shall require any person            the department and any other department, divi-
 desiring to obtain such information to declare          sion, bureau, board or commission of this state
 whether the person is a nonresident of the state        relating to the administration of tax laws or
 and whether the information is desired for the
    d                                                    child support enforcement under s . : 46 .25 .
 use or benefit of a nonresident person or firm or             8 , A member of' the boa rd of arbitration
 a foreign corporation. No copy of any return            established under s 71 :03 (3) or a consultant
 shall be supplied to any person except as permit-       under joint contract with the states of Minne-
 ted by par . : (c) .                                    sota and Wisconsin for the purpose of determin-
    (c) Subject to pats (d) and (e) and to rules         ing the reciprocity loss to which either state is
of the department, any returns or claims speci-          entitled '
fi ed under par . ( 'a) or , any schedules, exhibits,         9 . The office of the commissioner of insurance
writ i ngs ' or audit reports pertaining to the re-      with respect to information compiled under ' sub ..
turns or claims on file with the department shall        (45) .
be open to examination ; by only the following                 (d) Copies of returns and claims specified in
persons and the contents thereof ' may be di-            par . (a) and related schedules, exhibits, writ-
vulged' or used only as follows :                        ings or audit reports shall not be furnished to the
   i . : The secretary of'' ievenue or any officer,      persons listed under par (c), except persons
agent or employe of the department .                     under par.. (c) 5 or under' an agreement between
   2 The atto r ney general and department of            the department of revenue and another agency
Justice employes                                         of government,
    3 Members of any legislative committee on                 (e) The use of information obtained unde r
organization or its authorized agents provided           par , (c) or (d) ' is restricted to the discharge of
the examination is approved by ` a majority vote        duties imposed upon the persons by law or by the
of a quorum of its members and the tax return or        duties of their office or ' by order of a court as
claim ,information is disclosed only in a meeting       provided under par ., (c) 6 . :
closed to the public : The committee may dis-                 (f) The department of revenue may charge
close tax return or claim information to the            f "or, the reasonable cost of divulging information
senate or assembly or to other legislative com-         under this subsection;
mittees if the information does not disclose the           (g) District attorneys may examine tax and
identity of particular returns, claims or reports
       y                                                claim information of persons on file with the
and the items thereof. The department of                department of revenue as follows :
revenue shall prov ide assistance to the commit-           1 Such information may be examined for- use
tees or their authorized agents in order to iden-       in preparation for any judicial proceeding or, any
tify returns and claims deemed necessary by             investigation which may result in a judicial
them to accomplish the review and analysis of
                               w                        proceeding involving any ` 04' the taxes or tax
tax policy.                                             credits specified in par . (a) if:
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 1933                                                    INCOME AND FRA NCHISE TAXES 71 .11

   a . The taxpayer is or may be a party to such       ously impair a civil or criminal tax investigation,
proceeding;                                            the department may deny access and shall cer-
   b , The treatment of an item reflected in such      tify the reason therefor to the court .
information is or may be related to the resolu-           (h) Any person violating the provisions of
tion of an issue in the proceeding or investiga-       this subsection shall upon conviction be fined
tion ; or                                              not less than $100 nor more than $500, or
   c .. The information relates or may relate to . a   imprisoned not less than one month nor more
transactional relationship between the taxpayer '      than 6 months, or both
or- credit claimant and a person who is or may be          (45) SELF-INSURERS, The department shall
a party: to the proceeding which affects or, may       compile and maintain a current list of names
affect the resolution of an issue in such proceed-     and addresses of persons who indicate they are
ing or investigation ..                                self-insurers as required by s . 71 .10 (6m) . . The
   2. When the department of revenue allows            list shall be furnished to the office of the com-
examination of information under subd . 1 :            missioner of insurance on request .
   a . If the department has referred the case to a
                                                           (46) FAILURE TO FILE, ASSESSMENT .. In case
district attorney, the department may make
                                                       of failuree to file any return required under s.
disclosure on its own motion .:
                                                       71,10 (1), (2), (3) (c), (d) or (e) on the due
   b: If a district attorney requests examination      date prescribed therefor, including any exten-
of tax or tax credit information relating to a
                                                       sion of time for filing, unless it is shown that the
person, the request must be in writing, clearly
                                                       failure is due to reasonable cause and not due to
identify the requester and the person to whom
                                                       wilful neglect, there shall be added to the
the information relates and explain the need for,
                                                       amount required to be shown as `tax on the
the information .. - The department may then           return 5% of"the amount of'the tax if'the failure
allow the examination of information so re-            is for not more than one month, with an addi-
quested and the information may be examined
                                                       tional 5 % for each additional month or fraction
and used solely for the proceeding or investiga-
                                                       thereof during which the failure continues, not
tion for which it was requested .
                                                       exceeding 25% in the aggregate .. For purposess
    3 . Such information may be examined for, use      of this subsection, the amount of'tax required to
in preparation for any administrative or ,judicial
                                                       be shown on the return shall be reduced by the
                                             y
proceeding or an investigation which may result
                                                       amount of any part of the tax which is paid on or
in such proceeding pertaining to the enforce-          beforee the due date prescribed for payment and
ment of a specifically designated state criminal       by the amou nt of any cred it against the tax
statute not involving tax administration to
                                                       which may be claimed upon the return .
which this state or a governmental subdivision
thereof is a :party , Such information may be             ( 47 ) INC OMPLETE OR I NCORRECT RETURN,
used solely for the proceeding or investigation        ASSESSMENT . If any person required under this
                                                       chapter to file an income or franchise tax return,
for, which it is requested .
                                                       files an incomplete or incorrect return, unless it
    4 . The department of revenue may allow an
examination of information under subd . 3 only if      is shown that such filing was due to good cause
                                                       and not due to neglect, there shalll be added to
a district attorney petitions a court of ` record in
                                                       such per son's tax for the income year 25 % of the
this state for- an order' allowing the examination
                                                       amount otherwise payable on any income subse-
and the coun t issues an order ' after' finding. ;
         e
                                                       quently discovered or reported . The amount so
   a. There is reasonable cause to believe , based
                                                       added shall be assessed, levied and collected in
on information believed to be reliable, that a
                                                       the same manner as additional normall income
specific criminal act has been committed ;
                                                       or franchise taxes, and shall be in addition to any
   b. There is reason to believe that such infor-
                      n
                                                       other penalties imposed by this chapter
mation' is probative evidence of a matter ' in issue
related to . the commission of the criminal act ;         (48) AVOIDANCE OF TAX BY ESTABLISHMENT
and                                                    OR MAI NTEN ANCE OF OUT-OF-STATE TR UST ;
   c . The information sought to be examined           GRANTOR LIABLE FOR TAX . The establishment or
cannot reasonably : be obtained from any other         maintenance of a trust outside Wisconsin by a
source, unless it is deter mined that, notwith-        Wisconsinn resident as grantor, the income from
standing the reasonable availability of the infor-     which trust is taxable to the grantor or to any
mation from another source, the information            person other than the trust under the internal
constitutes the most probative evidence of a           revenue code, is hereby declared to be a tax
matter in issue relating to the commission of          avoidance device designed to avoid the legal
such crimi nal act .
    h                                                  application of the Wisconsin income tax to
   5 : If the department determines that exami-        income properlyy taxable to the grantor or such
nation of information ordered under subd . 4           other per-son . Any Wisconsin resident who is the
would identi fy a confidential informant or seri-      grantor of such a trust shall be liable for the
                         Electronically scanned images of the published statutes.
71 .11 INCOME AND FRANCHISE TAXES                                                                                      1934

Wisconsin income tax on the income of such                           commission or disposition of the appeal pursu-
trust which is federally taxable to such grantor                     ant to stipulation and order under ss 73         (4)
or other person under the internal revenue code                      (a) and 73 .03 (25) In the application for
    (49) PROSECU TIONS BY A T TORNEY GENE R A L . .                  healing, filed under sub ` (l ) (c), the taxpayer
The attorney general is authorized, upon the                                                  t
                                                                     may offer to deposit the entire amount of the
request of the secretary of" i evenue, to represent                  additional taxes, together with interest, with the
the state or, to assist the district attorney in the                 state treasurer . If an offer to deposit is made,
prosecution of any case arising under subs .                         the department of revenue shall issue a certifi-
(41), (42) and (43)                                                  cate to the state treasurer authorizing the trea-
   History : 1973 c . 110, 333 ; 1975 c 224 ; 1977 c 29,143, 418 ;   surer to accept payment of such taxes together
1979 c . 34, 89, 221, 313, 355 .                                     with interest to the first day of the succeeding
    The court adopts the rule that an application for refund of
income taxes can be offset by an additional assessment even          month and to give a receipt A copy of the
though the latter was barred by statute of limitations, so long      certificate shall be mailed to the taxpayer who
as the same year or tax period is involved, and conversely, a
taxpayer can counter with a refund claim . American Motors           shall pay the taxes and interest to the treasurer
Corp.p v . Dept .t of Revenue, 64 W (2d) .33'7, 219 NW (2d)          within 30 days . . A copy of the receipt of the state
300 .
                                                                     treasurer shall be filed with the department.
                                                                     The department shall, upon final determination
 71 . 12 Contested assessments and claims                            of the appeal, certify to the state treasurer the
 for refund . (1) (a) Any person feeling ag-
    r                                                                amount of the taxes as finally determined and
 grieved by a notice of additional assessment,                       direct the state treasurer to refund to the appel-
 refund, or notice of denial of ref ~nd may, within                  lant an y portion- of `such payment which has been
 60 days after receipt of the notice, petition the                   found to have been illegally , assessed, including
 department ofi revenue for i edeter urination . The                 interest The state treasurer shall make the
 department shall make a redetermination on the                      refunds di rected by the certificate within 30
 petition within -6 monthsafter it is filed                          days after receipt . Taxes paid to the state
     (b) The department shall notify any person                      treasurer under this subsection shall be subject
 who files a petition for redetermination that the                   to the interest provided by ss 7109 (5) and
 person may deposit the amount of an additional                      71 . 13 (2) only to the extent' of the interest
 assessment, including any interest or penalty,                      accrued on the taxes prior to the f irst day of the
 with the department when the petition is filed or                   month succeeding the application fo r hearing ' .
at any time before the department makes its                          Any por tion of the amount deposited with the
 i~edeterminatiom. Amounts deposited under, this                     state treasurer, which is reFunded to the taxpayer
 paragraph shalll be subject to the interest pro-                    shall bear interest at the rate of 9% per year
 vided by s 71 09 (5) only to the extent of the                      during the time that the funds are on deposit ..
                                                                            g
 interest accrued prior to the first . day of the
 month succeeding' the date of deposit, : Any                            (3); No person against whom an assessment
                                                                     of income tax has been made shall be allowed in
 deposited amount which is refunded shall bear
 interest at the rate of 9 % per year during the                     any action either as plaintiff or defendant or in
                                                                     any other proceeding to question such assess-
 time the funds were on deposit .: A person may
also pay any portion of an assessment which is                       ment unless the requirements of sub , (1) shall
admitted to be correct and the payment shall be                      first have been complied with, and unless such
                                                                     person ' shall have made full disclosure under
considered an admission of :the validity of that
                                                                     oath at the hearing before the tax appeals com-
portion of the assessment and may not be recov-
ered in an appeal or in any other action or                          mission of any and all income received by him .
                                                                     The requirements of this subsection may be
proceeding,
                                                                     waived by the department of revenue .
    (c) The person, if aggrieved by the depart-
ment's redetermination, may appeal to the tax                              (5) As soon as the appellant shall have filed a
appeals . commission by filing a petition with the                   petition with the tax appeals commi ssion,. all
                                                                                                 x        s
clerk of the commission as provided by law and                       collection proceedings except proceedings under
the rules of practice promulgated by the com-                        s . '71 ...11 (23) ;shall be stayed until final determi-
mission If a petition ; is .nott filedd withh the                    nation of the appeal andany review thereof'
commission within the time provided in s . 73 01                           (6) Any person who contests an assessment
or, except as provided in s . 71,10 (10) (e), if no                  before the tax appeals commission or in court
petition for redetermination is made within the                      shall state in his petition or not ice of appeal what
time provided the assessment, refund, or denial                      portion if any of" the tax is admitted to be legally
of'refund shall be final and conclusive . :                          assessable and correct , ; Within 5 days after
    (2) If the taxpayer requests a hearing, the                      notice by the department, the appellant shall
additional tax or overpayment- shall not be                          pay to the department the whole amount of the
placed on the assessment roll until after hearing                    admitted tax and such tax shall be appropriated
and determination of the tax by the tax appeals                      in accordance with s 71 `. 1 4 . Any such payment
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 1935                                                            INCOME AND FRANCHISE TAXES 71 . 13

shall be considered an admission of the legality               ci rcuit court of his or her county a copy of such
of the tax thus paid, and such tax so paid cannot              warrant, unless the taxpayer makes satisfactory
be recovered in the pending appeal or in any                   arrangements for payment with the department,
other, action or proceeding ..                                 in which case, the sheriff shall, at the direction
   (7) After ' final decision or other disposition,            of the department, return such warrant to it
the record shall be returned to the department of              The clerk shall docket the warrant as r equired
revenue, and the department shall proceed to                   by s . 806 .11, and upon docketing the amount of "
collect the taxes in the same manner as other                  such warrant, together with interest required by
income taxes are collected :                                   sub . . (1) shall be considered in all respects as a
  : 19 7 5 c . .39, 199; 1979 c . 11 0 s . 60 (1,3) ; 1979 c
  History                                                      final judgment creating a perfected lien upon
203,221 . . . .                                                the taxpayer's right, title and interest in all of
                                                                  e
                                                               the real and .d per sonal property of the taxpayer
71 .13 Collection of delinquent taxes . (1)                    against whom it is issued in the county where the
(a) Income and franchise taxes shall - become                  warrant or duplicate copy of the warrant is
delinquent if ' not paid when due under s . 71,10              docketed .: Such perfected lien shall not give the
(9), and when delinquent shall be subject to                   state priority over preexisting lienholders . The
interest at the rate of 1 . 5 % per month until paid,          clerk of " circuit court shall accept, file and docket
and if' delinquent prior, to January 1, 1970, shall            such war rant without prepayment of' any fee,
also be `subject to a penalty of 2% of' the amount             but the clerk shall submit a statement of the
of the tax and the department shall immediately                proper fee semiannually to the department cov-
proceed to collect the same . For the purpose of               ering the periods from January 1 to June 30 and
such collection the depa rtment or , its duly autho-           July 1 to December .31 . The fees shall then be
rized agent shall hav e the same powers as con-                paid by the state as provided by par . (g), but the
ferred by law upon the county treasurer, county                fees provided by s . 59 ..42 (8) for filing and
clerk, sheriff' and distri ct attorney ,                       docketing such warrants, and a f i ling fee of $1
   (b) The department shall provide by rule for                for- filing satisfactions of such warrants, shall be
reduction of interest under- pai . (a) to 9% per-              added to the amount of the warrant and col-
year- in stated instances wherein the secretary of             lected from the taxpayer when satisfaction of
r evenue determines reduction fair and                         release is presented for entry . . In counties where
equitable                                                      the cler k is compensated otherwise than by
    (2) Any additional income or franchise tax                 salary the fees may be paid by the state as
assessment contested before the tax appeals                    provided by par'(g) and added to the amount of
commission or in the courts, which is finally                                                d
                                                               the wa r rant and collected as provided in this
determined to be correct, shall become delin-                  paragraph The sheriff shall be entitled to the
quent if not paid on or before the 30th day                    same fees for, executing upon such warrant as
following the date on which the order or; ;judg-               upon an execution against property issued out of'
ment representing such final determination be-                 a court of' c-ecord, to be collected in the same
comes final and conclusive . Any additional                    manner, Upon the sale of any real estate the
income of franchise tax assessment so contested                sheriff shall execute a deed of ' the same, and the
shall be subject to s 71 : 11 (23)                             taxpayer shall have the right to redeem the real
    (3) (a) If any income or- franchise tax be not             estate as from a sale under- an execution against
paid within 30 days after the same' becomes                    property upon a judgment of a court of record . .
delinquent, the department of revenue shall                        (c) A l ike war r ant may be issued to any agent
issue a warrant to the slier iff of any county of the          of the department authorized to collect income
state commanding him to levy upon and sell                     taxes, and in the execution thereo f and collec-
sufficient of the taxpayer's real and personal
           t                                                   tion of said taxes such agent shall have the
propet-ty found within his county to pay such tax              powers of a sheriff, but shall not be entitled to
with the penalties, interest and costs, and ' to               collect'<f'rom the taxpayer, any fee or charge for -
proceed upon the same in all respects and in the               the execution of such,wari• ant in excess of' actual
same manner as upon an execution against                       expenses paid in the performance of his duty .
property issued out of a court of record, and to               When a warrant is issued to such agent he may
retu rn such warrant to the department and .d pay              proceed upon the same: in any county of the state
to it the money collected, or-, such part thereof as           designated in the warrant, in the same manner
may be necessary to pay such tax, penalties,                   as herein provided with respect to sheriffs of
interest and costs, within 60 days after, the                  such counties .
receipt of such war rant, and deliver the balance,                 (d) If' a warrant be r eturned not satisfied in
if any, after , deduction of lawful charges to the             full, - the. department of revenue shall have the
taxpayer .                                                     same remedies to enforce the claim for taxes,
   (b) The sheriff shall, within 5 days after the              penalties, interest, and costs as upon a judgment
receipt of the warrant, file with the clerk of the             against the taxpayer for- the amount of same .
                                                                         t                             t
                     Electronically scanned images of the published statutes.
 7 1 .13 INCOME AND FRANCHISE TAXES                                                                         1936

      (e) The departriient, if it finds that the inter-     sue to the clerk of circuit court for, the county in
   ests of' the state will not thereby be , jeopaidized,    which the warrant is filed a notice of' withdrawal
   and upon such conditions : as it may exact, may          of the warrant . The clerk shall void the warrant
   issue a release, of any warrant with respect to          and any liens attached by it .
   any real property upon which said warrant is a               (g) All fees and compensation of of 'f 'icials or
   lien or cloud upon title, and such release shall be      other pe r sons performing any act or functions
   entered of record by the clerk upon presentation         requit ed in carrying out this section, except such
   to him and payment of the fe , ' for f iling said        as are by this section to be paid to such offi cials
  release and the same shall be eld conclusive              or persons by the t axpayer , shall, upon pr esenta-
  that the lien or cloud upon the title of the              tion to the department of revenue of an itemized
  property covered by the release is extinguished .         and verified statement of the amount due, be
  Any person desiring that such release be issued           paid by the state treasurer upon audit by the
  shall present to the department a written appli-          department of administration on the certificate
  cation ' in affidavit form requesting that the            of the secretary of revenue and charged to the
  release be issued . Such application shall give the       proper- appropriation for the department of reve-
                                                                                          e
  reasons for the request and shall clearly describe        nue.. ' No public official shall be entitled to
  the property with respect to whichthe release is         demand prepayment of any fee for the perform-
  desired :. ' In support of the request,, the applicant   ance of any official act required in carrying: out
 shall furnish the department with proof suffi-            this section .
 cient to establish"satisf "actorily the fair market           (h) The state may be made a party defendant
 value of' the property, the amounts ; character           in any action' to foreclose a mortgage, land
 and dates, both of execution and of record, of all        contract, or other lien upon any real property
 incumb t ances of record prior to the warrant             affected by such warrant lien, and the summons
 lien, as well as the amount and character of any          may be served by delivering ` a copy to the
 unrecorded incumbcanees believed to be prior to           attorney general or leaving it at his office in the
 the warrant lien, including information as to             capitol with his assistant or clerk . But no judg-
 how and when all such incumbrances arose . .              ment for the recovery of' money or' personal
 Appropriate references shall be made to the               property or costs shall be t endered against the
 pages and volumes of the recording books in               state in any such action .
 which any such incumbrances have been                         (i) The provisions of this section shall be in
 recorded :' The department may require a certi-           addition to all other methods for the collection
 fied copy of any record referred to in such               of income taxes, and the department of ' revenue
 application to be furnished by the applicant, at          may exercise the powers vested in it by virtue of
 his expense, from the officer in whose office such                                            y
                                                           ss 73 :0 :3 (20) and 73 04 or any of the powers
 record is kept .                                          vested ' in it by virtue of any other statute for the
     (f) When the taxes set forth in ' a warrant           purpose of enforcing collection of income taxes . :
 together with penalties and interest to date of               (4) (a) Any taxpayer who is unable to pay
 payment and all costs due the department have             the full amount of his or her delinquent income
 been paid to it or when such warrant has not              taxes, costs, penalties and interest may apply to
 been paid of discharged, but the taxes for which          the department of revenue to pay such taxes,
 such warrant was issued have been canceled or             costs, penalties and interest in instalments
 credited, 'the department shall issue a satisfac-         Such application shall contain a statement of the
 tion of the warrant and file it with the clerk and        reasons such taxes, costs, penalties and interest
 said warrant shall be immediately satisfied of            cannot be paid in full and shall set forth the plan
 record by such clerk The department shall send            of instalment payments proposed by the tax-
a ' copy of such satisfaction to the taxpayer :            payer : Upon approval of such plan by the
                                        n
 When such warrant has not been paid of dis-               department and the payment of instalments in
charged but the enforcement of '' same would, in           accordance therewith collection proceedings
the opinion of 'tlie department, `result in depiiv-        with respect to such taxes, costs, penalties and
i fig the taxpayer. " of a substantial right, the          interest shall be withheld ; but on failure of the
department may issue a ` release of' said warrant          taxpayer, to make any instalment payment, the
and file same with the clerk who shall immedi-             department shall proceed to collect the unpaid
ately make an entry of same of record, and it              portion of such taxes, costs, penalties and inter-
shall be held conclusive of the extinguishment of          est in the manner provided by law ,
the warrant and all liens and rights created                  (b) Any taxpayer may petition the depart-
thereby, ` but shall not constitute a release or           ment of ` revenue to compromise his or her delin-
satisfaction of the taxes for which such warrant           quent income taxes including the costs, penalties
was issued                                                 and interest. Such petition shall set forth a
  (fm) If ' the department of ' revenue has issued         sworn statement of' the taxpayer and shall be in
an erroneous warrant, the department shall is-             such form as the department shall prescribe and
                    Electronically scanned images of the published statutes.
 1937                                                       INCOME AND FRANCHISE TAXES 71 .13

  the department may examine the petitioner                mines that it would be in the best interest of'the
  under' oath concerning the matter . If the depart-       state to compromise the tax, a written recom-
  ment finds that the taxpayer is unable to pay the        mendation shall be made to the department
  taxes, costs, penalties and interest in full it shall   stating the terms upon which the tax should be
 determine the amount the taxpayer is able to              compromised and the reasons therefor . The
  pay and shall enter an order reducing such taxes,
                       r                                   department shall approve or disapprove the rec-
  costs, penalties and interest in accordance with        ommendation and notify the department of,jus-
  such determination Such orde r shall provide             tice. If approved the department of,justice may
  that such compromise shall be effective only if'        enter into a stipulation with the taxpayer provid-
  paid within 10 days The department or its
     d                                                    ing for the compromise of the tax on the terms
 collection agents upon receipt of such order shall       set forth in the recommendation and upon com-
 accept payment in accordance with the order .            pliance by the taxpayer- the tax shall be fully
  Upon payment the department shall enter the             discharged The department of justice shall
 unpaid portion of the principal amount of such           furnish the department with a copy of such
 taxes on the next credit roll and make appropri-         stipulation, and .d the department or' its agents
 ate :record of the unpaid amount of penalties,
              d                                           charged with the collection of income taxes may
 costs,, and interest accrued to the date of such         accept payment of such tax in accordance with
 or der . If within 3 years of the date of such           thee terms of such stipulation and upon payment
 compromise order the department shall ascer-             being made shall enter the unpaid portion of'the
 tain that the taxpayer has an income or, property        tax on the next credit roll. This subsection shall
 sufficient to enable the taxpayer to pa y the            be in addition to all other powers of the depart-
 remainder of the tax including costs , pe nalty          ment of ,justice and the department of revenue
 and interest the depar tment shall re o pen said
    d                                                     with respect to compromise or settlement of
 matter and order th e payment in full of such            income taxes ..
 taxes, costs, penalties a nd interest . Before the           (f) As used in this section, "principal
 entry of` such order ' a notice shall be sent to the     amount" or "principal" of'the tax means the tax
 taxpayer by certified mail advising of the inten-        and interest added thereto in accordance with
 tion of the department of revenue to reopen such         section 71 .09 (5) and section 71 .10 (5),.
 matter and fixing a time and place for the                   (g) All payments made on delinquencies
                                  f
 appearance of the taxpayer if he or she desires a        shall be applied first in discharging costs, penal-
 hearing . . Upon entry of such order the depart-         ties and interest and the balance applied on the
 ment of revenue shall make an entry of the               principal of the tax
principal amount of such taxes, penalties, costs              (5) All laws not in conflict with this chapter,
and interest ordered to be paid on the delinquent         relating to the assessment, collection and pay-
 roll and such taxes shall be immediately due and         ment of taxes on personal property, the correc-
           e
 payable upon entry upon the roll and shall               tion of errors in assessment and tax rolls, and for
 thereafter- be subject to the interest provided by       the collection of delinquent personal property
 sub (1), and the department shall immediately            taxes except the provisions for the compromise
 proceed to collect the same together with the            or cancellation of illegal taxes and the refunds of
unpaid portion of penalty, costs, and interest            moneys paid thereon, shall be applicable to the
accrued to the date of'-the compromise or der .           income tax provided in this chapter .
    (c) Delinquent income taxes, interest and               Note :, See also sub. ( 4) ( d) as to sub (5) .
penalties, resulting from assessments pursuant               (6) (a) The transaction of business or- the
to s 71 . . 11 (4) or (5) ; or s 71 . 20 (5) or (6) or    peef'otmance of personal services in this state or
fr om assessments by virtue of disallowance of
                     s                                    the derivation of income from property the
claimed ` deductions for failure tofile informa-          income from which has a taxable situs in this
tion reports relating thereto, as required by this        state by any nonresident person, except where
chapter, may be compromised by the depart-                the nonresident is a foreign corporation that has
ment when such action is fair- and equitable              been licensed pursuant to ch 180, shall be
under ' : the circumstances ..                            deemed an irrevocable appointment by such
    (d) The following clause contained in sub.            person ; binding upon him, his executor', adminis-
(5) is repealed insofar as it is in conflict with         tratoc' of personal representative, of the secre-
any of the provisions of this section : "except the       tary of state to be his lawful attorney upon
pr ovisions for the compromise or, cancellation of        whom may be served any notice, order, pleading
illegal taxes and the refund of moneys paid               or- process (including without limitation by
ther eon" . .                                             enumeration any notice of assessment, denial of
 ` (e) If any delinquent income tax has been              application for abatement or denial of claim for,
referred by the department to the attorney gen-           refund) by any administrative agency or in any
eral for collection and after having fully investi-       proceeding by or before any administrative
gated the matter the attorney general deter-              agency, or in any proceeding or, action in any
                         Electronically scanned images of the published statutes.
 71 .13 I NCO M E AND FRAN CHISE TAXES                                                                               1938

 court, to enforce or effect full compliance with                       71 . 135 Withholding by employer of delin-
 or involving the provisions of this chapter . The                      quent tax of employe . (1) The department
 transaction of business, the performance of per-                       may give notice to any employer deriving in-
 sonal services or derivation of income from such                       come having a taxable situs in this state (regard-
 property in this state shall be a signification of                     less of whether any such income is exempt from
 his agreement that any such notice, order, plead-                      taxation) to the effect that an employe of such
 ing or process which is so served shall be of the                      employer is delinquent in a certain amount with
 same legal force and validity as if ' served on him                    respect to state taxes, including penalties; inter-
 personally, or upon his executor; administrator                        est and costs . . Such notice may be served by
or personal representative :                                            certified mail, or by delivery by an employe of
    (b) The transaction ofbusiness in this state                        the department of"revenue . Upon receipt of such
or the derivation of income which has a situs in                        notice of delinquency, the employer shall with-
this state under the provisions of this chapter by                      hold from compensation due or to become due to
any person while a resident of this state shall be                      the employe, the total amount shown by the
deemed an irrevocable appointment by such                               notice. The department may arrange between
person, binding upon him, his executor, adminis-                        the employer and the employe for a withholding
trator or personal representative, effective upon                       of an amount not less than 10% of the total
such person becoming a nonresident of this                              amount due the employe each pay period, until
state, of the secretary of" state to be his true and                    the total amount as shown by the notice, plus
lawful attorney upon whom may be served any                             interest, has been withheld The employer shall
notice, order, pleading or process (including                           not withhold more than 25 % of the compensa-
without limitation by enumeration any notice of'                        tion due any employe for any one pay period,
assessment, denial of application for abatement                         except that, if the employe leaves the employ of
or denial of claim for refund) by any adminis-                         the employer or gives notice of his or her inten-
tt•ative agency or in any proceeding by or before                      tion to do so or is discharged for any reason, the
an administrative agency, or in any proceeding                         employer shall' withhold the entire amount
or action in any court, to enforce or effect full                      otherwise payable to such employe, or so much
compliance with or- involving the provisions of                        thereof as may be necessary to equal the un-
this chapter .. And the transaction of such busi-                      withheld balance of the amount shown in the
ness or the derivation of such income shall be a                       notice of delinquency, plus delinquent interest .
signification of his agreement that any such                           In crediting amounts withheld against delin-
notice, order, pleading or process which is so                         quent taxes of an employe, the department shall
served shall be of the same legal force and                            apply amounts withheld in the following order :
validity as if served on him personally, or upon                       costs; penalties, delinquent interest, delinquent
his executor, ° administrator or personal                              tax. The "compensation due" any employee for,
representative :                                                       purposes of determining the 25% maximum
    (c) Service pursuant to par . (a) or (b) shall                     withholding for any one pay period shall include
 be made by serving a copy upon the secretary of                       all wages, salaries and fees constituting gross
state or by filing such copy in his office , and such                  income under s, 71,03 ( :1) (a) when paid to an
service shall be sufficient service upon such        h                 employe, less amounts payable pursuant to a
per son, or , his ' executor, administrator' or per-                   garnishment action with "respect to which the
sonal repi esentative if notice of such service and                    employer, was served prior to being served with
a copy of" the notice, order, pleading or process                      the notice of delinquency and any amounts
are within 10 days thereafter , sent by mail by the                    coveted by any irrevocable and previously effec-
state department, officer of agency snaking such                       tiveassignment of wages, of which amounts and
service to such person, or his executor, admnis-                       the facts relating to such assignment-the em-
tt atol or pe r sonal representative, at his last                      ployershall give notice to the department within
known address, and that an affidavit of compli-                        10 days after service of the notice of
anceherewith is filed with the secreta r y of ' sfate .                delinquency
The secretary of' state shall keep a record of all                        (2) In any case in which the employe ceases
such notices, orders, pleadings, processes and                         to be employed by the employer- before the full
affidavits and shall note in such record the day                       amount set forth in a notice of delinquency, plus
and hour of service upon 'him                                          delinquent interest, has been withheld by the
   History : Sup Ct. Order, 67 W (2d) '774; 1975 c .39,- 218,          employer, the employer shall immediately no-
224, 422; 1979 c. 89 ; 1979 c 110 s 60 (13) ; 1979 c 221 .
   Cross References:' See 806 ,11 on delinquent income tax
                                                                       tify the department in writing of the termination
docket ,                                                               date .e of the employe and thee totall amount
    See 7 .3 ..03 (27) for provision as to writing off uncollectible   withheld
income fazes ,.
    Tax warrants may be docketed by the clerk of court prior
                                                                          (3) The employer, shall, on or before the last
to issuance of sheriff for levy purposes; 61 Atty. . Gen . 148 . .     day of the next month after every calendar
                       Electronically scanned images of the published statutes.
  1939                                                               INCOME AND FRANC HISE TAXES 7 1 . 18

   quarter, remit to the department the amount             31, 1974, and 25 .. 25 % for the period August 1,
   withheld during the calendar quarter :. Any 1974 to June 30, 1975 , and 25 ., 14 % for the
                           e
   amount withheld from an employe by an em- per iod July 1, 1975 to June . 30, 1976 and
   ployer- shall immediately be a trust fund for this      25,16% for the period July 1, 1976, to June 30,
   state Should any employer, after notice,                1977, of collections of income of persons other
   wilfully fail to withhold in accordance with the than co r porations and 43,98% for the period
  notice and this section, or wilfully fail to remit       August 1,19 '74 to June 30, 1975, 38 . .'79 % for the
   any amount withheld, as required by this sec-           period July 1, 1975, to June 30, 1976, and
   tion, such employer , shall be liable for the total 37 81 % for the period July 1, 1976, to June 30,
                                       e
  amount set forth in the notice together with             1917, of collections of income and franchise
  delinquent interest as though the amount shown           taxes of corporations shall be entered in the
   by the notice was due by such employer as a             municipal and county shared tax account and
  direct obligation to the state for delinquent distributed under subch I of ch. 79 .
  taxes, and may be collected by any means pro-              History : 197 1 c. . 46 , 125 ; 1973 c 90; 19 75 c 39 ; 19 77 c . 29
  vided by law including the means provided for
  the collection of delinquent income taxes .. How- 71 . 15 Miscellaneous provisions . (3) If
  ever-, no amount required to be paid by an any transfer- of a reserve or other account or
  employer by reason of his or her failure to remit       portion thereof is in effect a transfer to surplus,
  under this section may be deducted from the so much of such transfer as had been accumu-
                                            d
  gross income of such employer, under either s . . lated through deductions from the gross or tax-
  71 ;. 04 or, 71,05 . Any a mount collected from the able income of the years open to audit under ss .
                                             d
  employer f'or', failure t o withhold or for failure to 71 .11 (lb) and 7L,11 (20) shall be included in
  remit under this section shall be credited as tax, the gross or taxable income of such years, and so
  costs, penalties and interest paid by the employe . much of such transfer as has been accumulated
       (4) Subsections (I) to (3) shall apply in any      through deductions from the gross or taxable
  case in which the employer is the United States         income of the years following January 1, 1911,
  or any instrumentality thereof ' or this state or and not open to audit under ss . 71 11 (16) and
  any municipality or other ' subordinate unit 71 .11 (20) shalll be included in the gross or
  thereof except those provisions imposing a liabil-      taxable income of the year in which such trans-
 ity on the employer for failure to withhold or fer was effected.
  remit ,. But an amount equal to any amount                 Hi story: 1971 c . 40
             d
 withheld by any municipality or other
 subordinate unit of this state under this section        71 . 18 Urban transit comp an ies; special
 and not remitted to the department as required
           t                                              tax. (1) CoMruiAT[ox : In lieu of the tax rates
 by this section shall be retained by the state prescribed in s . 71 09, there shall be assessed,
 treasurer from funds otherwise payable to any            levied and collected upon the taxable income of
 such municipality or subordinate unit, and everyy corporation whose principal source
 tr ansmitted instead to the department, upon             (herein defined as being 50 per cent or more) of
 certification by the secretary of revenue ..
                         e                               gross income is the urban mass transportation of
       (5) The department shall refund to the em-        passengers a special income tax of' 50 per cent
 ploye , excess amounts withheld from the em-            determined in accordance with this chapter,
 ploye under this section . .                            except that:
       (6) Employers required to withhold delin-              (a) United States income, excess or war
 quent taxes, penalties, interest and costs under' profits andd defense taxes shall be allowed as a
 this section shall not ' be required to withhold deduction from gross income to the extent of the
 amounts other than the total amounts certified          total : payment actually made during the tax
 to such employers by the department and shall           year„
 not be required to compute interest, costs or               (b) A deduction shall be allowed from such
 other charges to be withheld:                           taxable income as heieinabove defined, and
    History: 1975 c. 224.-                               before the imposition of'the special tax levied by
                                                         this section, in an amount equivalent to 8 per
71 .14 Distribution of ` revenue . All taxes cent of the amount by which the cost of the
imposed and collected under this chapter on and property of such corporation used and useful in
after November 1, 1971, other than those im- providing its urban mass transportation service
posed-on urban transit companies under s : 71„ 18, exceedss the cumulated amount of the deprecia-
shall become a part of the general fund for use of tion accrued against such property as of the end
the state, except , that . 25 .13 % for the period of the fiscal year for which the income tax return
                                               e
November 1,1971, to July 31, 1972, 24 . . 66% for is filed„
the period August 1, 1972 to July 31, 1973 and               (c) An amount shall be added to such taxable
24 , .845% for the period August 1, 1973 to July income as hereinabove defined, and before im-
                      Electronically scanned images of the published statutes.
71 .18 INCOME AND FRA N CHISE TAXES                                                                           1940

 position of the special tax levied by this section,              during an induction period, but this paragraph
 which amount shall be equivalent to the interest                 shall not apply for any month during any part of "
 paid during the year in the operation of' the                    which there are no combatant activities in any
 business from which its income is derived,                       combat zone and remuneration, for purposes of
     (2) D EFINI TIO NS . (a) "Urban mass trans-                  this paragraph, shall not include pensions and
 portation of passenger's" means the transporta-                  retirement pay .
 tion of passengers by means of'vehieles having a                     (b) For agricultural labor, and for, purposes
 passenger-carrying capacity of 10 or more per-                   of this paragraph the term "agricultural labor"
 sons including the operator, such capacity to be                 includes all service performed:
 determined' by dividing by 20 the total seating                      1 , On a farm, in the employ of any person, in
 space measured in inches, when such transporta-                  connection with cultivating the soil, or in con-
 tion takes place entirely within contiguous in-                  nection with raising or harvesting any agricul-
corporated cities or villages and in municipali-                  tural of- horti cultural commodity, including the
ties contiguous to that in which the carrier has                  raising, shearing, feeding, caring for, training
itss principal place of business, or within or                    and management of livestock, bees, poultry and
between municipalities located within a radius                    fur-bearing animals and wildlife ;
of 10 miles of the municipality in which the                         2 .. In the employ of the owner ' or tenant or
carrier has its principal place of business, or                   other operator of a farm, in connection with the
entirely within one municipality or municipali-                   operation, management, conservation, improve-
ties contiguous thereto, or within a county hav-                  ment or maintenance of such farm and its tools
ing a population of 500,000 or more or within                     and equipment, or in salvaging timber or clear-
such county and the counties contiguous thereto,                  ing land of brush and other debris left by a
or suburban operations classified as such by the                  hurricane, if the major part of such service is
transportation commission,                                        performed on a farm ;
    (b) The cost of property used and useful in                      3 . In connection with the production or har-
                                                                                            h
providing urban mass transportation service and                   vesting of crude gum, gum spirits of turpentine
the depreciation accrued on such property shall                   or gum rosin, in connection with the ginning of "
be determined on the basis of the reports and                    cotton,, or, iin connection with the operation or
orders on file with the transportation                            maintenance of ditches, canals, reservoirs or s
commission .                                                     waterways, not owned or operated for profit,
                                                                                   t      d
    (3) PAYMENT OF TAX . . The special income tax                used exclusively for supplying and storing water
assessed under this section shall be reportedd in                for farm purposes ;
an income tax return filed in accordance with                        4.. In the employ of the operator of a farm in
this chapter, except as modified by this section . .             handling, planting, drying, packaging, process-
The tax so reported and assessed shall be pay-                   ing, freezing, grading, storing or delivering to
able to the department of revenue, Taxes col-                    storage or to market or to a carrier for transpor-
                                                                                        t
lected on or, after November 1, 1911, but prior to               tation to market, in its unmanufactured state,
July 1,-1977, shall be deposited in the general                  any agricultural of- horticultural commodity,
fund, and 83% thereof shall be entered in the                    but only if such operator produced more thane
municipal and county shared tax account and                      one-half of the commodity with respect to which
distributed under subch . I of ch . 79 Taxes                     such service was performed, or in the employ of
collected on or after July' 1, 1977, shall be                    a group of operators of farms (other than a co-
deposited in the general fund for use of'the state ..            operative organization) in the performance of
  History : 1971 c 125 ; 1977 c .. 29 ss. 804-,1654 (9) (f) ;,   such services, but only if such operators pro-
                                                                 duced all of the commodity with respect to
71 . 19 Withho lding income tax; defini -                        which such service is performed, but the provi-
tions. As used in this section and s . 71 .20, unless            sions of this subdivision shall not be deemed to
the context clearly indicates otherwise :                        be applicable with respect to se rvice performed
   (1) "Wages" means all remuneration (other                     in connection with commercial canning or com-
                                                                                n
than fees paid to a public official) for, services               mercial freezing or in connection with any agri-
performed by an employe for his employer,                        cultural or horticultural commodity after its
including cash value of all remuneration paid in                 delivery to a terminal market for distribution or
any medium other than cash ; except that the                     consumption ;
term shall not include remuneration paid:                            5 , On a farm operated for profit if such
   (a) For active service as a member of the                     service is not in the course of the employer's
armed forces of' the United States for any month                 trade or business ;
during any part of which such member served in                       6.. As used in this paragraph the term "farm"
a combat zone during an induction period or was                  includes stock, dairy, poultry, fruit, fur-bearing
hospitalized as a result of wounds, disease or                   animals and truck farms, plantations, ranches,
injury incurred while serving in a combat zone                   nurseries, ranges, greenhouses, or other similar
                    Electronically scanned images of the published statutes.
 1941                                                       INCOME AND FRANCHISE TAXES 71 . 19

structures used primarily for the raising of agri-
               d                                          f 'or, services r'ender ' ed as such employe and not as
cultural or horticultural commodities, and                a beneficiary of the trust . .
ot•chaz ds .                                                   (k) For personal services . performed in Wis-
    (c) For- domestic service in a private home,          consin in the form of retirement, pension and
local college club or local chapter of a college          profit-sharing benefits, received by nonresidents
fraternity or sorority,                                   after retirement from the employ of the em-
   (d) For service not in the course of the               ployer for whom such personal services were
employer's trade or business performed in any             performed .
calendar quarte r by an employe , unless the cash              (1) To, or, on behalf of, an employe or benefi-
remuneration paid for such service is $50 or              ciaty from a plan described in s .. 815 .18 (31)
more and such service is performed by an indi-            (a) under, which the benefits are fully funded by
vidual who is regula r ly employed by such em-            life insurance or annuities .
ployer° to perform such service . . An individual             (m) If the remuneration paid by an employer
shall be deemed to be regularly employed by an            to an employe for services performed during
employers during a calendar quarter only if on            one-half or more of any payroll period of not
each of some 24 days during such quarter such             more than 31 consecutive days constitutes
individual performs; f'or, such employer', for            wages, all the remuneration paid by such em-
some portion of the day, service not in the course        ployer-` to such employe for such period shall be
of the employer's trade or business, or such              deemed to be wages ; but if the remuneration
individual was regularly employed (as herein              paid by an employer to an employe for services
defined) by such employer in the performance              performed during more than one-half' of' any
of such service during the preceding calendar             such payroll period does not constitute wages,
quazter„                                                  then none of the remuneration paid by such
    (e) For- services by a citizen o r resident of' the   employer to such employe for such period shall
 United States for a ` foreign government or an           be deemed to be wages .
 international organization                                    (n) In the form of tips paid to employes if :
    (f) `' Fot services performed by a duly or-                1 . The tips are paid in a medium other, than
dained, commissioned or licensed minister of a            cash ,
church in the exercise of his ministry or by a                 2 . The cash tips received by an employe in any
 member of a religious order in the exer cise of          calendar, month in the course of employment by
duties required by such order .                           an employer are less than $20. However, if such
    (g) For services performed by an individual           cash tips received in a calendar month amount to
under , the age of 18 in the delivery or distribution     $20 or, more none of such cash tips are excepted
of newspapers or shopping news, not including             from wages under, this section .,
delivery or distribution to any point f'or, subse-
                                  y                            (2) "Payroll period" means a period for
quent delivery or distribution :
                y                                                                      s
                                                          which a payment of wages is ordinarily made to
    (h) For services performed by an individual           the employe by his employee; and the term
in, and at the time of, the sale of newspapers or         "miscellaneous payroll period" means a payroll
magazines to ultimate consumer ' s, under' an ar-
                                       ,                  period other than a daily, weekly, biweekly,
rangement under , which the newspapers or                 semimonthly, monthly,, quarterly, semiannual
magazines are to be sold by him at a fixed price,         or annual payroll period
his compensation being based on the retention of               (3) "Employe" means a resident individual
the excess of such price over the amount at               who performs or performed services for n em-
which newspapers or magazines are charged to                                    a
                                                          pioyer, anywhei e or, a nonresident individual who
him, whether or not he is guaranteed a minimum            performs or performed such services within this
amount of compensation for such services,, of is          state, .and includes an officer, employe or elected
entitled to be credited with the unsold newspa-           official of the United States, a state, territory, or
pers or magazines turned back.                            any political subdivision thereof; or- the District
                                                              y
   (i) For services not in the course of the              of Columbia, or any agency or instrumentality
employer's trade or- business to the extent paid in       of" any one or, more of the foregoing .. The term
any medium other . than cash.                             also includes an officer of a corporation .
                                                              o
   (j ) To, or on behalf of, an employe or his                 (4) "Employer" means a person or partner-
beneficiary from a trust created or organized in          ship, whether subj ect to or exempt from income
the United States and forming part of a stock             taxation or not, for whom an individual per-
bonus, pension or profit sharing plan , of an             forms or, performed any service, of whatever
employer for the exclusive benefit of his em-             nature, as an employe of such person or, partner-
ployes or their, beneficiaries and which trust is         ship, except that :
exempt from taxation, unless such payment is                  (a) If the person f 'or, whom the individual
                                                                          e
made to an employe of the trust as remuneration                                                    s
                                                          performs or, performed the services does not
                       Electronically scanned images of the published statutes.
 71 .19 INCOME AND FRANCHISE TAXES                                                                                     1942

 have control of the payment of the wages for                         periods . Such tables shall be extended to cover
 such services, the term "employer" (except for                       from zero to 10 withholding exemptions, shall
 purposes of sub . . (1)) means the person having                     assume that the payment of wages in each pay
 control of the payment of such wages :                                                  n
                                                                      period will,, when multiplied by the number of
    (5) "Department" means the department of                          such pay periods in a year reasonably reflect the
 revenue .                                                            annual wage of" the employe from such employer
   Hi s tory : Sup.. Ct. Order, 67 W (2d) 774 ; 1975 c . 104, 199,    and shall be based on the further assumption
 218                                                                                           e
                                                                      that such annual wage should be reduced ' f 'or,
                                                                      allowable deductions from gross income . . It is
  71 . 20 Employers required to withhold .                            within the discretion of the department to deter-
  (1) On and after February 1, 1962, every                            mine the length of such tables and a reasonable
  employer at the time of payment of wages to an                      span of each bracket, In preparing such tables
  employe shalll deduct and withhold from such                        the department shall adjust all withholding
  wages, without regard for federal insurance                         amounts not an exact multiple of 10 cents to the
  contributions act deductions therefrom an                           next highestt figure that is a multiple of 10 cents . .
 amount determined in accordance with tables to                           (3) On and after February 1, 1962, at the
  be prepared by the department, as hereinafter                       time of payment of wages to a nonresident
 provided, The secretary mayy grant permission                        employe which wages were derived from the
  to employers who do not desire to use the                           performance of services both within and without
 withholding tax tables provided by the depart-                       the state, the employer shall deduct and with-
 ment to determine the amount of tax to be                            hold from the wages derived from the perf 'or' m-
 withheld by use of a method of .withholding                                                                 e
                                                                      ance of services within the state the amount as
 other than the withholding tax tables, provided                      reflected by the proper withholding table .
 suchh method will withhold from each employe                             (4) Every employer who deducts and with-
 substantially the same amount as would be                            holds any amount under this section shall de-
 withheld by use of the withholding tax tables,                                            t
                                                                      posit such amount on a quarterly basis, except
 Employers who desire to determine the amount                         that if" the amount deducted and withheld in any
 of'tax to be withheld by a method other than by                      quarter exceeds $300, the department may re-
 use of the withholding tax tables shall obtain                       quire by written notice to the employer, that
 permission from the secretary before the begin-                     amounts deducted and withheld on and after the
 ning of`a payroll period for which the employer                     date indicated on such notice be deposited on a
 desires to withhold the tax by such other                           monthly basis , Employers who are required to
 method . Applications for use of such other                         file r eports and deposit withheld taxes on a
 method must be accompanied by evidence estab-                       monthly, quarterly or annual basis, as the case
 lishing the need for the use of such method,                        may be, shall file such reports and deposit such
    (1m) An employer may, at his discretion,                         taxes on or before the last day of the month next
 deduct and withhold from any one payment of                         succeeding the withholding period .' If the
 wages in a month, in the case of an employe paid                    amount deducted and withheld in any quarter
 more often than once during any month, the                          exceeds $5,000, the department may require by
 total amount which the employer reasonably                                          e
                                                                     written notice to the employer, that for amounts
 estimates he will be required to withhold under                     deducted and withheld from the first day of the
 this section from such employe during that                          month through the 15th day of the month, the
month . Permission from the secretary under                          employer shall file reports and deposit such
sub, (1) is not needed by any employer, acting                       taxes on or before the last day of ' such month and
under this subsection                                                that for amounts deducted and withheld from
    (2) Prior, to February 1, 1962, the depart-                      the 16th day of the mon th through the last day
ment shall prepare, pfomulgate, and publish in                       of the month the employer shall file reports and
the official state paper, without regard to the                              t
                                                                     deposit such taxes on or before the 15th day of
requirements of ch ; 227, rules establishing with-                   the next succeeding month , Employers shall file
holding tables prepared on a weekly, biweekly,                       reports and deposit taxes with such public de-
semimonthly, monthly, and daily or miscellane-                       pository in Wisconsin as the department of
ous pay period basis . Such tables shall be based                    administration designates a public depository
upon the normal tax rates and upon any surtax                        therefor under s . 34 . 05 to the credit ' of the
applicable to the income of the calendar year                        general fund . With each deposit the employer
                                                                               l
1962 Thereafter, the department shall from                           shall include a deposit report on a form to be
time to `time similarly correct such tables to                       provided by the department . The department
reflect any changes in normal income tax rates                       may, when satisfied that the revenues will be
or changes in surtax . Such rules shall also                         adequately safeguarded, permit an employer
provide instructions for withholding with ce-                        whose withheld taxes do not exceed $50` per
spect to quarterly, semiannual and annual pay                        month to deposit withheld taxes and reports for
                   Electronically scanned images of the published statutes.
 1943                                                    INCOME AND FRANCHISE TAXES 71 . 20

 otherthan quarterly per iods . The department          such taxes on or before the last day of ' the month
 may revoke such permission at any time . The           next succeeding the withholding period . If the
 department, if it deems it necessary in order to       amount deducted and withheld in any quarter
 insure payment to or facilitate the collection by      exceeded $5,000, the department may require
 the state of the amount of taxes, may require
                    e                                   by written notice to the employer, that for
 reports or , payments of the amount of withheld        amounts deducted and withheld from the first
 taxes for other than quarterly peri ods. The           day of the month through the 15th day of the
 public depository shall record on such deposit         month, the employer shall file such reports and
 report the amount deposited and shall then             pay over such taxes on or before the last day of
 forward such report to the ;department in such         such month ; for amounts deducted and withheld
 manner and at such time as the department by           from the 16th day of the month through the last
 rule prescribes . On or before January 31 of each      day of ' .the month, the employer shall file such
 year every employer shall file with the depart-        reports and pay over such taxes on or before the
 ment at its offices in Madison, or at such other       15th day of the next succeeding month ..
 place as the department by rule prescribes, a             (b), With each payment the employer shall
 withholding report on a form to be provided by         include a withholding report on forms provided
 the department showing the amount withheld             by the department . The department may, when
 from the wages paid each employe in the previ-         satisfied that the revenues will be adequately
 ous calendar year, the amount deposited in             safeguarded, permit an employe r whose with-
 respect to each employe on wages paid in the
                   h                                    held taxes do not exceed $50 per, month to pay
 previous calendar year and a reconciliation of        over withheld taxes and file withholding reports
 the aggregate of the amounts deposited in re-          for longer than quarterly periods : Such permis-
                                                                                                  h
 spect to each employe on wages paid in the             sion may be revoked at any time . The depart-
 previous calendar year with the aggregate of the       ment, i f it deems it necessary in order to insure
 amounts shown on the semimonthly, monthly             payment or to facilitate the collection by the
 and quarterly deposit reports filed in respect to     state of the amount of' taxes, may require reports
 such withholding . Every employer who discon-         or payments of the amount of withheld taxes for
 tinues business prior to the end of a calendar        shorter than quarterly periods .
 year shall, within 30 days of such discontinu-            (c) On or before January 31 of each year
 ance, deposit withheld taxes -not previously de-
                                   t                   every employer shall file with the department an
posited and submit a deposit , report concerning       annual withholding report on forms provided by
such deposit with the public depository and file a     the department showing the amount withheld
 withholding repor t with the department cover-
                                             t         from the wages paid each employe in the previ-
 ing the period from the beginning of the calen-       ous calendar year, the amount deposited or paid
 dar ,year '.r to the date of discontinuance.. , No    over in respect to each employe on wages paid in
 employe shall have any right of action against an     the previous calendar year and a reconciliation
 employer in regard to money deducted from             of the aggregate deposited or paid .d over in re-
 wages and depos ited with the public depository       spect to each employe on wages paid, in the
in compliance or intended compliance with this         previous calendar year with the aggregate of the
 section                                               amounts shown on deposit and withholding re-
    (4m) Upon not lessthan 6 months' notice to
                  n                                    ports filed in respect of such withholding .,
 the public depository designated under sub . . (4),       (d) Every employer who discontinues his
the secretary of revenue may direct that with-         business prior to the end of 'a calendar year shall,
held taxes required to be reported and remitted        within 30 days of such discontinuance, • pay over
 by employers on and after, a date specified be  d     withheld taxes not previously deposited or pa id
reported and remitted directly to the depart-          over,, and shall file ,a withholding report with the
ment of revenue ,' Every employer who deducts          department covering the period from the begin-
and withholds any amount under this section            ning of . the calendar year to the date of
required to be reported and rem itted on or after,     discontinuance..
such date shall report and remit directly to the           (e ), No employe shall have any right of action
department . Amounts withheld shall be paid            against his employer in regard to money de-
over a quarterly basis but if the amount de-           ducted from his wages and paid over to the
ducted and withheld in any quarter exceeded            department in compliance or intended compli-
$300, the department may require ; by written          ance with th is section .
notice to the employer, that amounts deducted              (f) If the secretary of revenue elects to dis-
and withheld after the date indicated on such          continue use of` the public depository, reasonable
notice be paid over , a monthly basis . : Employers    notice of the change shall be communicated to
who are required. to file reports and pay over y       employers subject to . withholding . .
withheld taxes on a monthly, quarterly or an-
                                            y              (5) (a) The penalties provided by this sec-
nual basis, shall . file such reports and pay over     tion shall be paid upon notice and demand of the
                    Electronically scanned images of the published statutes.
 7 1 .20 IN CO M E AND FRA N CHISE TAXES                                                                    1944

 secretary of revenue or, the secretary's delegates        an additional 5 % for- each additional month or
 and shall be assessed and collected in the same           fraction thereof during which the failure contin-
 manner as income taxes .. Any person required to          ues, not exceeding 25 % in the aggregate ..
 withhold, account for or pay over any tax im-                      (6) Any person, whether exempt under s .
 posed by this chapter, whether exempt under s . .         ' 71 . . 01 (3) or not, required under s . 71,10 (8) to
 71 .. 01 (3) or not, who intentionally fails to           furnish a written statement to an employe, who
 withhold such tax, or account for or pay over             furnishes a false or fraudulent statement, or who
 such tax, shall be liable to a penalty equal to the       intentionally fails to furnish a statement in the
 total amount of the tax not withheld, collected,          manner, at the time and showing the informa-
 accounted for or paid over . .                            tion required under s 71,10 (8), or rules pre-
    (b) If any person required under this section
                                                           scribed with respect thereto, shall, for each such
 to file a deposit report or withholding report files      failure, be subject to a penalty of $20 .
 an incomplete or incorrect report, or fails to
 properly' withhold or fails to properly deposit or               (7) Whenever any person is required to
 pay over, withheld funds, unless it can be shown                       d
                                                           withhold any , Wisconsin income tax from an
 that the filing or failure was due to good cause          employe, until such amount is deposited with the
 and not due to neglect, there shall be added to          public depository prescribed by sub . (4) or paid
 the tax =25% of the amount not reported or not           over, to the department as prescribed by sub . .
 withheld, deposited of- paid over The amount so           (4m), the amount so withheld shall be held to be
`added shall be assessed, levied and collected in                                        r
                                                          a special fund in trust for the state . The amount
 the same manner, as additional income taxes,             of such fund may be assessed and collected from
and shall be in addition to any other penalties           such person by the department as income taxes
 imposed in this section.
                 s                                        are assessed and collected, and such collection
     (c) Any amount not deposited or paid over to         shall not abate any penalty imposed .
 the department within the time required shall be               (8)` (a) On or before February 1, 1962 (or
 deemed delinquent and deposit reports or with-           on or before the date on which an employe
 holding reports filed after, the due date shall be       commences employment with an employer after
 deemed late . Delinquent deposits or payments            such date), each employe shall furnish his em-
 shall bear interest at the rate of 1 . 5 % per ' month                               d
                                                          ployer with a signed withholding exemption
 from the date deposits or payments are required          certificate relating to the number of withholding
 under, this section until deposited or paid over to      exemptions he claims, which shall in no event
 the department. The department shall provide             exceed the number, t o which he is entitled . If ' the
 by rule for reduction of interest on delinquent          employe fails to furnish such certificate, such
 deposits to 9% per year in stated instances              employe, for withholding purposes, shall be con-
 wherein the secretary of revenue determines              sidered as claiming no withholding exemptions . .
reduction fai t and equitable . In the case of a             (b) If, on any day during the calendar year,
timely filed deposit or withholding report, with-
                                                          the number of withholding exemptions to which
held taxes shall become delinquent if ' not depos-
                                                          the employe is entitled is less than the number of
ited or paid over on or before the due date of the
                                                          withholding exemptions claimed by him on the
report In the case of no report filed or a report
               e                                          withholding exemption certificate then in effect,
filed late, withheld taxes shall become delin-
                                                          the employe shall within 10 days after the
quent if ' not deposited or paid over by the due
                                                          change occurs furnish the employer with a new
date oF' the report . In the case of an assessment
                                                          withholding exemption certificate, which shall
under par.. (a), the amount assessed shall be-
                                                          in no event exceed the number, to which he is
come delinquent if not paid on or before the first
                                                          entitled on such day .
day of the calendar month following the calen-
dai• month in which the assessment becomes                                      y
                                                             (c) If, on any day during the calendar ,year,
final, but if the assessment is contested before          the number of withholding exemptions to which
the tax appeals commission or in the courts, it           the employe is entitled is more than the number
shall become delinquent on the 30th day follow-           of withholding exemptions claimed by him on
ing the date on which the order or judgment               the withholding .: exemption certif icate then in
representing final determination becomes final .          effect, the employe may furnish the employer
   (d) In case of failure to file any withholding         with a new withholding exemption certificate on
deposit or payment report required under sub .
          r                                               which the employe must in no event claim more
(4) on the due date prescribed therefor-, unless it           n
                                                          than the number, of withholding , exemptions to
is shownthat the failure is due to reasonable             which he is entitled on such day ..
cause and not due to 'wilful neglect, thereshall             (d) A withholding -exemption certificate fur-
be added to the amount required to be shown as            nished the employer shall take effect as of the
withheld taxes on the report 5% of the amount if '        beginning of' the first payroll period ending after
the failure is not for more than one month, with          thedate on which such certificate is furnished .
                  Electronically scanned images of the published statutes.

 1945                                                    1NCOIt9 E AND FRANCHISE TAXES 71 . 20
                                                               1

     (e) Any employe who wilfully supplies his         other state by reason of the performance of
  employer with false or fraudulent information        substantial personal services in such other state,
  regarding his withholding exemption or who           pursuant to s 71 .09 (8) .
  wilfully fails to supply information which would        (13) This section shall not apply to any
                     t
' increase the amount to be withheld may be fined      county fair association in regard to any employe
  not more than $200..                                 receiving less than $100 annually in wages or
   (f) Whenever the internal revenue code or           salary from the association ..
regulations or, rulings of the internal r evenue           (14) An employer is not required to deduct      t
service require an employer to submit copies of,       and withhold any tax whenever an employe
or information taken from, an employe's with-          certifies to the employer, on a form prescribed
holding allowance certificate to the internal          by the secretary, that the employe incurred no
revenue service, the employer shall also furnish       liability for income tax imposed by this chapter
copies of the certificate to the department within     for the employe's preceding taxable year and
15 days after the employer is required to file the     anticipates that the emp loye will incur ' no liabil-
certificate or information with the internal ceve-     ity for the employe's current taxable year
nue service                                               (15) (a) The department may verify any
                                                                         e
    (9) An employe receiving wages shall on any        withholding exemption certficate, form or
day be entitled to the following withholding           agreement filed by an employe with an employer
exemptions :                                           directly f r om the books and records of any
   (a) An exemption for himself;                       person or fr om any other sources of information .
   (b) If' the employe is mar ried, an exemption       To ascertain the correctness of any withholding
to which his spouse is entitled, or would be           exemption certificate, form or agreement, the
entitled if such spouse were an employe receiv-        department may examine or cause to be ex-
ing wages, but only if such spouse does not have       amined by any agent or representative desig-
in effect a withholding exemption certificate          nated by it any books, papers, records or memo-
claiming such exemption .                              randa bearing on the certificate, form or
   (c) An exemption for each individual with           agreement and may require the production of
respect to whom, on the basis . of the facts           books, records and memoranda, and may re-
existing at the beginning of ' such day, ther e may    quire testimony and proof relevant to its
reasonably be expected to be allowable an ex-          investigation ..
emption under, s . 71 .09 (6p) for the taxable year
                s                                         (b) If it appears that a person has filed an
in which such day falls                                incorrect certificate, form or agreement with an
     (d) An exemption as head of a family when         employer, the department may void the certifi-
 on the basis of the facts existing at the beginning   cate, form or agreement by notifying the em-
 of' such day such an exemption may reasonably         plover, and employe . The employer shall then
be expected to be allowable under s . . 71 . 09 (6p)
                                    r                  withhold based on the number of exemptions
                                                                               e
 for the taxable year in which such day falls.         prescribed by the department in its notice . If an
   (e) In place of the exemptions allowable in         employe fails to furni sh information requested
pare (a) to (d) the employe may claim the              by the department to verify the correctness of
same number of withholding exemptions for              the certificate, form or agreement, the employe
Wisconsin withholding tax purposes as are al -         shall be considered as claiming no withholding
lowable for federal withholding tax purposes .         exemptions and the employer shall withhold on
   (10) The secretary of revenue is authorized         that basis upon notification by the department
to enter into an agreement with the secretary of       to the employer and the employe .
the treasury of the United `3tates pursuant to            (c) All provisions of this chapter on ther
P.1 . 82-587 enacted July 17 , 1952 .                  following subjects relating to income taxes that
   (11) In addition to the amount required to be       are not in conflict with this section apply to the
deducted and withheld, an employer and em-             administration of ` this section : assessment, hear-
ploye may agree in writing that an additional          ing and appeal - pr ocedures, preparation of` as-
amount shall be withheld from the employe's            sessment and tax rolls, certification of taxes due
w ages . The amount ' deducted and withheld            and correction of them, interest, collection, in-
pursuant to such an agreement shall be consid-         clud ing ss . 71 : 09 (10), 71 .13 and 71 : . 135, and
ered as an amount r equired to be deducted and         refund procedures .
withheld for all purposes of this chapter„                (16) Any employe who files a withholding
   (12) The secretary of revenue, acting within        exemption certificate, form or agreement under
his discretion, may authorize special withhold-        sub (8), (9), (14) or ` (22) ' with the intent to
ing arrangements in hardship cases resulting           defeat or evade the proper withholding of tax
from situations in which persons, domiciled in         under this section shall be subject to a penalty
Wisconsin, are subjected to withholding in some        equal to the difference between the amount
                    Electronically scanned images of the published statutes.
   71.20 IN COME A N D FRA N CHISE TAXES                                                                             1946

  required to be withheld and the amount actually              (21) "Person", as used in subs . (5) and (6),
  withheld for the period that the incorrect certifi-      includes an officer or employe of 'a corporation
  cate, form or agreement was in effect.                   or a member, or employe of a . partnership who, as
       (19) Whenever' it appears to the satisfaction       such officer, employe or member, is underr a duty
    of the secretary of revenue that with respect to
         e                                                 to perform the act in respect of which the
    the period beginning February 1, 1962, and             violation occurs . .
   ending December, .31, 1962, the cost to the                 (22) (a) In lieu of the amount required to be
   employer of withholding on the wages of nonies-         deducted and withheld under this section, an
   ident employes who ,performed wage earning              employer and employe may agree in writing on a
   services in Wisconsin and in the same pay pet i-        form prescribed and provided by the department
   ods also performed wage earning services
                                 e                         that a lesser amount be withheld from the em-
   outside Wisconsin, would havebeen excessive in         ploye's wages if-
   relation to the aggregate Wisconsin income tax             1. The employe determines that the lesser
   liability - of such nonresident employes on such       amount approximates the employe's anticipated
   wage earning services performed in Wisconsin           income tax liability for the year.
   and the employer failed to comply with the                 2 . The employe sends a copy of the completed
   withholding provisions of ch . 71 in respect of        agreement form to the department within 10
  such Wisconsin wages , the secreta ry, by agree-        days after it is filed with the employer .
  ment with such employer, may relieve such                   3 .. The agreement expires on April 30 of the
  employer of the consequences of ' such failure to       following ,year, for calendar year taxpayers, or 4
  withhold upon payment by such employer to the           months following the close of their fiscal year,
  depa r tment of the amount estimated by the             for fiscal ,year taxpayers .
  secretary to equal the taxes, fees and interest             (b) If the department determines that an
  that would be due from such employee on their           agreement under, par; . : (a) would result:. in an
  Wisconsin wages .. Any amount so paid by such
                                   t                      insufficient amount of tax , being withheld,, the
  employer may be deducted by such employer on           department may void the agreement by notifica-
  the cash basis as a Wisconsin income tax paid..
                                            x            tion to the employer , and employe ,
                      t
  Any nonresident employe upon whose behalf                  (c) Any employe who fails to notify the
 such a payment is made, if' not otherwise re-           department as required by par . (a) 2 shall be
 quired to file a Wisconsin income tax return            subject to a penalty of $10 „
 may, as a part of such agreement, be relieved               (e) Any employe who wilfully supplies an
 from filing a return covering such taxable year         employer with false or fraudulent information
 and paying a tax on such income . If any such           regarding an agreement wi th the intent to defeat
 nonresident employe . had income having a Wis-          or evade the proper withholding of tax under this
 consin income tax sites in a taxable year covered       section may be imprisoned not more than 6
 by such agreement, other than and in addition to        months, or fined not more than $500, plus the
 his . Wisconsin wages from such employee, his           costs of prosecution, or both ..
 Wisconsin tax shall be computed on the aggre-
                                     d                    History; 1971 c. 215 ; 19 7 3 c . 243; 1975c. 39, 104, 180, 199,
                                                        422; 1977 c 29,142,143,418 ; 1979 c. 1, 32 ;1979 c 110 s 60
 gate of his net income having an income tax situs      (13) ; 1979 c . 1 '74 s . 16 ; 1979 c. . 221 .
 in Wisconsin (including his Wisconsin wages
 from such employer) but he shall be allowed as a        71 .21 Declaration of estimated tax by in-
credit against the tax so computed an amount             dividuals . (1) Every individual deriving in-
determined by multiplying such tax by a f 'rac-          come subject to taxation unde r r this chapter,
tion the numerator of which shall be his Wiscon-         other than wages as defined ins , 71 .19 (, 1) upon
                                       d
sin wages from such employer and the denomi-             which taxes are withheld by the individual's
                                          s
nator of which shall be his total gross income           employer under s 71,20, shall make a declara-
having a Wisconsin income tax situs                      tion of estimated income tax i f the total tax on
    (20) No amount shall be withheld from the            income of the year' can reasonably be expected to
wages paid to a nonresident employe for services         exceed wi thholding on wages paid in the year , by
performed in this state if the employer reason-         $60 or more for taxable years prior to 1981 or by
ably estimates that during that calendar year           $100 or more for ' taxable year 1981 and there-
the employs will earn less than $1, 500 ; but
  e                          s                          after . The declaration shall contain such infor-
whenever it appears that the employe will earn          mation as the department by rule or forms
more than . $1,500 in this state during the calen-      prescr ibes This section does not apply to any
dai year, the employer shall withhold, from             estate or trust or to any, person on active duty
wages paid thereafter, such additional amounts          with the U .S . armed forces while stationed
      e
as the employer a •easonably, estimates will be         outside the continental United States .
required to offset the amounts not withheld from           (2) Declarations of" estimated income tax
                                                                               s                       e
previous payments .,                                    required bysub , . .(1) fr om individuals other than
                   Electronically scanned images of the published statutes.

  1947                                                       INCOME AND FRANCHISE TAXES 7 1 . 21

 farmers shall be filed on or before the fifteenth         as provided in sub . (2) (b) but on or before the
 day of the fourth month of the income year with           fifteenth day ofthe ninth, the estimated tax shall
 the department at its offices in Madison, except          be paid in 2 equal instalments .. The first instal-
 that if' the requirements of' sub . (1) are first met:    ment shall be paid with the filing of the declara-
    (a) After the fifteenth day of the fourth              tion and the second on or before the fifteenth
 month of the income year and on or before the             day of the first month following the end of the
 fifteenth day of the sixth month of the income            income year .,
 year ; the declaration shall be filed on or before           (d) If the declaration is filed after the fif-
 the fifteenth day of the sixth month, or                  teenth day of the ninth month of the income
    (b) AftePthe fifteenth day of the sixth month          year, the entire amount shall be paid with the
 ofthe income year and on or before the fifteenth          filing of the declaration . All payments of esti-
                                 e
 day, of the ninth month of the income year, the           matedtax shall be made to the department at its
 declaration shall be filed on or before the fif-          offices in Madison unless the department, by
 teenth day of the ninth month, or                         rule, prescribes another place of payment . .
    (c) After- the fifteenth day of the ninth month           (e) If the taxpaye r claims a refund on any tax
 of the income ,year, the declaration shall be f iled      return due on or after April 15, 1966, and
 on or before the fifteenth day of the month               concurrent with or subsequent to the filing of the
 following the end of the income ,year .                   return upon which such refund is claimed ' is
   (3) Declarations of estimated income tax                                e
                                                           required to fi le a declaration of estimated tax,
required by sub,, (1) from farmers may be filed            and at the time of filing such declaration : such
at any time on of before the fifteenth day ofthe                                 n
                                                           refund has not been paid, he may deduct the
first month of the succeeding income year . For            amount of' such refund from his first instalment
purposes of this section, farmers are individuals         of estimated taxes, and any excess from the
whose estimated gross income from farming for             succeeding instalments. If he later receives such
the income year is at least two-thirds ofthe total        refund he shall file an amended declaration with
estimated gross income ft om all sources for the          the instalment next due on his original declara-
income year ,                                             tionand, if such refund is paid after the due date
   (4) The amount of the estimated income tax             ofthe last instalment on the original declaration,
shall be the total estimated tax, including sur-          the receipt of such refund must be reflected on
taxes, if any, reduced by the amount, i f any, the        the income tax return covering the year of the
individuall determines will be withheld from              declaration ,: If the refund claim is determined to
wages pursuant to s . 71 . 20                             be excessive in whole or in part at any time prior
                                                          to the due date of the last instalment of the
   (5) The amount ofthe estimated income tax
                                                          originaldeclaiation, an amended declaration
with respect to which a declaration is required
                                                          reflecting the disallowance of some or all of such
shall be paid as follows :
                                                          refund must be filed on the due date for the next
    (a) If the declaration is filed on or, before the
                                                          instalment under the original declaration, and if '
 fifteenth day of the fourth month of the income
                                                          the refund is disallowed in whole or in part after
 year, the amount thereof shall be paid in 4 equal
                                                                                   t
                                                          the due date of the last instalment of the original
'instalments . The first instalment shall be paid
                                                          declaration, such disallowance must be reflected
 with the filing of the declaration, the second on
                                                          on the income tax return covering the year of" the
or before the fifteenth day of the sixth month of
                                                          declaration .
the income year, the third on or before the
fifteenth day of the ninth month of the income                (6) At the election of the individual, any
year; and the final instalment on or before the            instalment of the estimated tax may be paid
fifteenth day ofthe first month following the end          prior to the date prescribed for its payment ..
of the income year:                                           (7) An individual may amend a declaration
    (b) If the declaration is filed af'ter' the fi f-     during the income year under rules prescribed
teenth 'day of the fourth month of the income              by the department If an amendment of a
year as provided in sub, (2) (a) but on or before          declaration is filed, the payments required under
the fifteenth day of the sixth month; the esti-           the original declaration shall be increased or ,
mated tax shall be paid in 3 equal instalments .          decreased, as the case may be, to reflect the
The first instalment shall be paid with the filing        increase or decrease of the estimated tax by
of the declaration, the second on or before the           reason of ' such amendment . .
fifteenth day of the ninth month of the income                (8) If on or- before the first day of the .3rd
year- and the final instalment on of before the           month of the succeeding taxable year a farmer
                                                                        e
fifteenth day of the first month following the end        files his return for the taxable year (for which a
of the income year                                        declaration was required on or before the 15th
   (c) If the declaration is filed after- the fif-        day of the first month of the succeeding taxable
teenth day of the sixth month of the income year          year under sub .. (3)) and pays in full the amount
                    Electronically scanned images of the published statutes.
  71 . 21 INCOME AND FRANCHISE TAXES                                                                    1948

  computed on the return as payable, then such           months. . This paragraph shall not be considered
  return shall be considered as such declaration,        in connection with an underpayment of esti-
  and, as such, shall be deemed timely filed             mated tax in the taxable year 1972 of the
     (9) Application of this section to taxable          individual .
  years of less than 12 full months shall be made            (b) An amount equal to the tax computed at
  pursuant to rules of the department .                  the rates applicable to the taxable year and on
     (10) When the amount of an instalment               the basis of the . taxpayei's status with respect to
  payment of estimated tax exceeds the amount            personal exemptions for the taxable ,year, but
 determined to be the correct amount of such             otherwise on the basis of the facts shown on the
 instalment payment, the overpayment shall be            return of the individual for, and the law applica-
 credited against the unpaid instalment, if any,         ble to the preceding taxable year ..
     (11) In the case of any underpayment of                 (c) An . amount equal to 80 % of the tax for
 estimated tax by an individual, except as herein-
          d                                             the taxable year computed by placing on an
 after provided, there shall be added to the aggr e-     annualized basis the taxable income :
 gate tax for the taxable year , an amount deter-           1 . For the first ,3 months of the taxable year in
                                                                                                          r
 mined at the rate of 9% per year on the amount         the case ofthe instalment required to be paid in
 of the underpayment for the period of the              the fourth month, and
 underpayment . :                                           2 . For the first 5 months of the taxable year in
     (12) For sub . (11 ), the underpayment shall       the case of the instalment required to be paid in
 be the excess of the amount of . the instalment        the sixth month, and
                                                           e
 which would be required to be paid if the total            3 . Fox- the first 8 months ofthe taxable year in
 estimated tax were equal to 80% of the tax             the case of the instalment required to be paid in
shown on the return for the taxable year (or, if        the ninth month ..
no return was filed, 80% of the tax for the year)           (15) For purposes of sub, (14), the taxable
reduced by the aggregate of wages withheld              incomes shall be placed on an annuali zed basis
under s . 71 .20, over the amount of the instal-        by:
ment paid on or before the last date prescribed             (a) Multiplying by 12 the taxable income
for payment .. Any underpayment by an individ-          referred to in sub. (14) (c), and
ual- may be reduced by any overpayment by the                                              g
                                                            (b) Dividing the resulting amount by the
individual's spouse if the spouse f iled all re-        number of months ofthe taxable year completed
quired declarations of estimated tax and timely         as of the due date of the instalment payment.
paid all required declaration amounts . -                 (16) Notwithstanding subs , . (1) to (15 ), the
    (93) The period ofthe underpayment shall           addition to the tax with respect to any underpay-
run from the date the instalment was required to                                                     d
                                                       ment of any instalment shall not be imposed if'
be paid to whichever of the following dates is the     the total amount of all payments of estimated
earlier:                                               tax made on or before the last date prescribed
    (a) The fifteenth day of the fourth month          for the payment of such instalment equals, or
                          e
following the close of the taxable year                                                          t
                                                       exceeds an amount equal to 90 per cent of the
   (b) With respect to any portion of the un-
                                       n                                            s
                                                       tax computed, at the rates applicable to the
derpayment, the date on which such portion is          taxable year, on the basis of the actual taxable
paid . . For pur poses of this paragraph, a payment    income for the months in the taxable yea r end-
of estimated tax on the due date of any payment        ing befor e the month in which the instalment is
shall be considered a payment of a previous            required to be paid . .
underpayment only to the extent such payment                (18) If a taxpayer files his return for a
exceeds the instalment due on such due date ,.          calendar year on or before January 31 of the
                                             .3
     (14) Notw ithstanding subs , (1) to (113), t       succeeding calendar year (or if a taxpayer on a
addition to the tax with respect to any underpay-       fiscal ,year basis files his return on or before the
                                l
ment of any instalment shall not be imposed if             t
                                                        last day of the first month immediately suc-
the total amount of. all payments of estimated         ceeding the close of' suchfiscal year) and pays in
tax made on or before the last ; date prescribed       full at the t i me of such filing the amount com-
for'- such instalment .t equals or exceeds the         puted on the return ' as payable, then, if a decla-
amount which would have been :required to be           ration is not required to be filed on of before the
paid on or before such date if the total estimated     fifteenth day of the ninth month of the income
tax were whichever of" the following is the least :         r
                                                       year but is required to be filed on or before
   (a) The tax shown on the return of the              January . 15 of the succeeding income year (or'
individual for the preceding taxable .e year, if' a    the date corresponding thereto in the case of a
retur n showing a liability for tax was filed by the   fiscal year), such return shall be considered as
individual for the preceding taxable year and               h
                                                       such declaration, or, if a declaration was filed
such preceding year, was a taxable year of 12          during the income year, such return shall be
                        Electronically scanned images of the published statutes.

 1949                                                                  INCOME AND FRANCHISE TAXES 71 .22

 considered as an amendment of the declaration                       day of the ninth month of the income year, the
 permitted to be filed under sub . . (7),                            declaration shall be filed on or before the fif-
   (19) (a) Any individual deriving income                           teenth day of the ninth month, or
from wages, as defined in s .. 71 .19 (1), which is                     (c) After the fifteenth day of the ninth month
subject to taxation under ' this chapter during the                  ofthe income year, the declaration shall be filed
calendar year 1963 o any calendar or, fiscal year
                      or,                                            on or before the fifteenth day following the end
after , January 1, 1963, shall, if he files a declara-               ofthe income year .
tion of estimated tax and pays 100 per cent of                            (3) The amount of " the estimated income or
the estimated tax for the following calendar or                       franchise tax with respect to which a declaration
income year on or before the last day of the                          is required. shall be paid as follows:
current calendar or income ;year' , be entitled to                        (a) If the declaration is filed on or before the
complete exemption from payroll withholding
                           m                                          fifteenth day of the third month of the income
under ss ., 71 . 19 and 7120 for such following                       yea r, the amount thereof shall be paid in 4 equal
calendar or income year .                                             instalments The first instalment shall be paid
    (b) No employer shall : recognize exemption                       with the filing of the declaration, the second on
from payroll withholding for any employe unless                      or before the fifteenth day of the sixth month of
he first furnishes a certificate prepared by the                      the income year', the third on or before the
department of revenue satisfactorily showing                          fifteenth day of the ninth month of the income
that the employe has ' filed a declaration of                         year;, and the final instalment on or before the
estimated tax and prepaid the estimated tax
                    d                                                 fifteenth day ofthe first month following the end
within the time and manner prescribed in this                        of the income ,year..
subsection with respect to the calendar o r in-                          (b) If the declaration is filed after ' the fif-
come year for which such exempt i on is sought .                     teenth day of the third month ofthe income year
    (c) So far' as applicable the penalties pre-                     as provided in sub . (2) (a) but on or before the
scribed in this section shall apply to declarations                  fifteenth day of the sixth month, the estimated
of estimated income tax filed under this subsec-                     tax shall be paid in 3 equal instalments . The
tion and persons making and filing the same .                        first instalment shall be; paid with the filing of
    (d) No employer , shall force or attempt to                      the declaration, the second on or before the        e
coerce an employe into estimating and prepay-
                                     g                               fifteenth day of the ninth month of the income
ing his income taxes Any employer found: guilty                      year and the final instalment on or before the
of violating this subsection may be fined not less                   fifteenth day of the first month following the end
than $25 nor more than $200 for each violation „                     of the income year .
    Histo~': 1971 c 3, 125 ; 1975 c 39; 1977 c. . 29 ; 1979 e. 110       (c) If the declaration is filed after the fif-
S, 60 ( , 13) ;1979 , c . 221,                                       teenth day of the sixth month of the income year
    Prepayments under (19) must be deducted in the year the
taxes are assessed, not the year in which paid . Trepte v. Dept .t   as provided in sub .. (2) (b) but on or before the
of Revenue, 56 W (2d) 81 ; 201 NW (2d) 567 .                         fifteenth day of the ninth month, the estimated
                                                                     tax shall be paid in 2 equal instalments . The
71.22 , Declarations of estimated tax by                             first instalment shall be paid with the filing of
                                                                                                           h
corporations. (1) Every corporation Subject                          the declaration and the second on or before the
to income or franchise taxation under this chap-                     fifteenth day ofthe first month following the end
ter shall file, at the time hereinafter prescribed,                  of the income year .. "
a declaration of estimated income or franchise                           (d) , If the declaration is filed after the fif-
tax, if the total tax based on income of any such                    teenth day of the ninth month of the income
year can reasonably, be expected to exceed                           year-, the entire amount shall be paid with the
$2,000 , Such declaration shall contain such                         filing of the declaration'. All payments of esti-
information as the department ; may by rule or                       matedfax shall be made to the department at its
form prescribe .                                                     offices in Madison,
   (2) Declarations of ` estimated income or                             (3a) If upon the filing of its complete
franchise tax required' by sub . (1) shall be filed                  franchise or income tax return or an amended
on or , before the 15th day of the 3rd month of the                  return following the filing of such complete
income year with the department ants offices in                      return, a corporation claims a refund of
Madison, except that if the requirements of sub..                    franchise or income taxes (previously paid with
(1) are first met:                                                   a tentative return or with declarations of esti-
` (a) After the fifteenth day of the third month                     mated tax, or otherwise) it shall indicate on such
of the income year and on or before the fifteenth                    return whether such refund, if approved, should
day of the sixth month of the income year, the                       be refunded or applied against any instalment of
declaration shall ` be filed on or before the fif-                   estimated tax„ In the absence of such indication,
teenth ' day of the sixth month, or                                  the amount refundable shall be refunded and
   (b) After the fifteenth day of the sixth month                    may not be claimed as payment on a declaration
of the income year and on or before the fifteenth                    of estimated tax . No refund shall be made or
                   Electronically scanned images of the published statutes.
  71 . 22 INCOME AND FRANCHISE TAXES                                                                                 1950

  credit applied prior to f i ling of the complete           (a) The tax shown on the return of the
  r'etur ' n .                                           corporation for the preceding taxable year, if a
    (4) At the election of any corporation, any          return showing a liability for tax was filed by the
 instalment of an estimated tax may be paid prior        corporation on or measured by the income of the
 to the date prescribed for its payment                  preceding year and such preceding year was a
     (5) A corpo r ation may amend a declaration         taxable year of 12 months. . This pa r agraph shall
                                                         not be considered in connection with an un-
  during the income year under rules prescribed
  by the department .                                    derpayment of estimated tax in the taxable year
                                                         1972 of " the corporation .
     (6) Application of this section to income               (b) An amount equal to the tax computed at
 years of less than 12 full months shall be made        the rates applicable to the taxable year, but
 pursuant to rules of the department ..                 otherwise on the basis of the facts shown on the
     (7) When the amount of an instalment pay-          return of the corporation for and the law appli-
 ment of' estimated tax exceeds the amount deter,-      cable to the preceding taxable year .
 mined to be the correct amount of such instal-              (c) An amount equal to 80 % of the tax for
 ment payment, the overpayment shall be                 the taxable year, computed by placing on an
 credited against the unpaid instalments, if ' any .    annualized basis the taxable income :
    (8) In the case of any underpayment of                  1 .. For the first 2 months of the taxable ,year, in
 estimated tax by a corporation, except as herein-      the case of an instalment required to be paid in
 after provided, there shall be added to the aggre-     the third month, and
 gate tax for, the taxable year an amount deter--           2 . For the first 5 months of the taxable year in
 mined at the rate of 9 % per year, on the amount       the case of :the instalment required to be paid in
 of the underpayment for the period of the              the sixth month, and
                                                           e
 underpayment                                               3 . For the fi rst 8 months of the taxable year in
    (9) For sub . (8) the underpayment shall be         the case of the instalment required to be paid in
the excess of the amount of the instalment which        the ninth month . .
would be required to be paid if the total esti-           (d) For" purposes of par . (c) the taxable
mated tax were equal to 80% of the tax shown           income shall be placed upon an annualized basis
on the return for the taxable ,year, (or, if no        by multiplying by 12 the taxable income for the
return was filed, 80% of the tax for the year)         appropriate number of months and dividing the
over the amount, if any, of the instalment paid        resulting amount by the number of months of
on or, before the last date prescribed for pa ,y-      the taxable ,year completed as of the due date of
ment . The period of the underpayment shall run        the instalment payment .
from the date the instalment was required to be            (11) Notwithstanding subs . (8 ), (9) , and
paid to whichever ' of the following dates is the       (10) the addition to the tax with respect to any
earlier :                                              underpayment of any instalment shall not be
   (a) The fifteenth day : of the third month          imposed if the total amount of all payments of
following the close of the income year .,              estimated tax made on or before the last date
   (b) With respect to any portion of the un-          presc r ibed for the payment of such instalment
derpayment, the date on which such portion is          equals or exceeds an amount equal to 90 per cent
paid For purposes of this paragraph, a payment         of the tax computed, at the rates applicable to
of estimated tax on the due date of any payment        the taxable year; on the basis of' the actuall
shall be considered a payment of a previous            taxable income for- the months of the taxable
underpayment only to the extent such payment           year ended before the month in which the instal-
exceeds the instalment due on such due date..          merit is required to be paid .
                                                         History: 1971 c , 125; 1975 c 39 ; 197 7 c . 29; 1979 c . 110 s..
Any underpayment of an instalment not paid by          60(13) . .
the fifteenth day of the third month following
the close of the income year,, together with           71 .23 Penalties not deductible . No penalty
interest as provided in sub . (8), shall be deemed     imposed by thiss chapter, including penalties
delinquent .                                           imposed under s . 71 .20 or 71 .21, or by subch. III
    (10) Notwithstanding subs ; (8) and (9) the        of ch 77 may be deducted from gross income in
addition to the tax with respect to any underpay-      arriving at net income taxable under, this
ment of any instalment shall not be imposed if '       chapter. . .
the total amount of all payments of estimated            H istory: 19'77 c 29
tax made on or before the last date prescribed
for- such instalment equals or exceeds . the           71 .26 Time extension. For, good cause
amount which would have been required to be            shown upon applicationn by an employer, the
                           e
paid on or before such date if the total estimated     department may giant an extension of time not
tax were whichever of the following is the least :     exceeding 30 days in which to furnish employes
                      Electronically scanned images of the published statutes.

 1951                                                      INCOME AND F R ANCHISE TAXES 71 .303

the written statements required by s . 71,10 (8)          distribution which is not a dividend, or is a
or, to file the copies of' such written statements as     distribution of divested stock to which this sub-
required by s . 71      (8m) or (8n), or in which to      section applies ; to the extent that it exceeds the
file a withholding report as required by s ' 71 .. 20     basis of the stock, shall be treated as gain from
(4) or (4m), but no such extension shall extend           the sale or exchange of property ..
the time for- deposit with the public depository or          2. Distributions out of increase in value ac-
payment to the department of amounts required             crued before .January .1,1911 . . That portion of
to be deducted and withheld pursuant to s .               the distribution which is not a dividend, to the
' 7120 .                                                  extent that it exceeds the basis of the stock and
   History: 1975 c . 180                                  to the extent that it is out of increase in value
                                                          accrued before .January 1, 1911, shall be exempt
71 .301 Distributions of property to corpo-               from tax,
rations. (9) IN GENERAL Except as otherwise                  (4) BASIS. (a) The basis of proper ty received
provided in this chapter', a distribution of prop-        in a distribution to which sub .. (1) applies shall
erty< (as defined in s : 71,317 (1)) made by a            be whichever, of the following is the lesser :
corporation to a corporation shareholder with
                                                             1 . The fair market value of'such property ; or,
respect to its stock shall be treated as provided in
                                                             2, The basis (in the hands of the distributing
sub., (3) .
                                                          corporation immediately before thee distribu-
   (2) AMOUNT DISTRIBUTED (a) Generalrule.
                                                          tion) of such property, increased in the amount
For purposes, of this section, the amount of any
                                                          of gain to the distributing corporation which is
distribution shall be the amount of money re-
ceived; plus whichever- of the following is the           recognized under s . . 71„311 (2) .
lessen                                                       (b) With respect to any property received in
    1 The fair market value of the other property         a distribution of divested stock as defined in
received ; or                                             section llll of the internal revenue code of
    2 ., The basis (in the hands of ' the distr ibuting   1954 (F .L . 87-403, 2nd session), the fair market
corporation immediately before the distribu-              value of such property as of the date of such
tion) of the other property received, increased in        distribution ..
the amount of gain to the distributing corpora-
tion which is recognized under s . 71 :311 (2) or                                  s
                                                          71 . 302 Distributions in redemption of
                                                          stock. (1) GENERA L RULE, If a corporation
 (3 )
    (b) Reduction for• liabilities, The amount of         redeems its stock (within the meaning of s,
any distribution deter mined under par., (a) shall        71 :317 (2)), and if' such redemption is not
be reduced (but not below zero) by :                      essentially equivalent to a dividend, it shall be
    1 .. - The amount of any liability of the corpora-    treated as a distribution in part or, full payment
tion assumed by , the shareholder in connection
                         e            r                   in exchange for' the stock . A redemption is not
with the distribution, and "                              essentially equivalent to a dividend if the distri-
    2 The amount of any liability to which the            bution is substantially disproportionate with re-
property received by the shareholder is subject           spect to the shareholder .
immediately before, and immediately after, the               ( Z)   REDEMPTIONS     TREATED AS DISTRIBU-

distribution . :                                          TIONS of rxorExrY : Except as otherwise pro-
 ` (c) Determination of fair- market . value. . For-      vided in ch .i 71, if a corporation redeems its stock
purposes of this section, fair market value shall         (within the meaning of s 71,, :317 (2)), and if
be determined as of ' the date of the distribution ..     sub (1) does not apply, such redemption shall
   (3) AMOUNT TAXABLE, In the case of a distri-           be treated as a distribution of property to which
bution to which sub.. (1) applies:                        s 71,301 applies .
   (a) Amount constituting dividend. That por-
tion of" the distribution which is a dividend (as         71 . 303 Distributions in redemption of
defined in s .' 11 :, 316) 'shall be included in gross    stock to pay death ta xes . A distribution of
income, except for a distribution of divested             property to a shar'eholder' by a corporation in
stock as defined in section 1111 of the internal          redemption of part or alll of the stock of such
revenue< code of 1954 (P, L.. 87-403, 2nd                 corporation which is included in the inventory of
session),,                                                a decedent's estate shall be treated as a distribu-
   (b) Amount applied against basis. That por-            tion in full payment in exchange for 'the stockso
tion of the distribution which is not a dividend,         redeemed, provided such distributionn shall be
or is a distribution of divested stock to which           made prior to the time that taxes payable under
par . (a) applies, shall be applied against ' and         ch .. 72 by reasonof the death of such decedent
reduce the basis .of the stock :                          have become finally and conclusively fixed and
   (c) Amount in excess of basis , l : . In general„      determined, to the extent that the amount of
Except as provided in subd. 2, that portion of the        such distribution does not exceed the sum of :
                        Electronically scanned images of the published statutes.
  71 . 303 INCOME AND FRANCHISETAXES                                                                          1952

     (1) The estate,, inheritance, legacy and                (b) Election. . The election referred to in par ..
  succession taxes (including any interest col-           (a) shall be made in the return filed within the
                                                                                                       n
  lected as a part of'such taxes) imposed because         time prescribed by law (including extensions
  of such decedent's death, and                           thereof') for the taxable year in which such
     (2) The amount of funeral and administra-            rights were received . Such election shall be
  tion expenses allowable by thee court having            made in such manner as the department of
 jurisdiction of the decedent's estate .                  revenue may by rule prescribe, and shall be
    His tory : 1977 c 449 .                               irrevocable when made ..

 71 . 305 Distributions of stock and stock                71 .311 Taxability of corporation on distri-
 rights . (1) GENERAL RULE, Except as provided            bution . ( 1 ) GENERAL RULE . . Except as pro-
 in sub.. (2), gross income does not include the          vided in subs . ` (2) and (3), no gain or loss shall
 amount of any distribution madee by a corpora-           be recognized to a corporation on the distribu-
 tion to its shareholders, with respect to the stock      tion, with respect to its stock of :
 of such corporation, in its stockk or in rights to              (a)   Itsstock   (or rights to acquire its stock),
 acquire its stock .                                      OT '

    (2) DISTRIBUTIONS INLIEU OF MONEY .. Sub-                    (b) Property .
 section (1) shall not apply to a distribution by a          (2) LIFO INVENTORY . (a) Recognition of
 corporation of its stock . (or rights to acquire itss    gain . If a corporation inventor ying goods under
 stock), and the distribution shall be treated as a       the last-in, first-out (LIFO) inventory method
 distribution of property to which s . 71301              distributes inventory assets (as defined in par.
 applies :                                                (b) 1) then the amount (if ' any) by which the
    (a) To the.e extent that the . distribution is        inventory amount (as defined in par . (b) 2) of
 made in discharge of preference dividends for            such assets under the first-in, fast-out (FIFO)
 the taxable year of the corporation in which the         inventory method, exceeds the inventory
 distribution is made orfor- r the preceding taxable      amount of" such assets under the LIFO method,
 year; or'                                                shall be treated as gain to the corporation recog-
    (b) IF' the distribution is, at the election of       nized from the sale of such inventory assets.
 any of the shareholders (whether exercised                 (b) Defini tions. For purposes of par . (a) :
 before or after the declaration thereof), payable          1 Inventory assets . The term "inventory
 either 1 . in its stock (or in rights to acquire its    assets" means stock in trade of the corporation,
 stock), or 2 : in property„                             or other property of a kind which would properly
                                                         be included in the inventory of the corporation if
  71 .307 Basis of stock and stock rights                on hand at the close of the taxable year..,
 acquired in distributions. (1) GENERAL                     2„ Inventory amount.. The term "inventory
 RULE . If `a shareholder in a corporation receives      amount " means, in the case of inventory assets
 its stock or rights to acquire its stock (referred      distributed during a taxable year, the amount of
 to in this subsection as "new stock") in a distt-           h
                                                         such inventory assets determined as i f the tax-
 bution to whichh s : 71305 ( 1) applies, then the       able year closed at the time of such distribution ..
 basis of such new stock and of the stock with              (c) Method of determining inventory
 respect to which it is distributed (referred to in      amount.. For, purposes of this subsection, the
 this section as `.`old stock"), respectively, shall ;   inventory amount of assets under the FIFO
 in .the shareholder's hands ; be determined by          method shall be deter mined:
 allocating between the oldd stock and thee new             1 , If the corporation uses the retail method of
 stock the basis of'the old stock . Such allocation      valuing LIFO inventories, by using such
 shall be made under rules prescribed by the             method, or
 department of revenue,                                     2 If' subd . l does not apply, by using cost or
    (2) E XCE P T I ONS FO R CERTAIN STOCK               market, whichever is lower .
 RIGHTS ., (a) . In general. If"a corporation distrib-       (3) LIABILITY IN EXCESS OF BASIS .. If a corpo-
 utes rights to acquire its stock to a shareholder, in   ration distributes property to a shareholder with
a distribution to which s . 71305 (1) applies, and       respect to its stock, such property is subject to a
the fair' marketvalue of such rights at the time of'     liability, or the shareholder assumes a liability of
the distribution is less than 15 per cent of the fair    the corporation in connection with the distribu-
                                                                                              h
market value of the old stock at such time, then         tion, and the amount of such liability exceeds
sub;: (1) shall not:t apply and the basis 'of' such      the basis (in the hands of the distributing corpo-
rights shall be zero, unless the taxpayer elects         ration) of such property, then gain shall be
under this subsection to determine the basis of          recognized to the distributing corporation in an
the old stock and of thee stock rights under the         amount equal to such excess as if the property
method of allocation provided in sub . (1) .             distributed had been sold at the time of the
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 1953                                                    INCOME AND FRANCHISE TAXES 71 .312

distribution . In the case of a distribution of            (c) Any gain to the corporation recognized
property subject to a liability which is not as-        under s 71311 (2) .
sumed by the shareholder, the amount of gain to            ( 4) ' CERTAIN DISTRIBUTIONS OF S TOCK AND
be recognized under the preceding sentence              SECURITIES . (a) In general The distribution to a
shall not exceed the excess, if any, of the fair        distributee by or on behalf' of a corporation of its
market value of'such property over its basis . .        stock' or securities, of stock or securities in
                                                        another, :corporation, or of property, in a distri-
71 . 312 Effect on earnings and profits . (1)           bution to which ch . 71 applies, shall not be
GENERAL RULE . Except as otherwise provided in          considered a distribution of the earnings and
thiss section, on the distribution of property by a     profits of any corporation .
corporation with respect toits stock, the earn-            1 .. If' no gain to such distributee from the
ings and.piofits of the corporation (to the extent      receipt of such stock or securities, or property,
thereof) shall be decreasedd by the sum of the          was recognized under ch . 71, or
amount of money, the principal amount of the               2 If the distribution was not subject to tax in
obligations of such corporation and the basis of        the hands of such distributee by reason of s .
the other property, so distributed . .                  71305 (1) .
    (2) CERTAIN INVENTORY ASSETS . . (a) II1gCl1-          (b) Prior distributions . In the case of a distri-
eral . On the distribution by a corporation, with       bution of stock or securities, or property, before
respect to its stock, of inventory assets (as           January 1, 1955, the effect on earnings and
defined in par. (b) 1) the fair market value of         profits of such distributionshall be determined
which exceeds the basis thereof ; the earnings          under the corresponding provisions of prior law ;
and profits of'the corporation :                           (c) Stock or, securities For purposes of this
   1 : Shall be increased by the amount of such         subsection, : the term "stock or securities" in-
excess ; and                                            cludes iightsto acquire stock or securities .
   2 .,, .Shall be decreased by whichever of" the           (5) SPECIAL RULE FOR PARTIAL LIQUIDA-
following is the lesser : a. the fair market value of    TIONS A ND CERTAIN REDEMPTIONS . In the case
the'inventory assets distributed, or b . . the earn-     of amounts distributed in partial liquidation or
ings and profits (as increased under subd .l) .          in a redemption' to which s . . 71302 (1) or 71 .. .30 .3
   (b) Definitions, 1 . Inventory assets . For the       applies, the part of such distribution which is
purposes of' par„ (a), the term "inventory as-           properly chargeable to capital account shall not
sets" means: stock in trade of the corporation, or       be treated as `a distribution of earnings and
other, property of a kind' which would properly          profits..
be included in the inventory of the corporation if
                                                            ( G~ EFFECT ON EARNINGS AND PROFITS OF
on hand at the close of the taxable year ; property      GAI N OR LOSSA ND OF RE C EIPT OF TAX-FREE DIS-
held by the corporation primarily for sale to            rxisuiiorrs, (a) Effect on earnings and profits
customers in the ordinary course of its trade or         ofgain or, loss. . The gain or loss realized from the
business ; and' unrealized receivables or fees;         sale or, other, disposition (after January 1, 1911)
except`receivables from sales or exchanges of'          of property by a corporation for the purpose of
assets other than assets described in this              the computation of the earnings and profits of
subdivision                                             the corporation shall (except as herein pto-
 - 2 . Unrealized receivables or fees . For, pur-       vided)'be determined by using as the basis the
poses of subd . 1, the term "unrealized 'ieceiv-        basis (under, :the law applicable to the year in
ables or fees" means ;o to the extent not previously    which the sale or other, disposition was made)
includable in income under the method of ac-            for determining gain, except that no regard shall
counting used by the corporation, any rights            be had to the value of the property as of January
 (contractual or otherwise) to payment for goods         1,'1911 ; but for purposes of the computation of
delivered, or to be delivered, to the extent that       the earnings and profits of the corporation for
the proceeds therefrom would be treated as              any period beginning after January 1, 1911,
amounts received from the sale or exchange of           shall be determined by using as the basis the
property, or services rendered or- to be rendered .     basis (under the law applicable to the year in
    (3) ADJUSTMENTS FOR LIABILITIES, EIC , In           which the sale or other disposition was made)
making the adjustments to the earnings and              for determining' gain .. Gain or loss so realized
profits of 'a corporation under sub, (1) or (2),        shall increase or- decrease the earnings and prof-
proper adjustments shall be made for.                   its to but not beyond, the extent to which such a
   (a) The amount of any liability to which the         realized gain or loss was recognized in comput-
property distributed is subject,                        ing taxable income under the law applicable to
   (b) The amount of any liability of the corpo-        the year in which such sale or disposition was
ration assumed by a shareholder in connection           made„ Where, in determining the basis usedd in
with the distribution, and                              computing such realized gain or loss, the adjust-
                     Electronically scanned images of the published statutes.
  71 .312 I NCO ME A ND FRANC H ISE TAXES                                                                 1954

  ment to the basis differs from the adjustment            its of the distributing corporation and the con-
  proper for- the purpose of determining earnings          trolled corporation (or corporations) shall be
  and profits, then the latter adjustment shall be         made under ' rules prescribed by the department
  used in determining the increase or decrease             of revenue .
  above provided .,                                             (9) DISTRIBUTION OF PROCEEDS OF LOAN IN-
     (b) Effect on earnings and profits of receipt          SURED BY THE UNITED STATES, If .a corporation
              .
  of tax-free distributions Where a corporation             distributes property with respect to its stock, and
 receives (after January 1, 1911) a distribution            if, at the time of the distribution there is out-
  from a second corporation which (under the law           standing a loan to such corporation which was
  applicable to the year in which the distribution         made, gua r anteed or insured by the. . Unite
 was made) was not a taxable dividend to the
                                                           States (or by any agency or instrumentality
 shar•eholdecs of the second corporation, the              thereof) , and the amount of such loan so out-
 amount of such distribution shall not increase            standing exceeds the adjusted basis of' the prop-
 the earnings and profits of the first corporation         erty consti tuting security for such loan, then the
 in the following cases :                                  earnings and profits of the corporation shall be
     1 No such increase shall be made in respect           increased by the amount of such excess, and
 of thee part of such distribution which (under'           (immediately after the distr i bution) shall be
 such law) is directly applied in reduction of the
                                                           decreased by the amount of such excess . For
 basis of`the stock in respect of which the distri-
                                                           purposes of this subsection, the basis of the
 bution was made ; and-
                                                           propert y at the time of distribution shall be
    2 No such increase shall be made if (under
                                                           determined without regard to any adjustment
                                                                                                y
 such law) the distribution causes the basis of'the
                                                           for depreciation and depletion „ For purposes of
 stock in respect of which the distribution was
                                                           this subsection, a commitment to make guaran
 made to,be allocated between such stock and the
                                                           tee . or insure a loan shall be treated as the
 property received (or` such basis would, but for s . .
                                                           making, guaranteeing or insuring of a loan .
                                                                    ,
 71307 : . (1), be so allocated) .
      (7 ) EARNINGS AN D PR OFITS-INCREASE IN
                                                           71 .316 Dividend defined. (1) GENERAL
  VALUE ACCRUED BEFORE JANUARY I , ,1911, (a)
                                                           RULE . For purposes of' this chapter, the term
  I f any increase or decrease in the earnings and
                                                           "dividend" means any distribution of property
  profits for any period beginning after January 1,
                                                           made by a corporation to its shareholders out of
  1911, with respect to any matter would . : be
                                                           its earnings and profits accumulated after Janu-
  different had the basis of the property involved
                                                           ary 1 , 1911, or out of its earnings and profits of
  been determinedd without regard to its January
                                                             e
                                                           the taxable ,year (computed as of the close of the
  1, 1911, value, then, except as provided in par-,
                                                           taxable year, .without diminution by reason of
  (b), an increase . (properly reflecting such dif-
                                                                                              g
                                                           any distributions made during the taxable
  ference) shall be made in that part of the
                                                           year. ) , without regard to the amoun t of ' the
 earnings and profits consistingg of increasee in
                                                          earnings and profits at the time the distribution
 value of property accrued before January 1,
                                                          was made Except as otherwise provided in this
                                                                                                     d
  1911,
                                                          chapter-, eve r y distribution is made out of' earn-
     (b) If the application of sub.: (6) to a sale or'
 other disposition after January l ; 1911, results        ings and profits to the extent thereof, and from
 in a loss which is to be applied in decrease of          the most recently accumulated earnings and
                                                          profits , To the extent that any distribution is,
 earnings andd profits forr any period beginning
 after January 1 ;'1911, 'then, notwithstanding           under any provision of this chapter ; treated as a
 sub . (6) and in lieu of the rule provided in par .                                         h
                                                          distribution of p roperty to which s . 71 .301 ap-
 (a), the amount of such loss so to be applied            plies, such distribution shall be treated as a
 shall be reduced by the amount, if any, by which         distribution of property for .r purposes of this
 the basis of the property used in determining the        subsection..
 loss exceeds the basis computed without regard
 to the value of the property on January 1, 1911,         7-1,31 7,          definitions . (1) PROPERTY .
 and if such amount so applied in reduction, of the       Forpurposes of ss. 71 301 to, 71 . .317 , the term
                                                                                                        e
decrease exceeds such loss, the excess over such                                      ,
                                                          "property"' means money, secu rities, and any
loss shall increase that part of the earnings and                        ;        t
                                                          other property ;. except that such - term . does not
profits consisting of increase in value of property       include stock in the corporation making the
accrued before January 1, 1911 . .,                       distribution (or rights to acquire such stock) .
     (8) ALLOCATION IN CERTAI N CORPORATE                    (2) REDEMPTION OF STOCK . For, purposes of
SEPARATIONS. In the case of a distribution or             ss 71 .301 to 71 .317, stock shall be treated as
exchange to which s. 71 ;355 (or- so much of s .                    d
                                                          redeemed by a corporation if the corporation
71„356 as relates to s.. 71 .355) applies, proper,        acquires its stock . & •om a shareholder in ex-
                                                                                                      r
allocation with respect tothe earnings and prof-          change for property, whether or not the stock so
                     Electronically scanned images of the published statutes.
 195 5                                                   INCOME AND FRAN CHISE TA XES 71 .333

acquired is canceled, retired or held as treasury            (c) Such distribution is one of a series of
stock .. . . .                                           distributions by such other corporation in com-
    (3) DISTRIBU iEE AND SHAREHOLDE R ID SS .            plete cancellation or redemption of all its stock
71 .301 to 71 .372, "distributee;" "shareholder"         in accordance with a plan of liquidation under
or similar, appellation, shall not include natural       which the transfer of all the property under the
persons or fiduciaries for the purpose of' determi-      liquidationn is to be completed within 3 years
nation of their taxable income or for the pur-           from the close of the taxable year duringg which
poses of determining basis of stock owned by             is made the first of the series of distributions
them ,                                                   under the plan, except that if such . transfer is not
   History: 1973 c; 12 s :37,
                                                         completed within such period, or if'the taxpayer
                                                         does not continue qualified under par .. (a) until
                                                         the completion of such transfer, no distribution
7 1 .331 Gain or ' loss to shareholders in
                                                         under the plan shall be considered a distribution
corporate liquidations . (1) GENERAL RULE,
                                                         in complete liquidation .
(a) : Gorrmplete lrqudati'ons Amounts distrib-
uted in complete liquidation of a corporation               A distribution otherwise constituting a distti-
shall be treated as in full payment in exchange          bution in complete liquidation within the mean-
for the stock                                           ing of`this subsection shall not be considered as
                                                        not constituting such a distribution merely be-•
   (b) Partialligaidatlons. Amounts distributed
                                                        cause it does not constitute a distribution or
in partial liquidation of a corporation (as de-
                                                        liquidation within the meaning of the corporate
fined in s, 71:346) shall be treated as in part or
full payment in exchange for the stock ;                law : under ; which the distribution is made ; and
                                                        f"or, ,purposes of this subsection a transfer of
    ( 2)' NONAPPLICAIION OF SE C TIO N 71,301 .         property of such other corporation to the tax-
Section, 71 301 shall not apply to an,ydistribu-        payer shall riot be considered as not constituting
tion of property in partial or complete                 a : distribution (or one of' a series of distribu-
liquidation                                             tions) in complete cancellation or re d emption of
                                                        all the stock of such other corpo r ation, merely
 71 . 332 Complete liquidatio ns of subsidi-            because the carrying out of the plan involves (a)
 aries . ,(1) GENERAL R ULE No gain or' loss shall      the transfer under, the plan to the taxpayer by
 be recognized on the receipt by a corporation of       such other- corporation of property, not attiibut-
 property distributed in complete liquidation of        able to shares owned by thee taxpayer, on an
 anotherr coclporation .                                exchange described in s . 71 361, and (b) the
     ( 2 ) - LIQUI DA TIONSTO W HICH SEC TION AP-       complete cancellation or redemption under the
 PLIES: For purposes of sub,. (1), a distribution       plan, as a ,result of exchanges described in s ..
shall :be considered to be in complete liquidation      71 .354, of the shares not owned by the taxpayer.
only if:                                                        SPE C IAL R ULE FOR INDEBTEDN ESS OF
    (a) The corporation receiving such property         SUBSIDIAR Y 10 PARE N T .. I f 3 corporation is liqui-
was, on the date of the adoption of'the plan of         dated and sub. (1) applies to such liquidation,
liquidation, and has continued to beat all times        and on the date of the adoption of the plan of
until the receipt- of the property, the owner of        liquidation, such corporation was indebtedd to
stock (in such other cotparation) possessing at         the corporation which meets the 80 perr cent
least 80% of the total combined voting power of         stock ownership requirements specified in sub ..
all classes of stock entitled to vote and the owner     (2), then no gain or loss shall` be recognized to
of at least 80% of the total number of shares of        the corporation so indebted because of the trans-
all other classes of stock(except nonvoting stock       fe of property in satisfaction of such
which is limited and preferred as to dividends) ;       indebtedness :
and either,
   (b) The distribution is by such other coi por a-     71 .333 Election as to recogni tion of gain
tion in complete cancellation of redemption of          in certain cor porate liquidations. (1) I f
all its stock ; and the transfer- of all the property   property is distributed in complete liquidation of
occurs within the taxable year ; in such case the       a corporation and if (a) the liquidation is made
adoption' by the shareholders of the resolution         in pursuance of a plan of liquidation adopted
under. which is authorized the distribution of all      after December 31, 1954, an d .(b) the;,distribu-
the assets of such corporation in complete can-         tion is in complete cancellation or redemption of
cellation : or redemption of all its stock shall be     all the stock, and the transfer of all the property
considered an adoption of a plan of"liquidation,        und er the liquidation occurs within some one
even though no time for the completion of the           calendar month ; then in the case of each q uali-
transfer of' the property is specified in such          fied electing shareholder as define d in sub . . (3)
resolution ; or                                         gain upon the shares owned by him at the time of
                    Electronically scanned images of the published statutes.
 71 .333 I N CO M E A ND FRAN CHISE TAXES                                                                   1956

 the adoption of the plan of liquidation shall be        liquidation (other than a distribution to which s .
 recognized only to the extent provided in the           71 . . .3 .33 applies), and if gain or loss is recognized
 sub . : (4) . .                                         on receipt of such property, then the basis of the
     (2) The term "excluded corporation' as used         property in the hands of the distributee shall be
 inthis section means a corporation which at any         the fair' market value of such property at the
 time between January 1, 1955, and the date of           time of the distribution . .
 the adoption of the plan of liquidation, both               ('1 ) LIQUIDATION OF SUBSIDIARY . . (a) 171 g611-
 dates inclusive, was the owner of stock possess-        eral: If' property is r eceived by a corporation in a
 ing 50 per, cent or more of the total combined          distribution in complete liquidation of another
 voting power of all classes of stock entitled to        corporat ion (within the meaning of s. '71 . 3 ,32
 vote on the adoption of such plan                       (2 ) ), then, except as provided in par , . (b), the
                                                         basis of ' the property in the hands of the distribu-
    (3) In this section, "qualified electing share-
                                                           e
                                                         tee shall be the same as itwould be in the hands
holder", means a shareholder, other than an
                                                         of the transferor If property is received by a
excluded corporation, of any class of stock
                                                         corporation in a tcansfer , to which s.. 71 .. .332 ( :3)
whether or not entitled to vote on the adoption of
                                                         applies , and if par . (b) does not apply, then the
the plan of liquidation who is a shareholder at
                                                         basis of the property in the hands of the trans-
the time of the adoption of the plan, and whose
                                                         feree shall be the same as it would be in the
written election to have the benefits of this
                                                         hands of the transferor .
section is filed with the department of revenue
within 30 days : after the adoption of'the plan of           (b) Exceptr'on.. If ' property is r eceived by , a
liquidation, but in the case of a shareholder                         n
                                                         corporation in a distribution incomplete liqui-
which is a corporation, only if evidencee is sub-        dation of another corporation (within the mean-
mitted to the department which is satisfactory to        ing of s, 71 . 332 ,(2) - ), and if ' the distribution is
it that written elections have been filed as pro-                              n
                                                         pursuant to a plan of liquidation adopted not
vided by section 333 of the internal revenue code        more than 2 years after the date of the transac-
of 1954 by corporate shareholders, other than an         tion described in this sentence (or, in the case of
excluded corporation, which at the time of the           a series of transactions, the date of the last such
adoption of the plan of liquidation are owners of        transaction) ; and stock of ' the distributing cor-
stock possessing at least 80% of the total com-          poration possessing at least 80 per cent of the
bined voting `power, exclusive of votingg power          total combined voting power of all classes of
possessed by stock owned by an excluded 'corpo-          stock entitled to vote, and at least 80 per cent of
ration and by Shareholders who are not corpora-          the total number of shares of all other classes of
tions of All classes of stock entitled to vote on the    stock (except nonvoting stock which is limited
adoption of the plan of liquidation .                   and preferred as to dividends ' ) ; was acquired by
    (4) The gain of a corporate or noncorporate         the distributee by purchase (as defined in .par..
qualified ;electingshareholder upon the shares of        (c)) during a period of not more than 12
                                                        months; then the basis of the property in the
the liquidating corporation owned by him at the
time of adoption of the plan ofliquidation shall        hands of the distributee shall be the basis of the
be recognized and taxed as a profit on disposi-         stock with respect to which the distribution was
tion of such shares, but only to the extent of the      made . For purposes of the preceding sentence,
greater of the following : (a) the portion of the       under rules prescribed : by the department of
assets received by him which consists of money,         revenue, proper, adjustment` in the basis of any
or of stock or- securities acquired by the liquidat-    stock shall be made for any distribution made to
ing corporation after January 1, 1955, or (b) his       the dishibutee with respect to such stock before
ratable share of the earnings and profits of the        the adoption of the plan of liquidation, for any
liquidating corporation accumulated after Janu-         money received, for any liabilities assumed or
ary, 1, 1911, such earnings and profits to be                                              y
                                                        subject to which the property was received, and
determined as of the close of the month in which        for other items . .
the transfer in liquidation occurred, but without           (c)' Purchase defined. For purposes of par .
diminution by reason of`disttibutions made dur-         (b), . the term ". `purchase" means any acquisition
ing such month, but including in the computa-           of stock, ' but only if the basis of the stock in the
tion thereof all amounts accrued up to the date         hands ' of the distfibutee is not determined in
on` which the transfer of all the property under        whole of in part by reference to the basis 'of such
the liquidation is completed                            stock in the hands of the - person from whom
  :-1979c
  History 132..                                         acquired, or under such provisions of s „ 71 .03
                                                        (i ) (g) as relate , to the basis of property ac-
71 .334, Basis of property received in liqui-           quired by descent, devise, will or , inheritance,
dations . (1) <GENERAL RULE, If property is             and the stock is not acquired in an exchange to
                                                           d e
received in a distribution in partial or complete       which s . 71 .351 applies ..
                   Electronically scanned images of the published statutes.

  1957                                                    INCOME AND FRANCHISE TAXES 71 .346

     (d) Distributee defined. For purposes of"this           (b) Nonrecognitlon with respect to in vento.(y
  subsection, the term "distributee" means only           m certain cases,: Notwithstanding par . (a), if
  the corporation which meets the 80 per' cent            substantially all of the property described in par.
 stock ownership- requirements specified in s .           (a) i which is attributable to a trade or business
  71,332 (2) .                                            of the corporation is, in accordance with this
     (3) PR OPE R'TY' RECEIVED IN LIQUIDATION             section, sold or, exchanged to one person in one
                                                          transaction,, then for purposes of sub , (1) the
 UNDER SECTION 71,333 If property was ac-
                                                          term "property" includes such property so sold
 quired by a 'shareholder in the liquidation of a
                                                          or exchanged, and instalment obligations ac-
 corporation in cancellation or redemption of
                                                          quired in respect of such sale or exchange
 stock, and with respect to such acquisition gain
 was realized, but as a result of an election made           (3) Li Mir A itorrs, (a) Llquidatlons to which
 by the shareholder under s . 71 .333, the extent to          i
                                                         sect on 71 . ..3. 3.3 applies. This section shall not
 which gain- was `recognized was determined              apply to any sale or exchange following the
 under' s„ 71 : .333, then the basis shall be the same   adoption of a plan of complete liquidation, if s .
 as the basis of such stock canceled or redeemed         71,333 applies with respect to such liquidation .
 in the liquidation, decreased in, the amount of'            (b) Liquidations to which section 71. . .3.32 ap-
 any money received by the shareholder, and              plies . In the case of a sale or exchange following
 increased in the amount of'gain recognized to           the adoption of a plan of complete liquidation, if
 him . .                                                 s . 71,332 applies with respect to such liquida-
                                                         tion , then:.
71 .336 Gain or loss to corporation on liq-                 L If the basis of the property of the liqu i dat-
                                                         ing corporation in the hands of the distributee is
uidation, general rule . No gain or loss shall be
recognized to a corporation on the distribution          determined under s .. 71 . 334 (2) (a), this section
                                                         shall not apply ; or
of property in partial or complete liquidation . .
                                                            2.. If the basis of the property of the liquidat-
71 . 337 ' Gain or loss on sales or exchanges            ing corporation in the hands of the distributee is
in connection with certain liquidations. (1)             determined under s . . 71 .. .3 .34 (2) (b), this section
GENERAL RULE. If a corporation adopts a plan of          shall apply only to that portion (if any) of the
complete liquidation, and within the 12-month            gain which is not greater than the excess of a ..
                                                         that portion of the basis (adjusted for any
period' beginning on the date of the adoption of
                                                         adjustment required under the second sentence
such plan, all'of'the assets of the corporation are
                                                         of s . 71 .334 (2) (b)) of the stock of the liquidat-
distributed in complete liquidation, less assets
                                                         ing corporation which is allocable, under rules
retained to meet claims, then gain or loss shall
                                                         prescribed by the department of revenue to the
not be recognized to such corporation from the           property sold or exchanged, over b . the basis, in
sale or exchange by it of property within such           the hands of the liquidating corporation, of the
12-month period to the extent that such gain or          property sold or exchanged .
loss is participated in by Wisconsin resident               Statute is constitutional. See note to Art. . I, sec. 1, citing
Shareholders,                                            WKBH Television, Inc v Dept , of Revenue, 75 W (2d) 557,
                                                         250 NW; (2d) 290 ,
   (2) PR O P E RTY D EF I NE D. (a) In general, For,
purposes of sub . (1), the term "property" does          71 .346 Partial liquidation defined. (1) IN
not include :                                            GENERAL. For, purposes of ch ,. 7l, a distribution
   1 Stock in trade of the corporation, or other             l
                                                         shall be treated as in partial liquidation of a
property, of a kind which would properly be              corporation if:
included in the inventory of the corporation if on          (a) The distribution is one of a series of
hand at the close of, .thef taxable . year, and          distributions in redemption of all of the stock of
property held by the corporation primarily for           the corporation pursuant to a plan ; or,
sale to customers in the ordinary course of its             (b) The distribution is not essentially
trade or :business,                                      equivalent to a dividend , is in redemption of a
   2 . Instalment obligations acquired in respect        part of the stock of the corporation pursuant to a
of the sale or exchange (without regard to               plan ; and occurs within the taxable year in
                                                                           s
whether such sale or exchange; occurred` before,         which the plan is adopted or within the suc-
on, or after thee date of the adoption of the plan       ceeding taxable year, including: (but not limited
referred to in sub.... (1)) of stock in trade or other   to) adistribution which meets the requirements
property described in subd, 1,, and                      of sub.; (2) .
   3 . Instalment obligations acquired in respect           (2) T ERMINATION OF A BUSINESS . A distribu-
of property (other than property described in            tion shall be treated as a distribution described
subd l) sold or exchanged before the date of the         in sub. (1) (b) if the requirements of this
adoption of such plan of liquidation                     subsection are met .
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 71 .346 INCOME AND FRANCHISE T AX ES                                                                    1958

   (a) The distribution is attributable to the            stock which it receives in the exchange to its
                                                              k
corporation's ceasing to conduct, or consists of                               t
                                                          shareholdersshall not be taken into account . .
the assets of, a trade or business which has been
actively conducted throughout the 5-year period          71 .354 . Exchanges of stock and securities
immediately before the distribution, which               in certain reorganizations . (1) GENERAL
trade or business was not acquired by the corpo-         PULE, (a) In general No gain or loss shall be
ration within such period in a transaction in            recognized if'stock or, securities in a corporation
which gain or loss was recognized in whole or in         a party to a reorganization are, in pursuance of
part . .                                                 the plan of reorganization, exchangedd solely for
   (b) Immediately after the distribution the            stock `or- securities in such corporation or in
liquidating corporation is actively engaged in           another . corporation a party to the
the conduct of a trade or business, which trade          reorganization.
or business was actively conducted throughout               (b) Limitation . . Paragraph (a) shall not ap-
the 5-,year, period ending on the date of the            ply if the principal amount of an,y such securities
distribution and was not acquired by the corpo-          received exceeds the principal amount of any
ration within such period in a transaction in            such securities surrendered, or anysuch securi-
which gain or loss was recognized in whole or in         ties are received and no such securities are
part . . .                                               sucreridered ;
   (2a) REQUIREMENTS, MEE T ING, Whether' or,                (2) ExcErriorr . (a) In general. Subsection
not a distribution meets the requirements of'sub .        (1) shall not apply to an exchange in pursuance
(2) shall be determined without regard to                of a plan of reorganization within the meaning
whether or not the distribution is proportional          of s 71;.368 (1) (a) 4,: unless : the corporation to
with respect to all of the shareholderss of' the         which the assets are transferred acquired sub-
corporation .                                            stantially all of the assets of thee transferor of
    (3) TREATMENT OF CER TAIN REDEMPTIONS„               such assets ; and the stock, securities and other'
The fact that, with respect to a shareholder ; 'a        properties received by such transferor, as well as
distribution qualifies under s 71 .302( 1') (relat-      the other properties of such transferor, are dis-
ing to redemptions`treated as distributions in           tiibuted in pursuance of the plan of
part or full payment in exchange for stock) by           reorganization.
reason ofsuch distribution being substantially               (3) CERTAIN RAILROAD REORGANIZATIONS,,
disproportionate shall not be taken into account         Notwithstanding any other provision of ch . 7,1,
in determining whether, the distribution, with           sub. (1) (a) and s . 71 .356 shall apply with
respect to such shareholder, is also a distribution      respect to a plan of reorganization (whether or
in partial liquidation of the corporation .              not a reorganization within the meaning of s .
   Histor y: 19'79 c . 110 s . 60 "(11)                  71368 (0) for a railroad approved by the
                                                         interstate commerce commission under section
 71 .351 Transfer to corporation controlled              77 of the bankruptcy act, or under' section 20b of
 by transferor. (1) G ENE RAL RULE No gain or            the interstate commerce act, as being in the
 loss shall be recognized if' proper ty is transferred   public interest ;
 to a corporation by one or more persons solely in
exchange for stock or securities in such corpora-         71 :355 Distribution of stock and securi-
tion and immediately after the exchangee such            ties of a controlled corporation . (1) E FFECT
person or persons are in control (as defined in s .       ON bisTxisurEES . (a) General rule.. If:
71,368 (3)) of the corporation For purposes of               1 . A corporation (referred to in this section as
this section, stock or- securities issued for ser-       the "distributing corporation") distributes to a
vices shall not be considered as issued in return        shareholder, with respect to its stock, or distrib-
for. property .,                                         utes to a security holder, in exchange'e for its
    (2) RECEIPT OF PRO PER TY . . If sub, (1) would      securities, solely stock or securities of acorpora-
apply to an exchange but for : the fact that there       tion (referred to in this section as "controlled
is received, in addition to the stock or, securities     corporation") which it controls immediately
permitted to be received underr sub ., (1), other        before .e the distribution,
property or money, then gain (ifany) to such                 2 . The transaction was not used principally as
recipient shall be t•ecognized, but not in excess of     a device for the distribution of the earnings and
the amount of money received, pluss the fair             profits of the distributing' corporation or' the
market valuee of such other property received ;          controlled corporation or both (but the mere
and no loss to such recipient shall be recognized„       fact that subsequent to the distribution stock or
   (3) SPECIAL RULE . In determining control,            securities in one or more of such corporations
for purposes of this section, thee fact that any         are sold or exchanged by all or some of the
corporate transferor distributes part or all of the      distributees (other than pursuant to an arrange-
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  1959                                                       INCOME AND FRANCHISE TAXES 71 .356

  ment negotiated or agreed upon prior to such                  2, Immediately before the distribution, the
  distribution) shall not be construed to mean that          distributing corporation had no assets other
  the transaction was used principally as such a             than stock or securities in the controlled corpo-
  device),                                                   rations;and each of'the controlled corporations is
     3 . The requirements of sub . . (2) (relating to        engaged immediately after the distribution in
  active businesses) are satisfied, and                      the active conduct of a trade or `business .
       4 ., As part ofthe distribution, the distributing        (b) Definition,, For the purposes of par . (a), a
   corporation distributes all of the stock and se-          corporation shall be treated as engaged in the
 curities in the controlled corporation held by it           active conduct of a trade or- business ifand only
   immediately before the distribution, or' an
 amount of stock in the controlled corporation                  1 . It is engaged in the active conduct of a
 constituting control within the meaning of s.               trade or, business, or substantially all of its assets
 ' 71 . 368 _ (3), and it is established to the satisfac-    consist of stock and securitiess of' a corporation
   tion of the department of revenue that the                controlled by it, (immediately after the distribu-
 retention by the distributing corporation of       n        tion) which is so engaged,
 stock . (or stock and securities) .) in the controlled         2 . Such trade or business has been actively
 corporation was not in pursuance of a plan                  conducted throughout the 5-year period ending
 having as one of its principal purposes the avoid-          on the date of the distribution,
 ance of income . tax, then no gain or loss shall be           3 . Such trade or businesss was not acquired
 recognized to (and no amount shall be includ-              within the period described in subd 2 in a
 able .in the income o# ' ) such shareholder or             transaction in which gain or loss was recognized
 secur i ty , holder on the receipt of such stock or        in whole or in part, and
 securities                                                    4 . Control of a corporation which (at the time
    (b) Non p roportr 'onal distributions, etc: Par-        of acquisition of control) was conducting such
 agraph (a) shall be applied without regard to              trade or business was not acquired directly (or
 the following :                                            through one or more corporations) by another
    1 Whether or not the distribution is propor-            corporation within the period described in subd„
 tional with respect to all of the shareholde r s of        2, or was so acquired by another corporation
 the distributing corporation,                              within such period, but such control was so
    2.. Whether, or not the shareholder surrenders          acquired only by reason of transactions in which
 stock in the distributing corporation, and                 gain or loss was not recognized in whole or in
    3 Whether or not the distribution is in pursu-          part, or only by reason of such transactions
 ance of a plan of reorganization (within the               combined with acquisitions before the beginning
 meaning of s 71:.368 (1) (a) 4) . .                        of such period .
    (c) ` Limitation Paragraph (a) shall not ap-              History: 1979 c.. 110 s . 60 (11) ,
 ply if the principal amount of the securities in
 the controlled corporation which are received              71 . 356 Receipt of additional consid e ra-
 exceeds the pr incipal amount of the securities            tion . (1) GA I N ON EXCHANGES, (a) Recogni-
which are surrendered in connection with such                tion of"gain. If s71354 or 71 .355 would'apply
distribution, of securities in the controlled cor-          to an exchangee but for- the fact that the property
poration are received and no securities are sur-            received in the exchange consists not only of
rendered in connection with such distribution .             property permitted by s . 71,354 or' 71 . . .355 to be
For purposes of this section (other ' than par (a)          received without the recognition of gain but also
4) and so much of s . . 7 1 . . 356 as relates to this      of other property or money, then the gain, if any,
section, stock of a controlled 'corporation ac-             to the recipient shall be recognized, but in an
quired by the distributing corporation by reason            amount not in excess of the sum of such money
of any transaction which occurs within 5 years of           and the fair market value of .such other property . .
the distribution of such stock and in which gain               (b) Treatment as dividend, If an exchange is
or loss vas recognized in whole or in part, shall           described in par (a) but has the effect of the
not be treated as stock of such contr olled coipo-          distribution of a dividend, then there shall be
ration ' but as other, property .                           treated as a dividend to each distributee such an
   ( Z) ' REQUIREMENTS AS TO ACTIVE BUSINESS..              amount of'the gain recognized under par . (a) as
(a) In general Subsection (1) ' shall apply if              is not in excess of his ratable share of the
either :                                                    undistributed earnings and profits of the corpo-
    1 Thedistributing corporation, and the con-
                                            d               ration accumulated after January 1, 1911, The
 trolled corporation (or, , if stock of;more than one       remainder, ifany, of the gain recognized under
controlled corporation is distributed, each of              par . (a) shall be treated as gain from the
such corporations), is engaged immediately af '-            exchange of property.
ter, the distribution in the active conduct of a               ( Z ) ADDITIONAL CONSIDERATION RECEIVED
trade of- business, or,                                     IN CERTAIN DISTRIBUTIONS, Ifs. 71,355 would
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71 .356 INCOME A ND FRAN CHISE. TAXES                                                                          1960

apply to a distribution but for the fact that the          71 . . .351, 71 . 361 or 71 .. 371, without recognition of
property received in the distribution consists not         gain if it were the sole consideration, and as part
only of property permitted by s „ 7. 1 .. .355 to be       of the consideration, another party to the ex-
received without the recognition of gain, but also         change assumes a liability of the taxpayer, or
of other property or money, then an amount
                                    n                      acquires from the taxpayer' property subject to a
equal to the sum of such money and the fair                liability, then such assumption or, acquisition
market value of' such other property shall be              shall not be treated as money or other property,
treated as a distribution of property to which s .         and shall not prevent the exchange f r om being
71 . . .301 applies :                                      within the provisions of s . 71 .. .351 ; 71,361 or
      (3) Loss .. If' s . 71 . 354 - would apply to an     71 .. .371, as the case may be .
exchange, or s . 71 . 355 would ' apply to an ex-                  (2) TAX AVOIDANCE PURPOSE .. (a) In gen-
change or distribution, but for the fact that the          eral, If ; taking into consideration the nature of
                                                                               g
property received in the exchange or distribution          the liability and the circumstances in the light of
consists not only of" property permitted by s .            which the ar r angement for the assumption or,
71354 or '71 . . .355 to be received without the           acquisition was made, it appears that the princi-
recognition of' gain or loss, but also of other            pal purpose of the taxpayer with respect to the
property or money, then no loss from the ex-               assumption or acquisition described in sub : (1)
change or distribution shall be recognized .               was a purpose to avoid income tax on the ex-
      ( 4) SECURITIES AS OTHER PROPERTY .,         For'    change, or if not such purpose, was not a bona
purposes of this section :                                 fide business purpose,, then such assumption or
                                                           acquisition (in the total amount of the liability
                                 t
    (a) In general Except as provided in par .
                                                           assumed or > acquired pursuant to such ex-
(b) , the term "other prope r ty" includes
                                                           change) shall, for, purposes of' s : 71 .351, 71,361
securities .. .
                                                           or 71 :371 (as the case may be) be considered as
    (b) Exceptions. 1 Securities with respect to           money received by the taxpayer on the
which noniecognition of gain would be permit-
                                                           exchange . .
ted , The term ".`other property" does not include                        :
                                                              (b) Burden of-proof In any suit or proceed-
securities to the extent that, under s . 71 : 354 or
71 .. 355, such securities would be permitted to be
                h                                          ing where the burden is on the taxpayer to prove
received without the recognition of gain .                 such assumption or acquisition is not to be
                                                           treated as money received by the taxpayer, such
     2. Greater- principal amount in s . 71,354            burden shall not be considered as sustained
exchange . If in an exchange described in s . .
                                                           unless the taxpayer sustains such burden by the
71 . . .354 (other than sub .. (3) thereof'), securities   clear preponderance of the evidence ..
of a corporation a party to the reorganization
                                                               (3) LIABILITIES IN EXCESS OF BASIS . . (a) In
are surrendered and securities of any co t pora-
                                                           the case of an exchange to which s 71 . .. 351
tion a party to the reorganization are received,
and the principal amount of such securities                applies, of to which s . 71 .361 applies by reason
received exceeds the principal amount of such              of a plan of reorganization within the meaning
securities surrendered, then, with respect to
             s                                             of s 71,368 (1) (a) 4, if the sum of the amount
such securities received, the term "otherr prop-           of the liabilities assumed, plus the amount of the
                                                           liabilities to which the property is subject, ex-
erty" means only the fair market value of such
                     y
                                                           ceeds the total of the basis of the property
excess . . For purposes of this subdivision and
                                                           transferred ., pursuant to such exchange, then
subd . 3, if no securities are surrendered, the
excess shall be the entire principal amount of the         such excess shall be conside red as a gain from
                                                           the sale or , exchange of property.
securities received
   3 , Greater principal amount in s . 71 355                 (b) Exception Paragraph (a) , shall not apply
transaction . If, in an exchange ' or distribution         to any exchange , to which s .. 71,357 . . (2) (a)
described in s . 71 .355, the principal amount of          applies or to which s. 71 .; 371 applies
the securities in the ` controlled corporation
which are received exceeds the principal amount            71 .358 : Basis todistributees . (1) GENERAL
of the.: secur• ities in the distributing corporation      RULE, In the case of an exchange to which s.
which : are surrendered, then, with respect to
            e                                              '71 . . 351, 71 .354, 71 .355, 71 .356, 71 .361 or,
such securities received, the term "other prop-            7         :' . (2 ) applies:
erty" means only the fair market value of such
                    y                                            (a) Nonrecognrtion ptoperCy. . The basis of
excess..                                                   the property permitted to be received under such
                                                           section ` without the recognition of gain or loss
71 .357 Assumption of liability. ( 1 ) GEN-                shall be the same as that of the property ex-
ERAL RULE . Except as provided in subs . . (2) and         changed decreased by the fair ' market value of
(3), if the taxpayer receives property which               any other property (except money) received by
would be permitted to be received under s ,                the taxpayer, and the amount of any money
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 1961                                                     INCOME AND FRANCHISE TAXES 71 .362

 received by the taxpayer, and increased : by the         permitted by sub.. (1) to be received without the
 amount which was treated as a dividend, andd the         recognition of gain, but also of other property or
 amount of gain to the taxpayer which was                 money,, then :
 recognized on such exchange (not including any              1 . If' the corporation receiving such other
 portion of such gain which was treated as a              property or money distributes it in pursuance of
 dividend) .                                              the plan of'reorganization, no gain to the corpo-
    (b) Otherproperty The basis of any property           ration shall be recognized from the exchange,
 (except money) received by the taxpayer shall            but
 be its fair market value .                                 2 . If the corporation receiving such other
     (2) ALLOCA T ION OF B ASIS„ (a) In gBI1CtaI.,       property or money does nott distribute it in
 Under rules prescribed by the department of             pursuance of the plan of' reorganization, the
 revenue, the basis determined under sub . . (1)         gain, if any, to the corporationn shall be recog-
 (a) shall be allocated among the properties             nized, but in an amount not in excess of the sum
 permitted to be received without the recognition        of such money and the fair market value of such
 of gain or loss,                                        other property so received, which is not so
     (b) Special rule for section 71 :355, In the        distributed .
 case ;ofan exchange to which s '71 .355 (or so             (b) Loss . If sub . (1) would apply to an
 much of s . 71,356 as relates to s . . 71 . . :355)     exchange but for the fact that the property
 applies, then in making the allocation under par ..     received in exchange consists not only of prop-
 (a), there shall be taken into account not only         erty permitted by sub . (1) to be received with-
 the property so permitted to be received without        out the recognition of gain or loss, but also of
 the recognition of`gain or loss,, but also the stock    other property or money, then no loss from the
 or securities :(if any)_ of the distributing 9orpora-   exchange shall be recognized,
2ion which are retained, and the allocation of
 basis shall be made among; all suchh properties.         71 .362 Basis to corporations . (1) PROP-
     ( S ) ' TRANSACTIONS WH I CH AR E NOT EX-            ERTY ACQUIRED BY -ISSUANCE OF STOCK OR AS
 CHANGES, For purposes of this section, a distri-         PAID-IN SURPLUS . If property was acquired on or
bution to which s . 71355 (or so much of s .              after January 1, 1955, by a corporation in
 71356 as relates to s . 71 .355) applies shall be        connection with a transaction to which s, 71 .. .351
treatedd as an exchange, and for such purposes            (relating to transfer of property to corporation
the stock and securities of the distributing cor-         controlled by transferor) applies, or as paid-in
poration whichh are retained shall be treated as          surplus or as a contribution to capital, then the
surrendered, and received back, in the exchange . .       basis shall be the same as it would be in the
    (4) ASSUMPTION OF LIABILITY,, Where, as               hands of the transferor, increased in the amount
part of the consideration to the taxpayer, an-            of gain recognized to the transferor on such
other, party to the exchangee assumed a liability         transfer-,,
of the taxpayer' or acquired from the taxpayer'               (2) TR ANSFERS TO CO R PO RATIO NS . : If pI'OP-
property subject to a liability, such assumption          ertywas acquired by a corporation in connection
or acquisition (in the amount of the liability),         with a reorganization to which ss . 71, . :351 to
shall, for purposes of this section, be treated as        71 .368 apply, then the basis shall be the same as
money `received by the taxpayer on the                   it would be in the hands of the transferor,
exchange                                                 increased in the amount of gain recognized to
    (5) EXCEPTION, This section shall not apply          the transferor on such transfer .. This subsection
to property acquired by a corporation by the             shall not apply if the property acquired consists
issuance of its stock or securities as considera-        of stock or securities in a corporation a party to
tion in whole or in part for the transfer of the         the reorganisation, unless acquired by the issu-
property to it..                                         ance of stock or securities of the transferee as the
                                                         consideration in whole or in part for the transfer .
71 . 361 Nonrecognition of gain or loss to                    (3) SPE CIAL RU LE FOR C ERTAIN CONTRIBU-
corporations. (1) G ENE RAL RULE .. No gain or           TIONS TO CAPITAL (a) Fioperty other than
loss shall be recognized if a corporation a party        money. Notwithstanding sub (1), if property
to a reorganization exchanges property, in pur-          other than money is acquired- by a corporation,
suance of the plan of reorganization, solely for'        on or after January 1, 1955, as a contribution to
stock or securities in another corporation a party       capital, and is not contributed by a shateholder,
to the reorganization,                                   as such, then the basis of such property shall be
    (2) EX CHANGES NOT SOLELY IN KI ND . . (a)           201' 0.,
 Gam, If sub : (1) would apply to an exchange               (b) Money. Notwithstanding sub . . (1), if
but for the fact that the property received in           money is received by a corporation, on or after'
exchange consists not only of stock or securities        January 1, 1955, as a contribution to capital,
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 71 .362 INCOME AND FRANCHISE TAXES                                                                             1962

and is not contributed by a shareholder as such,                   2 ; Additional consideration in certain cases .
then the basis of any property acquired with                    If a., one corpor ation acquires substantially all of
such money during the 12-month period begin-                    the properties of another corporation, b, the
ning on the day the contribution is received shall              acquisition would qualify under par . (a) 3 but
be reduced by the amount of such contribution . .               'f'or, the fact that the acquiring corporation ex-
The excess (if' any) of the amount of such                      changes money or other property in addition to
contribution over the amount of ' . the reduction               voting stock, and c. the acquiring corporation
under the preceding sentence shall be applied to                acquires, solely for voting stock described in par . .
the reduction (as of the last day of the period                 (a) 3, property of the other corporation having a
specified in the preceding sentence) of the basis               fair market value which is at least 80 per cent of
of any other property held by the taxpayer . The                the fair, market value of all of the property of'the
particular- properties to which the reductions                  other corporation, then such acquisition shall
required by this paragraph shall be allocated                   (subject to subd . 1) ; be treated as qualifying
shall be determined under , rules prescribed by                 under, pat, (a) .3 . Solely for the purpose of
the department of revenue .                                     determining whether clause c.c of the preceding
                                                                sentence applies, the amount of any liability
  71 .368 Definitions .s relating to corporate                  assumed by the acquiring corporation, and the
  reorganizations. (1) REORGANIZATION . (a)                     amount of any liability to which any property
  In general For purposes of' ss . ' 71 .. .301 to 71 .. 368,   acquired by the acquiring corporation is subject,
  the term "reorganization" means ; . .                         shall be treated as money paid for the property ..
     1;: A statutory merger or, consolidation ;                      3 Transfers of assets to subsidiaries in certain
     2::' The acquisition by one corporation, in                 cases . A transaction otherwise qualifying under
  exchange solely for all or, a part of its voting               par (a )1 or 3 shall not be disqualified by reason
  stock, of stock of another corporation if ', imme-             of the fact that part or all of the assets which
  diately after the acquisition, the acquiring cot-              were acquired in the transaction are transferred
  potation has control of such other corporation                -to :a corporation controlled by the corporation
  (whether- or- not such acquiring corpo ration had              acquiring such assets.. .
  control immediately before the acquisition) ;                      (2) PARTY TO A RE OR GANIZATION .. F01' pur-
     3 . The acquisition by one corporation, in                  poses of ss 71 .;.351 to 71 . .368, the term "a party
  exchange solely for all or a part of its voting                to a reorganization" includes a'corporation re-
  stock (or in exchange solely for all or a' part of             sulting from a reorganization, and both cot pora-
 the voting stock of a corporation which is in                   tions,<in the case of a reorganization resulting
  control of the acquiring corporation), of sub-                 from the acquisition by one corporation of stock
' stantially all of ' the properties of another, corpo-         `or, pproperties of another' .. In the case of' a
  ration, but in deter-mining whether the exchange               reorganization qualifying under sub (1) (a) 3,
                                      n
  is solely for stock the assumption by the acquir-              if the stock exchanged for the properties is stock
  ing corporation of a liability of the other, or the            of a corporation which is in control of the
  fact that property acquired is subject to a liabil-            acquiring corporation, the term "a party to a
  ity, shall be disregarded ; .                                  reorganization" includes the corporation so con-
     4 A transfer by a corporation of all of a part              trolling the acquiring corporation . In the case of
 of itsassets to another corporation if immedi-                  a reorganization qualifying under sub . (1) (a) 1
  ately after- the transfer- the transferor, or one or           or 3 by reason of sub,. . (1) (b) 3, the term "a
  more of its shareholders (including persons who                party to a reorganization" includes the corpora-
 were shareholde rs immediately before the trans-                tion controlling the corporation to which the
  fer), or any combination thereof, is in control of             acquired assets are transferred,
 the corporation to which the assets are trans-                       (3) CONTROL . For purposes of ss . 71 .301 to
 fer-red ;' but only if, in, pursuance of the plan,             71 .. .368, the term "control" means the ownership
 stock or securities of the corporation to which                of stock possessing at least 80 per cent of the
 the assets are transferred are distributed in a                total combined voting power of' all classes of
 transaction which qualifies under s . 71 . . 354,              stock entitled to vote and at least 80 percent of
           ,
 71 :355, or 71,356 ;                                           the total number of shares of all other classes of
   5 A recapitalization ; or                                    stock of the corporation,.
   6 A mere change in identity, form, or place of
organization, however effected :                                71 .371 Reorganization in certain receiv-
   (b) Special rules 1 , " Reorganization de-                   ership and bankruptcy proceedings. ,(1)
scribed in par , (a) 3 and 4. If a transaction is               EXC HANGES BY CORPORATIONS, (a) In genefal,
described in par , ( a) 3 and 4, then, for purposes             No gain or loss shall be recognized if property of
of ch . 71, such transaction shall be treated as                a corporation . (other than a railroad corpora-
described only in par : : (a) 4                                 tion, as defined in section 77 (m) of thee bank-
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 1963                                                   INCOME AND FRANCHISE TAXE S 71 .53

ruptcy act (49 Stat .. 922 ; 11 USC 205)) is             (4) AssumPTION OF LIABILITIES . In the case
transferred in pursuance of an order of'the court     of a transaction involving an assumption of a
having jurisdiction of such corporation in a          liability or the acquisition of property subject to
receivership, foreclosure, or similar proceeding,     a liability, the rules provided in s . 71 . . .357 shall
or, in a proceeding under chapter X of the            apply
bankruptcy act (52 Star, 883-905 ; 11 USC, ch .
10) or the corresponding provisions of prior law,     71 . 372 Basis in connection with certain
to another corporation organized or made use of       receivership and bankruptcy proceedings.
to effectuate 'a plan of reorganization approved      If property was acquired by a corporation in a
by the court in such proceeding, in exchange          transfer to which s . . 71 .. .371 (1) applies, so much
solely for stock or securities in such other          of s . 71 . . .371 (3) as relates to s . 71 .371 (1) (a)
corporation„                                          applies or the corresponding provisions of prior
    (b) Gain from exchanges not solelyin kind, If     law apply, then notwithstanding the provisions
 an exchange would be within the provisions of        of section 270 of the bankruptcy act (54 Stat.
 par . . (a) if it were not for thee fact that the    709 ; 11 USC 670), the basis in the hands of'the
property received in exchange consists not only       acquiring corporation shall be the same as it
of'stock or securities permitted by par . (a) to be   would be in the hands of the corporation whose
received without the recognition of gain, but also    property was so acquired, increased in the
of other property or money, then if the corpora-      amount of gain recognized to the corporation
tion receiving such other property or money           whose property was so acquired under the law
distributes it in pursuance of the plan of reor-      applicable to the year in which the acquisition
ganization, no gain to the corporation shall be       occurred, and such basis shall not be adjusted by
recognized from the exchange, but if the coi,po-      reason of a discharge of"indebtedness in puisu-
ration receiving such other property or, money        ance of the plan of reorganization under which
does not distribute it in pursuance of the plan of    such transfer was made..
reorganization, the gain, if any, to the corpora-
tion shall be recognized, but in an amount not in     71 .53 Property tax and rent credit. (1) In
excess of the sum of such money and the fair          this section :
market value of such other property so received,         (a) "Claimant" means a natural pei-son who
which is not so distributed,                          files a claim or, on whose behalf' a claim is filed
    (2) EXCHA NGES BY SECU RI TY HOLDE R S . (a)      under this section but does not include an estate,
In general. No gainn or loss shall be recognized      fiduciary or trust . .
on an exchange consisting of the relinquishment          (b) "Principal dwelling" means any dwelling
or extinguishment of stock or securities in a         used as a primary residence by the claimant,
corporation the plan of reorganization of which       including a part of a multidwelling or multipur-
is approved by 'the court in a proceeding de-         pose building .
scribed in sub; . (1), in consideration of the            (c) "Property taxes" means real and personal
acquisition solelyy of stock- or securities in a      property taxes, exclusive of'special assessments,
corporation organized or made use of to effectu-      delinquent interest and charges for service, paid
ate such plan or reorganization,                       by a claimant during the taxable year for which
   (b) Gain from exchanges not solelyin kind . If     credit under this section is claimed, less any
an exchange, would be within the provisions of        property taxes paid which are properly includi-
par . (a) if it were not for, the fact that the       ble as a trade or business expense under section
property received in exchange consists not only       162 of the internal revenue code and less the tax
of'pzopei•ty permitted by par, (a) to be received     credit,, if any, afforded in respect of the property
without the recognition of gain, but also of other    by ss . 79,10 ( .3) and 7917 (3m ) ., Yf the property
property or money, then the gain, if any, to the      on which the taxes were paidd is owned by 2 or-
recipient shall be recognized, but in an amount       more persons . : or entities as joint tenants or,
not in excess of the sum of such money and the        tenants in common; "property taxes" is that part
fair market value of such other property .            of property taxes paid, reduced by any tax credit
   (3) LOSS FROM EXCHA NGES NOT SO LELY I N           under ss, 79 .10 (3) and 79 .17 (3m), as reflects
KIND . If an exchange would be within the provi-      the ownership percentage of the claimant . . If
sions ofsub. (1) (a) or, (2) (a) if it were not for   property is sold during the taxable year the
the fact'that,the property received in exchange       "pi opei ty taxes" for, the seller and buyer shall be
consists not only of property permitted by sub .      the amount of the tax prorated to each in the
(1) (a) or (2) (a) to be received without the         closing agreement pertaining to the sale or, if
recognition of' gain or loss, but also of other       not so provided for in the closing agreement, the
property or money, then no loss from the ex-          tax shall be prorated between the seller and
change shall be recognized .                          buyer in proportion to months of'their respective
                       Electronically scanned images of the published statutes.
71 . 53 INCOME AND FRANCHISE TAXES                                                                     1964

ownership . "Property taxes" includes monthly          application of any tax credit other than personal
parking permit fees collected under s . 66,058         exemptions under s . 71 .09 (6p), who have
 (3) ( c) .,                                           timely filed a Wisconsin income tax return for a
    (d) "Rent constituting property taxes"             12. month taxable year ending during the pre-
means 25 % of rent if heat is not included, or         ceding calendar year,
20% of rent if heat is included, paid during the          (2) The amount of rebate under sub . (1)
taxable year, for which .h credit is claimed under     shall be the product of the person's net income
                                            e
this section , at arm' s length, for the use of a      tax liability as determined under , this chapter for
principal dwelling, excluding any payment for          the taxable year identif i ed in sub . (1) multiplied
domestic, food, medical or other services which        by a fraction, the numerator of' which is the total
are unrelated to use of the dwelling as housing . .    amount to be distributed under s . 25 .62 (2), and
"Rent" includes space rental paid to a landlord
                 s                                     the denominator of which is the totall individual
for ; parking a mobile . home . Rent shall be          income tax liability determined by the depart-
proportioned among the occupants of a principal        ment of revenue for the returns rzferred to in
dwelling according to their respective contribu-
                    g                                  sub.. (1 ) .
tion to the totall amount of rent paid. "Rent "             (3) The rebate calculated under sub. (2)
does not include rent paid for the use of housing      shall be paid by separate check from the appro-
which was exempt from property taxation, ex-           priation under s.. 20 878 (1) (q) no later than
cept housing for which payments in lieu of' taxes      December 1 of the calendar year in which a
were made under s . 66 .40 (22) .                      distribution is required under s. 25 . 62 (2) , The
    (2) Subject to the limitations provided in         department may not issue a check to any person
this section , a claimant may claim as a credit        with respect to whom the amount determined
against, but not to exceed the amount of , Wis-        under sub . (2) is less than one dollar ., The check
consin net income taxes otherwise due, 12 % of                      t
                                                       will be sent to the address on the income tax
                                                           l
the claimant's property taxes and rent constitut-      return which was the basis for the rebate. If
ing property taxes .. Married persons may claim        returned as undeliverable,, the department shall
the credit against, but not to exceed the amount       make a reasonable attempt at determining a
of, their combined Wisconsin net income taxes          current address . If such attempt is unsuccessful
otherwise due . This credit shall be subtracted        and the check remains unclaimed for a period of
from the Wi sconsin net income tax liability           6 months following its date of issuance, the
                                                                                      e
prior to the application of any credit under s .       amount of the rebate shall escheat to this state
                                                       for, deposit in the peoples escrow fund.
   (3) Married persons may divide the total                (4) If a combined husband and wife return
amount of the credit claimed under this section        has been filed with both persons indicating
by either spouse between them as they choose..
         r                                             Wisconsin .n net income tax liability, the rebate
   (4) ' No credit may be allowed under this           shall be based on the combined liabilities and
section unless claimed within the period speci-        shall be made payable to both spouses .
fied ins .. 71 ,:10 (10) (bn) :                            (5) No interest shall be paid on rebates
    (5) In any case in which a principal dwelling      calculated under this section .
is rented by a person from another person under            (6) The department of revenue may credit
circumstances deemed by the department of              the amount of any rebate against any outstand-
revenue to be not at arm's length, it may deter-
                                                       ing liabilities of " the recipient or the recipient 's
mine rent at arm's length, and, for purposes of
                                                       spouse in. respect to any tax collected by the
this secti on, such determination shall be final ..
                                                       department, and shall pay any balance of the
                                                                         d
     (6) Property taxes and r ' ent' constituting      rebate remaining to the recipient ,
property taxes shall be reduced by one-twelfth
                                                           (7) Any person's net income tax liability
for, any full month in which the claimant was not
                                                       may be corrected by the department prior to the
domiciled in this state. Any month in which the
claimant was domiciled in this state for less than     calculation of the amount of rebate under this
 Z 5 days shall be a full month for purposes of this   section ,
subsection .                                               ( 8) If it is determined that a rebate was
  History: 1979 c 1, .34 .                             excessive: as a result of" negligence by the recipi-
                                                       ent, the excess amount may be recovered by
71 .55 Peoples escrow fund. (1) In any                 assessment as income taxes are assessed and
odd-numbered year, beginning in 1981, in which         shall bear interest of 1 . 5 % per month from the
an amount is to be distributed from the peoples        date of the issuance of the check to the date of e
escrow fund under s . 25 .62 (2), the department       repayment to the state .. If it is determined that
of revenue shall rebate the amount calculated          the rebate was excessive as a result of fraudulent
under this section to all natural persons with a       intent by the recipient, the entire rebate plus a
net Wisconsin income tax liability, prior to the       penalty equal to 50% of the rebate may be
               Electronically scanned images of the published statutes.
1965                                             INCOME AND FRANCHISE TAXES . 71 . 55

recovered by assessment as income taxes are month from the date of the issuance of the check
assessed and shalll bear interest of 1 .5% per to the date of repayment to the state .
                                                 His tory : 1979 c . . 1, 34 .

								
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