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Tax 2.95(4) (4) Taxation of proceeds from installment sale of real property or tangible personal property. Upon the sale of real property or tangible personal property reported under the installment method:
Tax 2.95(4)(a) (a) Wisconsin property.
Tax 2.95(4)(a)1.1. If the property is located in Wisconsin and the seller is a Wisconsin resident, the portion of each installment payment that represents gain and interest income from the sale is taxable by Wisconsin.
Tax 2.95(4)(a)2. 2. If the property is located in Wisconsin and the seller is not a Wisconsin resident, the portion of each installment payment that represents gain is taxable by Wisconsin. Interest income of a nonresident is not taxable by Wisconsin.
Tax 2.95(4)(b) (b) Out-of-state property. For property located outside Wisconsin which is sold in taxable year 1975 or thereafter:
Tax 2.95(4)(b)1. 1. If the sale occurs while the seller is a Wisconsin resident and the seller is a Wisconsin resident at the time installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are taxable by Wisconsin. However, if the seller no longer is a Wisconsin resident when installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are not taxable by Wisconsin.
Tax 2.95(4)(b)2. 2. If the sale occurs while the seller is not a Wisconsin resident and the seller is a Wisconsin resident at the time installment payments are received, the portion of each of the installment payments that represents gain is not taxable by Wisconsin, but interest income from the sale is taxable. However, if the seller is not a Wisconsin resident at the time installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are not taxable by Wisconsin.
Tax 2.95 Note Note: For taxable years prior to 1975, s. 71.07 (1), Stats., provided that for Wisconsin income taxation purposes, income or loss derived from the sale of real property or tangible personal property followed the situs of the property. Interest income and income or loss from the sale of intangible personal property followed the individual's residence. Therefore, if real property or tangible personal property which was located outside Wisconsin was sold on the installment method prior to taxable year 1975:
Tax 2.95 Note 1) The portion of each installment payment that represents gain is not taxable by Wisconsin regardless of whether the seller is a resident or nonresident of Wisconsin at the time payments are received, regardless of whether the payments are received in 1975 or in any subsequent year.
Tax 2.95 Note 2) The portion of each installment payment that represents interest income is taxable by Wisconsin if the seller is a Wisconsin resident at the time payments are received. If the seller is a nonresident of Wisconsin at the time payments are received, the interest portion is not taxable by Wisconsin.
Tax 2.95(5) (5) Taxation of proceeds from sale of installment obligation. If the sale of an installment obligation, i.e., an individual's right to unpaid installments from the sale of property, occurs while the seller is a Wisconsin resident, gain or loss on the sale is taxable by Wisconsin. Internal Revenue Code section 453B provides that any gain or loss resulting from the disposition of an installment obligation shall be considered as resulting from the sale or exchange of the property in respect of which the installment obligation was received. Therefore, if the sale of an installment obligation occurs while the seller is not a Wisconsin resident, gain or loss on the sale is taxable by Wisconsin where the installment obligation resulted from the sale of real property or tangible personal property located in Wisconsin.
Tax 2.95 Note Example: In 2016 an Illinois resident sells Wisconsin real estate for $140,000. The adjusted basis of the property is $70,000 which results in a gross profit percentage of 50%. The seller receives a down payment of $40,000 and an installment note of $100,000 for the balance. In 2017, after receiving a $60,000 payment on the principal plus interest of $4,000, the installment obligation is sold for $45,000. The seller's Wisconsin taxable income from these transactions is as follows: - See PDF for table PDF
Tax 2.95 Note Note: Section Tax 2.95 interprets ss. 71.01 (6) and 71.04 (1) (a), Stats.
Tax 2.95 History History: Cr. Register, January, 1979, No. 277, eff. 2-1-79; r. and recr. (2) and (5) (b) 2.a. and b., am. (4) (a) and (b), (5) (b) 1.a., Register, September, 1983, No. 333, eff. 10-1-83; r. and recr. (1), r. (2), (3) (a), 5. (b) 1. (intro.), a. and b., renum. (3) (b) to be (2) and am., renum. (4) to be (3) and am., renum. (5) (intro.) (a) to be (4) (intro.) (a.), renum. (5) (b) 2. (intro.) a. and b. to be (4) (b) (intro.) 1. and 2. and am., renum. (6) to be (5) and am., Register, March, 1991, No. 423, eff. 4-1-91; CR 19-141: am. (5) (Example) Register September 2020 No. 777, eff. 10-1-20.
Tax 2.955 Tax 2.955Credit for taxes paid to other states.
Tax 2.955(1)(1)Definition. In this section, “state" means the 50 states of the United States and the District of Columbia, but does not include the commonwealth of Puerto Rico or the several territories organized by Congress.
Tax 2.955(2) (2) Credits allowable.
Tax 2.955(2)(a)(a) Except as provided in subs. (2m) and (3), an income tax credit may be claimed by a Wisconsin resident individual, estate, or trust for any net minimum tax or income tax paid to another state by the resident upon income of the individual, estate or trust taxable by that state.
Tax 2.955(2)(b) (b) Except as provided in subs. (2m) and (3), an income tax credit may be claimed by a Wisconsin resident shareholder, partner, or member in a tax-option (S) corporation, partnership, or limited liability company for any net minimum tax, income tax, or franchise tax paid by that shareholder, partner, or member to another state on or measured by income of the tax-option (S) corporation, partnership, or limited liability company.
Tax 2.955(2)(c) (c) Except as provided in subs. (2m) and (3), an income or franchise tax credit may be claimed by a tax-option (S) corporation, partnership, or limited liability company which makes an election to be taxed at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats., for any net minimum tax, income tax, or franchise tax paid by that entity to another state upon income of the entity and net minimum tax, income tax, or franchise tax paid by that entity to another state upon income of the entity on behalf of its Wisconsin resident shareholders, partners, and members on a combined or composite return filed with the other state.
Tax 2.955(2m) (2m)Limitation.
Tax 2.955(2m)(a) (a) The credit may only be allowed if the income taxed by the other state is also considered income for Wisconsin tax purposes.
Tax 2.955(2m)(b) (b) The credit may not exceed the net tax paid to Wisconsin on income that is taxable to both Wisconsin and the other state.
Tax 2.955(2m)(c) (c) The limitation in par. (b) does not apply to income that is taxable to both Wisconsin and to Minnesota, Iowa, Illinois, or Michigan.
Tax 2.955(3) (3) Credits not allowed. An income tax credit may not be allowed for:
Tax 2.955(3)(a) (a) Income tax paid to Illinois, Indiana, Kentucky, or Michigan on personal service income earned in these states included under a reciprocity agreement.
Tax 2.955 Note Note: Refer to s. Tax 2.02 for information concerning reciprocity.
Tax 2.955(3)(b) (b) Minimum tax, income tax, or franchise tax paid to another state on income not considered taxable income for Wisconsin tax purposes.
Tax 2.955(3)(c) (c) Minimum tax paid to a state which does not classify the minimum tax as an income tax.
Tax 2.955(3)(d) (d) Income tax paid to a county, city, village, town or foreign country.
Tax 2.955(3)(e) (e) Minimum tax, income tax, or franchise tax paid to another state by a Wisconsin resident individual on income derived from a tax-option (S) corporation, partnership, or limited liability company that elects to be taxed on the income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats.
Tax 2.955 Note Example: A Wisconsin resident shareholder in a tax-option (S) corporation pays income tax to Iowa on her proportionate share of income from the corporation that is reportable and taxable on both her Wisconsin and Iowa income tax returns for the same taxable year. The tax-option (S) corporation elects to be taxed at the entity level under s. 71.365 (4m) (a), Stats., and files and pays Wisconsin franchise tax. The Wisconsin resident shareholder may not claim a credit for net income tax paid to Iowa since the income from the tax-option (S) corporation is not taxable on her Wisconsin income tax return.
Tax 2.955(3)(f) (f) A tax-option (S) corporation, partnership, or limited liability company electing to be taxed on income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats., if the shareholder, partner, or member pays the tax to the other state on their proportionate share of income from the entity.
Tax 2.955 Note Example: A partnership elects to be taxed on income at the entity level under s. 71.21 (6) (a), Stats., and pays Wisconsin income tax on income that is also taxable to Iowa for the same taxable year. A Wisconsin resident partner files and pays Iowa income tax on his proportionate share of income from the partnership. The partnership may not claim a credit for tax paid to Iowa since the partnership did not pay the Iowa income tax.
Tax 2.955(4) (4) How to claim a credit. The amount of income tax credit claimed shall be entered on the line provided for net income tax paid to other states on Wisconsin income tax return Form 1, Form 1NPR, Form 2, or for tax-option (S) corporations and partnerships, Schedule 5S-ET or 3-ET. The credit may not exceed the Wisconsin net tax. To support the credit claimed, the following information shall be submitted with Wisconsin Form 1, Form 1NPR, Form 2, Form 3, or Form 5S:
Tax 2.955(4)(a) (a) For a Wisconsin resident individual, estate, or trust, attach copies of the other state's income tax return and the wage statements, if any, to the Wisconsin income tax return.
Tax 2.955(4)(b) (b) For a Wisconsin resident shareholder in a tax-option (S) corporation, the federal subchapter S status of which is recognized by the other state, partner in a partnership, or member in a limited liability company:
Tax 2.955(4)(b)1. 1. If a Wisconsin resident shareholder, partner, or member files an individual income tax return with that state, submit a copy of the other state's income tax return with the Wisconsin income tax return.
Tax 2.955(4)(b)2. 2. If the corporation, partnership, or limited liability company files a combined or composite return with that state on behalf of its shareholders, partners, or members who are nonresidents of that state and pays the tax on their proportionate share of the income earned there, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 or 3K-1 on which is shown the shareholder's, partner's, or member's share of tax paid to that state, or a letter as provided in par. (d).
Tax 2.955(4)(b)3. 3. If the corporation, partnership, or limited liability company files a corporate or partnership income or franchise tax return with that state and pays tax on or measured by income earned there that is attributable to its shareholders, partners, or members who are nonresidents of that state, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 or 3K-1 on which is shown the shareholder's, partner's, or member's share of tax paid to that state, or a letter as provided in par. (d).
Tax 2.955(4)(c) (c) For a Wisconsin resident shareholder in a tax-option (S) corporation, the federal subchapter S status of which is not recognized by the other state, if the corporation pays an income or franchise tax on or measured by the income earned there, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 on which is shown the shareholder's share of tax paid to that state, or a letter as provided in par. (d).
Tax 2.955(4)(d) (d) If the tax-option (S) corporation, partnership, or limited liability company is not subject to Wisconsin's income or franchise tax, a Wisconsin resident shareholder, partner, or member shall submit with the Wisconsin income tax return a letter provided by the corporation, partnership, or limited liability company in lieu of Wisconsin Schedule 5K-1 or 3K-1 as required in pars. (b) 2. and 3. and (c). The letter shall include a schedule showing the shareholder's, partner's, or member's proportionate share of the items of income taxable by that state, the adjusted gross income, and the net tax paid.
Tax 2.955(4)(e) (e) For a tax-option (S) corporation, partnership, or limited liability company which makes an election to be taxed on income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats.:
Tax 2.955(4)(e)1. 1. If the corporation, partnership, or limited liability company files a corporate or partnership income or franchise tax return with another state, submit a copy of the other state's income or franchise tax return with Wisconsin Form 3 or 5S.
Tax 2.955(4)(e)2. 2. If the corporation, partnership, or limited liability company files a combined or composite return with another state on behalf of its shareholders, partners, or members who are nonresidents of that state and pays tax on their proportionate share of the income taxable to the other state, submit a copy of the other state's combined or composite income or franchise tax return with Wisconsin Form 3 or 5S.
Tax 2.955(5) (5) Year in which to claim income tax credit. The credit for income tax paid to another state shall be claimed on the Wisconsin return for the year in which the out-of-state income is considered taxable Wisconsin income.
Tax 2.955 Note Example: A Wisconsin resident receives income of $4,000 in 2018 from rental property located in Iowa. The person files a 2018 declaration of estimated tax of $200 with Iowa, with $150 of estimated tax payments being made in 2018 and the fourth quarter payment of $50 being made in January 2019. The Iowa income of $4,000 is reported as income on the 2018 Iowa and Wisconsin returns. The 2018 Iowa income tax return shows the following:
Tax 2.955 Note   2018 Iowa Return
Tax 2.955 Note   Iowa Rental Income   $4,000
Tax 2.955 Note   Iowa Net Tax   $ 185
Tax 2.955 Note   Estimated Tax Payments   200
Tax 2.955 Note   Refund   $ 15
Tax 2.955 Note The taxpayer may claim a credit for net income tax paid to other states of $185 on the 2018 Wisconsin return, even though a part of the tax was paid in 2019.
Tax 2.955 Note Note: Section Tax 2.955 interprets ss. 71.07 (7), 71.08 (5), 71.21 (6) (a), and 71.365 (4m) (a), Stats.
Tax 2.955 History History: Cr. Register, December, 1978, No. 276, eff. 1-1-79; am. (4) (b), Register, January, 1981, No. 301, eff. 2-1-81; r. (2) (a) and (b), (3) (b), am. (2) (c), (3) (d) and (4), renum. (3) (c) to be (3) (b), r. and recr. (5), Register, September, 1983, No. 333, eff. 10-1-83; am. (1), (2), (3) (a) and (b), (4) (intro.), renum. (3) (cv) to be (3) (d), cr. (2) (b), (3) (c), (4) (c) and (d), r. and recr. (4) (a) and (b), Register, June, 1990, No. 414, eff. 7-1-90; am. (3) (intro.), (a), (4) (b) 2., 3., (c) and (d), Register, April, 1993, No. 448, eff. 5-1-93; CR 17-019: am. (3) (a), cr. (4) (e), (f) Register June 2018 No. 750 eff. 7-1-18; correction in (4) (f) made under s. 35.17, Stats., Register June 2018 No. 750; CR 19-141: am. (2), cr. (2m), am. (4) (intro), (b) 2., 3., (c), (d), (5) (Example) Register September 2020 No. 777, eff. 10-1-20; CR 20-081: am. (2) (b), cr. (2) (c), am. (3) (b), cr. (3) (e), (f), am. (4) (intro.), (b) to (d), r. and recr. (4) (e), r. (4) (f) Register July No. 787, eff. 8-1-21; CR 21-085: am. (5) (Example) Register August 2022 No. 800, eff. 9-1-22.
Tax 2.957 Tax 2.957Relocated business credit or deduction.
Tax 2.957(1)(1)Purpose. The purpose of this section is to prescribe the method by which the percentage of the workforce payroll of a business and the dollar amount of wages paid to such workforce moved to this state during a taxable year shall be determined for purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats.; provide examples of actions that may indicate a business has relocated to this state from another state or country; and limit the deduction provided for in s. 71.05 (6) (b) 47. am., b., and c., Stats.
Tax 2.957(2) (2) Definitions. In this section:
Tax 2.957(2)(a) (a) “Business" means any organization or enterprise operated for profit, including a sole proprietorship, partnership, firm, business trust, joint venture, syndicate, corporation, limited liability company, or association.
Tax 2.957(2)(b) (b) “Doing business in this state" has the meaning given in s. 71.22 (1r), Stats.
Tax 2.957(2)(c) (c) “Employee" has the meaning given in section 3121 (d) of the Internal Revenue Code.
Tax 2.957(2)(d) (d) “Taxable year" has the meaning given in ss. 71.01 (12), 71.22 (10), and 71.42 (5), Stats.
Tax 2.957(2)(e) (e) “Wages" has the meaning given in section 3121 (a) of the Internal Revenue Code.
Tax 2.957(3) (3) Relocation to this state. For purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., actions that may indicate a business has relocated to this state from another state or country include the following:
Tax 2.957(3)(a) (a) Registering with the department, as provided in s. 73.03 (50), Stats.
Tax 2.957(3)(b) (b) Registering to do business in Wisconsin with the department of financial institutions.
Tax 2.957(4) (4) Doing business in this state. For purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., doing business in this state for any portion of a taxable year means doing business in this state for the entire taxable year, as provided in s. 71.22 (1r), Stats.
Tax 2.957(5) (5) Workforce payroll. For purposes of ss. 71.05 (6) (b) 47. a., 71.28 (9s) (a) 2., and 71.47 (9s) (a) 2., Stats., the determination as to whether 51% or more of the workforce payroll of a business has moved to this state during a taxable year shall be made using a fraction, the numerator of which is the total amount of wages paid by the business during the taxable year to employees of the business who are residents of this state, and the denominator of which is the total amount of wages paid by the business during the taxable year to all employees of the business.
Tax 2.957 Note Example: During the taxable year in which Business A begins doing business in Wisconsin, Business A pays $6,000,000 of wages to employees of Business A who are residents of Wisconsin and $10,000,000 of total wages to all employees of Business A. Sixty (60) percent of the workforce payroll of Business A moved to Wisconsin during the taxable year (6,000,000/10,000,000).
Tax 2.957(6) (6) Workforce wages. For purposes of ss. 71.05 (6) (b) 47. a., 71.28 (9s) (a) 2., and 71.47 (9s) (a) 2., Stats., the determination as to whether at least $200,000 of wages paid to the workforce of a business has moved to this state during a taxable year shall be made using the total amount of wages paid by the business during the taxable year to employees of the business who are residents of this state.
Tax 2.957 Note Example: During the taxable year in which Business B begins doing business in Wisconsin, Business B pays $250,000 of wages to employees of Business B who are residents of Wisconsin. Wages of $250,000 paid to the workforce of Business B moved to Wisconsin during the taxable year.
Tax 2.957(7) (7) Limitations on credit and deduction.
Tax 2.957(7)(a) (a) No modification may be made under s. 71.05 (6) (b) 47. am., b., or c., Stats., if the amount otherwise eligible for the modification is less than zero.
Tax 2.957(7)(b) (b) The credit or deduction under this section may not be claimed by a business that relocates to Wisconsin in a taxable year beginning after December 31, 2013.
Tax 2.957 Note Example: Partner B determines the amount otherwise eligible for the modification under s. 71.05 (6) (b) 47. b., Stats., is a loss of $5,000. Partner B may not make a modification under s. 71.05 (6) (b) 47. b., Stats.
Tax 2.957 History History: EmR1104: emerg. cr. eff. 4-7-11; CR 11-023: cr. Register November 2011 No. 671, eff. 12-1-11; CR 14-005: am. (7) (title), renum. (7) to (7) (a), cr. (7) (b) Register August 2014 No. 704, eff. 9-1-14.
Tax 2.96 Tax 2.96 Extensions of time to file corporation franchise or income tax returns.
Tax 2.96(1)(1)Due dates.
Tax 2.96(1)(a)(a) General. Except as provided in pars. (am) and (b), corporation franchise or income tax returns are due on or before the 15th day of the 4th month following the close of a corporation's taxable year unless an extension of time for filing has been granted.
Tax 2.96(1)(am) (am) For tax exempt corporations with unrelated business taxable income, the franchise or income tax return is due on or before the 15th day of the 5th month following the close of the corporation's taxable year unless an extension of time for filing has been granted.
Tax 2.96(1)(b) (b) Short-period returns. Corporation franchise or income tax returns for periods of less than 12 months are due on or before the federal due date.
Tax 2.96(2) (2) Extensions.
Tax 2.96(2)(a)(a) Automatic extension. For corporation franchise or income tax returns, an automatic extension is allowed for a period of 7 months or until the original due date of the corporation's corresponding federal return, whichever is later. If any extension is obtained for federal purposes, that extension also applies for Wisconsin purposes and is further extended for another 30 days after the federal due date. A copy of federal extension form 7004, or other federal extension form, if applicable, shall be attached to any Wisconsin franchise or income tax return filed under extension, even if the extension was not requested for federal purposes.
Tax 2.96(2)(b) (b) Combined returns. For corporations required to use combined reporting under s. 71.255, Stats., any extension granted to the designated agent of the combined group is considered granted to each corporation in the combined group.
Tax 2.96(2)(c) (c) Estimated tax payment. A taxpayer who desires to minimize interest charges during the extension period may pay the estimated tax liability on or before the original due date of the franchise or income tax return. The estimated tax liability includes the economic development surcharge imposed under s. 77.93, Stats.
Tax 2.96 Note Note: See s. Tax 2.66 for rules relating to the payment of estimated taxes by combined groups.
Tax 2.96(3) (3) Interest charges and late filing fees.
Tax 2.96(3)(a) (a) Regular interest. Except as provided in par. (b), additional tax due with the complete return and the economic development surcharge imposed under s. 77.93, Stats., which are not paid by the original due date are subject to interest at 12% per year during the extension period and 1 1/2% per month from the end of the extension period until the date of payment.
Tax 2.96(3)(b) (b) Delinquent interest. If 90% of the tax shown on the return is not paid by the unextended due date of the return, the difference between that amount and the estimated taxes paid along with any interest due is subject to interest at 1 1/2% per month until paid regardless of any extension granted for filing the return. The tax shown on the return includes the economic development surcharge imposed under s. 77.93, Stats.
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.