Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 . Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 . . Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 , Electronically scanned images of the published statutes. 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: Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 . Electronically scanned images of the published statutes. 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- Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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 Electronically scanned images of the published statutes. 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, Electronically scanned images of the published statutes. 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- Electronically scanned images of the published statutes. 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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