3. Gross interest income reportable on line 5 of federal form Form 1120.
4. Gross rents reportable on line 6 of federal form Form 1120.
5. Gross royalties reportable on line 7 of federal form Form 1120.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the net gain or loss on lines 8 and 9 of federal form Form 1120.
SECTION 15. Tax 2.32 (2) (a) 7. (Note) is repealed.
SECTION 16. Tax 2.32 (2) (b) 1., 2., 3., 4., 5., 6., 7., and 8., (c) 1., 2., 3., 4., 5., and 6., and (d) 1., 2., 3., 4., 5., and 6 are amended to read:
(b) 1. Gross receipts or sales reportable on line 1a of federal form Form 990-T, exempt organization business income tax return.
2. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on lines 4a and 4b of federal form Form 990-T.
3. Gross rents includable in computing rent income on line 6 of federal form Form 990-T.
4. Gross income from unrelated debt-financed property includable in computing unrelated debt-financed income on line 7 of federal form Form 990-T.
5. Gross interest, annuities, royalties and rents from controlled organizations includable in computing those items of income on line 8 of federal form Form 990-T.
6. Gross investment income includable in computing investment income on line 9 of federal form Form 990-T.
7. Gross exploited exempt activity income includable in computing that item of income on line 10 of federal form Form 990-T.
8. Gross advertising income includable in computing advertising income on line 11 of federal form Form 990-T.
(c) 1. Gross premiums earned reportable on lines 1 and 8 of schedule Schedule A on federal form Form 1120-PC, U. S. property and casualty insurance company income tax return.
2. Gross dividends reportable on line 2 of schedule Schedule A, or line 2 of schedule Schedule B if applicable, on of federal form Form 1120-PC.
3. Gross interest income reportable on line 3a of schedule Schedule A, or line 1a of schedule Schedule B if applicable, on of federal form Form 1120-PC.
4. Gross rents reportable on line 4 of schedule Schedule A, or line 3 of schedule Schedule B if applicable, on of federal form Form 1120-PC.
5. Gross royalties reportable on line 5 of schedule Schedule A, or line 4 of schedule Schedule B if applicable, on of federal form Form 1120-PC.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on lines 6 and 7 of schedule Schedule A, or lines 5 and 7 of schedule Schedule B if applicable, on of federal form Form 1120-PC.
(d) 1. Gross receipts or sales reportable on line 1c of federal form Form 1120S, U. S. corporation income tax return for an S corporation.
2. Gross rents includable in computing the income from real estate and other rental activities reportable on lines 2 and 3a of schedule Schedule K on of federal form Form 1120S.
3. Gross interest income reportable on line 4 of schedule Schedule K on of federal form Form 1120S.
4. Ordinary dividends reportable on line 5a of schedule Schedule K on of federal form Form 1120S.
5. Gross royalties includable in computing royalty income reportable on line 6 of schedule Schedule K on of federal form Form 1120S.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on line 4 of federal form Form 1120S and lines 7, 8a, and 9 of schedule Schedule K on of federal form Form 1120S.
SECTION 17. Tax 2.39 (6) (f) and (h) are amended to read:
2.39 (6) (f) Sales of services attributable to Wisconsin. Sales of services are attributable to Wisconsin if the benefit of the service is received in Wisconsin, as provided in ss. 71.04 (7) (dh) and 71.25 (9) (dh), Stats. (h) Receipts from intangible property for taxable years beginning on or after January 1, 2009. For taxable years beginning on or after January 1, 2009, the amount includable in the numerator of the sales factor for gross receipts from the sale of, license of, or allowing use of intangible property in this state is determined as provided in ss. 71.04 (7) (dj) and (dk) and 71.25 (9) (dj) and (dk), Stats. For purposes of applying these paragraphs, excluding ss. 71.04 (7) (dj) 2. and 71.25 (9) (dj) 2m., the following rules apply: SECTION 18. Tax 2.395 is repealed.
SECTION 19. Tax 2.49 (2) (hm) and (4) (x) 1. b. and c. are amended to read:
b. The service relates to tangible personal property that is located in this state at the time that the service is received or tangible personal property that is delivered directly or indirectly to customers in this state.
c. The service is provided to purchased by an individual who is physically present in this state at the time that the service is received.
SECTION 20. Tax 2.61 (4) (b) 1. and 4., (6) (a) 3., and (7) (h) are amended to read:
(4) (b) 1. For purposes of the water's edge rules in pars. (d) and (e), a corporation is an “80/20 corporation" if 80 percent or more of its worldwide gross income during the testing period is “active foreign business income" as defined in section 861(c)(1)(B) subchapter N of the Internal Revenue Code.
4. For purposes of this paragraph, a corporation's active foreign business income includes gross income attributed from subsidiary corporations as provided in section 861(c)(1)(B) subchapter N of the Internal Revenue Code, but only to the extent the gross income of the subsidiary corporations is derived from the combined group's unitary business.
(6) (a) 3. Add net capital gain includable in the combined unitary income, applying the loss limitation as described in par. (c) and using the federal basis of assets. Any differences between the federal and Wisconsin basis of assets, including basis differences that arise from the application of par. (f), are accounted for as Wisconsin modifications under subd. 6. The Wisconsin basis of a corporation's depreciable property for the first year the corporation becomes taxable in Wisconsin equals its federal basis as of the beginning of the taxable year in which the corporation becomes taxable in Wisconsin, as required under s. 71.265, Stats. The federal basis shall be computed under the Internal Revenue Code in effect for Wisconsin federal purposes as required under ss. 71.22 (4) and (4m), 71.42 (2), and 71.26 (3) (y), and 71.98 (3), Stats. (7) (h) Alternative apportionment. A qualifying combined group may petition the department to use an alternative apportionment method, as provided in s. Tax 2.64. SECTION 21. Tax 2.61 (7) (h) 1. and 2. are repealed.
SECTION 22. Tax 2.62 (2) (d) 1. is amended to read:
1. For any participant in the unitary business that is not a member of a commonly controlled group of corporations as provided in s. Tax 2.61 (3), the participant's income from the unitary business is generally apportioned in the manner provided by ss. Tax 2.39, 2.395, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable. However, the participant may be required to apportion its income under the combined reporting rules provided in s. Tax 2.61 if certain conditions apply, as further explained in s. Tax 2.61 (2) (f). SECTION 23. Tax 2.64 (2) (b) 7., (c), and (e) 3. are amended to read:
7. A calculation of each combined group member's tax liability for the first taxable year to which the petition applies and for the previous taxable year, similar to the calculations in subds. 5. and 6., computed as if each corporation were not a member of the combined group and using the method prescribed by ss. Tax 2.39, 2.395, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation. (c) Limitation. The department may not grant a taxpayer's petition for an alternative apportionment method if the alternative method would result in a lower tax liability than the sum of the tax liabilities of the combined group members computed as if they were not members of a combined group and using the apportionment method prescribed by ss. Tax 2.39, 2.395, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation. 3. A calculation of each combined group member's tax liability for the taxable year included in the combined return computed as if each corporation were not a member of the combined group and using the apportionment method prescribed by ss. Tax 2.39, 2.395, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation. SECTION 24. Tax 2.67 (2) (b) 2. (Note) is amended to read:
SECTION 25. Tax 2.87 (1) (a) and 2.88 (3) (a) are amended to read:
2.87 (1) (a) Requests the reduction in writing, addressed to the Wisconsin Department of Revenue, Delinquent Tax Collection System Compliance Bureau, P.O. Box 8901, Madison, WI 53708.
2.88 (3) (a) (a) Any refund of individual income or corporate franchise or income taxes shall include interest at the rate of 3% per year from the due date of the return to the date paid by the department, except as provided in pars. (b), and (c), and (d).
SECTION 26. Tax 2.88 (3) (d) is created to read:
(d) No interest may be allowed on refunds due to a tax credit issued under 71.07 (3q), (3w), (3wm), and (3y), 71.28 (3q), (3w), (3wm), and (3y), 71.47 (3q), (3w), and (3y), and subch. VIII of ch. 71. SECTION 27. Tax 2.88 (5) (Note 4) and 2.89 (4) (b), (c), and (d) are amended to read:
2.88 (5) Note: Section Tax 2.88 interprets ss. 71.03 (7), 71.07 (3q), (3w), (3wm), and (3y), 71.24 (7), 71.28 (3q), (3w), (3wm), and (3y), 71.44 (3), 71.47 (3q), (3w), and (3y), 71.55 (4), 71.82 (1) and (2) (a), and 71.90 (1), Stats. 2.89 (4) (b) For periods of 4 to 6 months, the 3rd 4th and last months of the taxable year.
(c) For periods of 7 to 9 months, the 3rd 4th, 6th and last months of the taxable year.
(d) For periods of 10 to 11 months, the 3rd 4th, 6th, 9th and last months of the taxable year.
SECTION 28. Tax 2.92 (3) (e) (Note 1) is repealed.
SECTION 29. Tax 2.935 (1) (a) is amended to read:
(a) Requests the reduction in writing, addressed to the Wisconsin Department of Revenue, Delinquent Tax Collection System Compliance Bureau, P.O. Box 8901, Madison, WI 53708.
SECTION 30. Tax 2.95 (5) (Example) and 2.955 (2) (a) and (b) are amended to read:
2.95 (5) Example: In 1990 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 19912017, 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:
19902016− | Selling price | $140,000 | |
| Wisconsin adjusted basis | 70,000 | |
| Down payment received | $40,000 | |
| Profit reportable (50% x $40,000) | 20,000 | $20,000 |
| Total Wisconsin Income | | $20,000 |
19912017− | Payment on principal received | $60,000 | |
| Profit reportable (50% x $60,000) | 30,000 | $30,000 |
| Interest received | 4,000 | −0− |
| Sale of installment obligation: | | |
| Less basis − unpaid balance of | | |
| $40,000 less unpaid profit due | | |
| of $20,000 ($40,000 x 50%) | 20,000 | |
| Gain on sale of installment | | |
| obligation ($45,000 − $20,000) | 25,000 | 25,000 |
| Total Wisconsin Income | | $55,000 |
2.955 (2) (a) Except as provided in sub. 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.
(b) Except as provided in sub. subs. (2m) and (3), an income tax credit may be claimed by a Wisconsin resident shareholder in a tax-option (S) corporation for any net minimum tax, income tax, or franchise tax paid by that shareholder to another state on or measured by income of the tax-option (S) corporation.
SECTION 31. Tax 2.955 (2m) is created to read:
(2m) Limitation. (a) The credit may only be allowed if the income taxed by the other state is also considered income for Wisconsin tax purposes.
(b) The credit may not exceed the net tax paid to Wisconsin on income that is taxable to both Wisconsin and the other state.
(c) The limitation in par. (b) does not apply to income that is taxable to both Wisconsin and to Minnesota, Iowa, Illinois, or Michigan.
SECTION 32. Tax 2.955 (4) (intro), (b) 2. and 3., (c), and (d) and (5) (Example) are amended to read:
(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 Form 1 or form Form 1NPR. The credit may not exceed the Wisconsin net tax. To support the credit claimed, the following information shall be attached to form Form 1 or form Form 1NPR:
2. If the corporation files a combined or composite return with that state on behalf of its shareholders who are nonresidents of that state and pays the tax on their proportionate share of the income earned there, attach to the Wisconsin income tax return either a copy of the Wisconsin schedule 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).
3. If the corporation files a corporate income or franchise tax return with that state and pays tax on or measured by income earned there that is attributable to its shareholders who are nonresidents of that state, attach to the Wisconsin income tax return either a copy of the Wisconsin schedule 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).
(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, attach to the Wisconsin income tax return either a copy of the Wisconsin schedule 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).
(d) If the tax-option (S) corporation is not subject to Wisconsin's income or franchise tax, a Wisconsin resident shareholder shall attach to the Wisconsin income tax return a letter provided by the corporation in lieu of Wisconsin schedule Schedule 5K-1 as required in pars. (b) 2. and 3. and (c). The letter shall include a schedule showing the shareholder's proportionate share of the items of income taxable by that state, the adjusted gross income, and the net tax paid.
Example: A Wisconsin resident receives income of $4,000 in 1992 2016 from rental property located in Iowa. The person files a 1992 2016 declaration of estimated tax of $200 with Iowa, with $150 of estimated tax payments being made in 1992 2016 and the fourth quarter payment of $50 being made in January 1993 2017. The Iowa income of $4,000 is reported as income on the 1992 2016 Iowa and Wisconsin returns. The 1992 2016 Iowa income tax return shows the following:
1992 2016 Iowa Return
Iowa Rental Income $4,000
Iowa Net Tax $ 185
Estimated Tax Payments 200
Refund $ 15
The taxpayer may claim a credit for net income tax paid to other states of $185 on the 1992 2016 Wisconsin return, even though a part of the tax was paid in 1993 2017.
SECTION 33. Tax 2.96 (1) (a) is amended to read:
(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 3rd 4th month following the close of a corporation's taxable year unless an extension of time for filing has been granted.
SECTION 34. Tax 2.98 (2) (b) (Note 1), (Note 2), and (Note 3) are repealed.
SECTION 35. Tax 14.01 (2) (am) is created to read:
(am) "Disqualified loss" has the meaning given in s. 71.52 (1e), Stats. SECTION 36. Tax 14.03 (4) (b) 23. is repealed.
