Chapter Tax 3

Tax 3.095(5) (5) Taxable securities. Interest and dividends payable on the following securities shall be subject to the Wisconsin income tax on individuals and fiduciaries:

Tax 3.095(5)(a) (a) Taxable state and municipal government securities.

Tax 3.095(5)(a)1. 1. District of Columbia Development Land Agency bonds, 42 USC 1452.

Tax 3.095(5)(a)2. 2. District of Columbia general obligation bonds issued after January 28, 1987, D.C. Code 47-33.

Tax 3.095(5)(a)3. 3. Municipal bonds.

Tax 3.095(5)(a)4. 4. Public housing agency bonds issued after January 28, 1987, and by agencies located outside Wisconsin. Public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest from the bonds qualifies for exemption from federal income taxation solely because of section 103 of the internal revenue code.

Tax 3.095(5)(a)5. 5. Robert F. Kennedy Stadium bonds, D.C. Code 2-1720 et seq.

Tax 3.095(5)(a)6. 6. Transit bonds of the Washington Metropolitan Area Transit Authority.

Tax 3.095(5)(a)7. 7. Wisconsin Health Education Assistance Loan revenue obligation bonds, s. 39.374, Stats.

Tax 3.095(5)(a)8. 8. WHEDA bonds issued after January 28, 1987, and all business development revenue bonds, economic development revenue bonds and CHAP housing revenue bonds issued by WHEDA, regardless of when issued, unless specifically exempt by law, ch. 234, Stats.

Tax 3.095(5)(b) (b) Other taxable securities.

Tax 3.095(5)(b)1. 1. Asian Development Bank bonds, 22 USC 285h.

Tax 3.095(5)(b)2. 2. College Construction Loan Insurance Association obligations, 20 USC 1132.

Tax 3.095(5)(b)3. 3. Environmental Financing Authority obligations, 33 USC 1281.

Tax 3.095(5)(b)4. 4. Export-Import Bank of the United States debentures, 12 USC 635.

Tax 3.095(5)(b)5. 5. Farmer’s Home Administration insured notes, 7 USC 1928 and 1929.

Tax 3.095(5)(b)6. 6. Federal Assets Financing Trust participation certificates, 12 USC 1717 (c).

Tax 3.095(5)(b)7. 7. Federal Financing Bank bonds, 12 USC 2288.

Tax 3.095(5)(b)8. 8. Federal Home Loan Bank dividends, 12 USC 1426 and 1436.

Tax 3.095(5)(b)9. 9. Federal Home Loan Mortgage Corporation obligations, 12 USC 1455.

Tax 3.095(5)(b)10. 10. Federal National Mortgage Association certificates, 12 USC 1718.

Tax 3.095 Note Note: In 1968, the Federal National Mortgage Association became 2 separate corporations. One corporation retained the original name and the other is known as the Government National Mortgage Association.

Tax 3.095(5)(b)11. 11. Federal National Mortgage Association dividends, 12 USC 1719.

Tax 3.095(5)(b)12. 12. Government National Mortgage Association, or Ginnie Mae, bonds, 12 USC 1721.

Tax 3.095(5)(b)13. 13. HUD/New Communities Program obligations, 12 USC 1701g-5a.

Tax 3.095(5)(b)14. 14. Insured Merchant Marine bonds, 46 USC 1273.

Tax 3.095(5)(b)15. 15. Inter-American Development Bank securities, 22 USC 283h.

Tax 3.095(5)(b)16. 16. Interest paid on deposits in any federal bank or agency.

Tax 3.095(5)(b)17. 17. International Bank for Reconstruction and Development bonds, also known as World Bank bonds, 22 USC 286k-1.

Tax 3.095(5)(b)17m. 17m. National Consumer Cooperative Bank, 12 USC 3017 (c).

Tax 3.095(5)(b)18. 18. Rural Telephone debentures, 7 USC 947 (a).

Tax 3.095(5)(b)19. 19. Small Business Administration notes, 15 USC 633.

Tax 3.095(5)(b)20. 20. Small Business Investment Company debentures, 15 USC 683 and 687.

Tax 3.095(5)(b)21. 21. Tennessee Valley Authority bonds, 16 USC 831n-3.

Tax 3.095(5)(b)22. 22. Virgin Islands Housing Authority bonds issued after January 28, 1987, 48 USC 1408a.

Tax 3.095(5)(b)23. 23. World Bank bonds, also known as International Bank for Reconstruction and Development bonds, 22 USC 286k-1.

Tax 3.095 Note Note: This section interprets s. 71.05 (6) (a) 1. and (b) 1., Stats.

Tax 3.095 History History: Cr. Register, August, 1976, No. 248, eff. 9-1-76; emerg. cr. (1) (g) to (i), am. (2) (intro.), r. (2) (b), (h) and (j), eff. 7-31-87; r. and recr. Register, April, 1988, No. 388, eff. 5-1-88; emerg. am. (3) (intro.) and (c), cr. (3) (g), r. and recr. (4) (b), eff. 1-1-89; am. (2) (intro.), (3) (intro.), (c), (f), (4) (intro.) and (b), cr. (4) (c) to (f), Register, August, 1989, No. 404, eff. 9-28-89; cr. (1) (a), (b), (f), (g), (i), (q), (r) and (v), (2) (a), (d), (f), (g), (m), (o), (p) to (u), (w), (zh), (zq) and (zr), (4) (b) and (e); renum. (1) (a) to (n), (2) (a) to (zb), (4) (a), (b), (d) and (e) to be (1) (c) to (e), (h), (j) to (p), (s) to (u), (2) (b), (c), (e), (h) to (l), (n), (v), (x) to (zd), (zf), (ze), (zg), (zi) to (zp), (4) (d), (h), (g) and (a) and am. (1) (p), Register, June, 1991, No. 426, eff. 7-1-91; r. and recr. Register, January, 1994, No. 457, eff. 2-1-94; corrections in (4) (a) 4. and 5. made under s. 13.93 (2m) (b) 7., Stats., Register October 2002 No. 562; CR 12-011: r. (4) (a) 9., cr. (4) (a) 12. to 20. Register July 2012 No. 679, eff. 8-1-12; CR 14-005: cr. (2) (e), (4) (a) 21. Register August 2014 No. 704, eff. 9-1-14; CR 17-019: cr. (4) (a) 22., Register June 2018 No. 750 eff. 7-1-18; CR 19-096: am. (4) (a) (title), (b) (title), 8., 11., 12., 16, cr. (4) (b) 18e., 18m., 18s., 21g., 21r., am. (4) (b) 24., 38., (5) (b) 1., 12., 13., 15., 17., cr. (5) (b) 17m., am. (5) (b) 22., 23. Register April 2020 No. 772, eff. 5-1-20.

Tax 3.096 Tax 3.096 Interest paid on money borrowed to purchase exempt government securities.

Tax 3.096(1) (1) Any amount of distributable and nondistributable interest or dividend income which is by federal law exempt from the Wisconsin income tax shall be reduced by any related expense before it is claimed as a subtraction modification on a Wisconsin fiduciary income tax return.

Tax 3.096(2) (2) Interest expense is a “related expense” if it is incurred to purchase securities producing exempt interest or dividend income and if it is deducted in computing Wisconsin taxable income.

Tax 3.096(3) (3) Interest expense is not a “related expense” if it is incurred to purchase securities producing exempt interest or dividend income but is not deducted in computing Wisconsin taxable income (for example, because the taxpayer elects the standard rather than to itemize deductions).

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Tax 3.096 History History: Cr. Register, January, 1977, No. 253, eff. 2-1-77; am. (1), Register, June, 1990, No. 414, eff. 7-1-90.

Tax 3.098 Tax 3.098 Railroad retirement supplemental annuities. Railroad retirement supplemental annuities paid under 45 USC 231m are exempt from the Wisconsin taxable income of their recipients.

Tax 3.098 Note Note: 1) The Railroad Retirement Act of 1974 as amended by P.L. 98-76 (45 USC s. 231m), effective August 12, 1983, provides that:

Tax 3.098 Note “(a) Except as provided in subsection (b) of this section and the Internal Revenue Code of 1954 [26 USCS §§ 1 et seq.], notwithstanding any other law of the United States, or of any State . . . no annuity or supplemental annuity shall be . . . subject to any tax. . . .

Tax 3.098 Note (b) (1) This section shall not operate to exclude the amount of any supplemental annuity paid to an individual under section (2) (b) of this Act [45 USCS § 231a (b)] from income taxable pursuant to Federal income tax provisions of the Internal Revenue Code of 1954 [26 USCS §§ 1 et seq.]”

Tax 3.098 Note 2) 45 USCS. s. 231m prohibits states from taxing railroad retirement supplemental annuity payments. Taxpayers may make a modification to federal adjusted gross income to remove this income in computing Wisconsin adjusted gross income.

Tax 3.098 Note Note: This section interprets s. 71.05 (6) (b) 3., Stats.

Tax 3.098 History History: Cr. Register, January, 1977, No. 253, eff. 2-1-77; am. Register, July, 1989, No. 403, eff. 8-1-89.