Chapter 71

71.04(7)(e)9. 9. Gross management fees.

71.04(7)(e)10. 10. Gross royalties from income-producing activities.

71.04(7)(e)11. 11. Gross franchise fees from income-producing activities.

71.04(7)(f) (f) The following items are among those that are not included in “sales” in this subsection:

71.04(7)(f)1. 1. Gross receipts and gain or loss from the sale of tangible business assets, except those under par. (e) 1., 2. and 3.

71.04(7)(f)2. 2. Gross receipts and gain or loss from the sale of nonbusiness real or tangible personal property.

71.04(7)(f)3. 3. Gross rents and rental income or loss from real property or tangible personal property if that real property or tangible personal property is not used in the production of business income.

71.04(7)(f)4. 4. Royalties from nonbusiness real property or nonbusiness tangible personal property.

71.04(7)(f)5. 5. Proceeds and gain or loss from the redemption of securities.

71.04(7)(f)6. 6. Interest, except interest under par. (e) 7., and dividends.

71.04(7)(f)7. 7. Gross receipts and gain or loss from the sale of intangible assets, except those under par. (e) 1.

71.04(7)(f)8. 8. Dividends deductible by corporations in determining net income.

71.04(7)(f)9. 9. Gross receipts and gain or loss from the sale of securities.

71.04(7)(f)10. 10. Proceeds and gain or loss from the sale of receivables.

71.04(7)(f)11. 11. Refunds, rebates and recoveries of amounts previously expended or deducted.

71.04(7)(f)12. 12. Other items not includable in apportionable income.

71.04(7)(f)13. 13. Foreign exchange gain or loss.

71.04(7)(f)14. 14. Royalties and income from passive investments in the property under s. 71.25 (5) (a) 21.

71.04(7)(f)16. 16. Pari-mutuel wager winnings or purses under ch. 562.

71.04(7)(f)17. 17. Gross receipts from sales of property or services as part of performing disaster relief work, as defined in s. 323.12 (5) (a) 3.

71.04(7)(g) (g)

71.04(7)(g)1. 1. For taxable years beginning after December 31, 2018, the amount of a broadcaster’s gross receipts from advertising and the use or license of intangible property, as determined under pars. (dh) 4. and (dj) 2., shall be adjusted as follows:

71.04(7)(g)1.a. a. Determine the amount of the numerator of the sales factor for a broadcaster as provided in this subsection.

71.04(7)(g)1.b. b. Multiply .01 by the total amount of the domestic gross receipts of the broadcaster from advertising and royalties and other gross receipts for the use or license of intangible property.

71.04(7)(g)1.c. c. Determine the numerator of the sales for a broadcaster by substituting the amount determined under subd. 1. b. for the total amount determined under subd. 1. a.

71.04(7)(g)1.d. d. Except as provided in subd. 1. e., if the amount of the numerator determined under subd. 1. c. is more than the amount determined under subd. 1. a., substitute the amount of total gross receipts determined under subd. 1. b. for the total amount of the gross receipts determined under subd. 1. a. For purposes of this subd. 1. d., the amount of the numerator for a broadcaster is the amount determined under subd. 1. c.

71.04(7)(g)1.e. e. If the amount of the numerator computed under subd. 1. c. is more than 140 percent of the amount determined under subd. 1. a., adjust the total amount of the gross receipts under subd. 1. a. so that the amount of the numerator for a broadcaster is 140 percent of the numerator otherwise determined under subd. 1. a.

71.04(7)(g)2. 2. The department may promulgate rules to administer this paragraph.

71.04(8) (8) Railroads, financial organizations and public utilities.

71.04(8)(a) (a)

71.04(8)(a)1. 1. In this section, “financial organization” means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, credit union, cooperative bank, small loan company, sales finance company, investment company, brokerage house, underwriter, or any type of insurance company.

71.04(8)(a)2. 2. In this section, “financial organization” includes any subsidiary of an entity described in subd. 1., if a significant purpose for the subsidiary is to hold investments or if the subsidiary primarily functions to hold investments.

71.04(8)(b) (b)

71.04(8)(b)1. 1. In this section, for taxable years beginning before January 1, 2006, “public utility” means any business entity described under subd. 2. and any business entity which owns or operates any plant, equipment, property, franchise, or license for the transmission of communications or the production, transmission, sale, delivery, or furnishing of electricity, water, or steam, the rates of charges for goods or services of which have been established or approved by a federal, state, or local government or governmental agency.

71.04(8)(b)2. 2. In this section, for taxable years beginning after December 31, 2005, “public utility” means any business entity providing service to the public and engaged in the transportation of goods and persons for hire, as defined in s. 194.01 (4), regardless of whether or not the entity’s rates or charges for services have been established or approved by a federal, state or local government or governmental agency.

71.04(8)(c) (c) The net business income of railroads, car line companies, pipeline companies, financial organizations, telecommunications companies, air carriers, and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state.

71.04 Cross-reference Cross-reference: See also ss. Tax 2.46, 2.47, 2.475, 2.49, 2.495, 2.50, and 2.502, Wis. adm. code.

71.04(9) (9) Nonresident income from multistate tax-option corporation. Nonresident individuals and nonresident estates and trusts deriving income from a tax-option corporation which is engaged in business within and without this state shall be taxed only on the income of the corporation derived from business transacted and property located in this state and losses and other items of the corporation deductible by such shareholders shall be limited to their proportionate share of the Wisconsin loss or other item, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. For purposes of this subsection, all intangible income of tax-option corporations passed through to shareholders is business income that follows the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state.

71.04(10) (10) Department may waive factor. Where, in the case of any nonresident individual or nonresident estate or trust engaged in business in and outside of this state and required to apportion its income as provided in this section, it shall be shown to the satisfaction of the department of revenue that the use of any one of the 3 factors provided under sub. (4) gives an unreasonable or inequitable final average ratio because of the fact that such nonresident individual or nonresident estate or trust does not employ, to any appreciable extent in its trade or business in producing the income taxed, the factors made use of in obtaining such ratio, this factor may, with the approval of the department of revenue, be omitted in obtaining the final average ratio which is to be applied to the remaining net income. This subsection does not apply to taxable years beginning after December 31, 2007.

71.04(11) (11) Department may apportion by rule. If the income of any such nonresident individual or nonresident estate or trust properly assignable to the state of Wisconsin cannot be ascertained with reasonable certainty by the methods under this section, then the same shall be apportioned and allocated under such rules as the department of revenue may prescribe.

71.04 History History: 1987 a. 312; 1987 a. 411 ss. 34 to 40, 61; 1989 a. 31; 1989 a. 56 s. 259; 1991 a. 39, 189, 269; 1993 a. 112, 204, 491; 1995 a. 27; 1997 a. 27, 237; 1999 a. 9; 2003 a. 37; 2005 a. 25; 2007 a. 20; 2009 a. 2, 28; 2015 a. 84, 196, 216; 2017 a. 59.

71.04 Cross-reference Cross-reference: See also s. Tax 2.39, Wis. adm. code.

71.05 71.05 Income computation.

71.05(1) (1) Exempt and excludable income. There shall be exempt from taxation under this subchapter the following:

71.05(1)(a) (a) Retirement systems. All payments received from the U.S. civil service retirement system, the U.S. military employee retirement system, the employee’s retirement system of the city of Milwaukee, Milwaukee County employees’ retirement system, sheriff’s annuity and benefit fund of Milwaukee County, police officer’s annuity and benefit fund of Milwaukee, fire fighter’s annuity and benefit fund of Milwaukee, or the public employee trust fund as successor to the Milwaukee public school teachers’ annuity and retirement fund and to the Wisconsin state teachers retirement system, which are paid on the account of any person who was a member of the paying or predecessor system or fund as of December 31, 1963, or was retired from any of the systems or funds as of December 31, 1963, but such exemption shall not exclude from gross income tax sheltered annuity benefits.

71.05 Cross-reference Cross-reference: See also s. Tax 2.94, Wis. adm. code.

71.05(1)(am) (am) Military retirement systems. All retirement payments received from the U.S. military employee retirement system, to the extent that such payments are not exempt under par. (a) or sub. (6) (b) 54.

71.05(1)(an) (an) Uniformed services retirement benefits. All retirement payments received from the U.S. government that relate to service with the coast guard, the commissioned corps of the national oceanic and atmospheric administration, or the commissioned corps of the public health service, to the extent that such payments are not exempt under par. (a) or (am) or sub. (6) (b) 54.

71.05(1)(b) (b) State legislature allowance for expenses. All amounts received in accordance with s. 13.123 (1) (a) which are spent for the purposes specified in s. 13.123 (1) (a) if the person does not claim a deduction for travel expenses away from home on legislative days. In this chapter, the place of residence of a member of the state legislature within the legislative district which the member represents shall be considered the member’s home.

71.05(1)(c) (c) Certain interest income. Interest received on bonds or notes issued by any of the following:

71.05(1)(c)1. 1. The Wisconsin Housing and Economic Development Authority under s. 234.65, if the bonds are used to fund an economic development loan to finance construction, renovation, or development of property that would be exempt under s. 70.11 (36).

71.05(1)(c)1m. 1m. The Wisconsin Housing and Economic Development Authority under s. 234.08 or 234.61, on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects.

71.05(1)(c)3. 3. A local exposition district created under subch. II of ch. 229.

71.05(1)(c)4. 4. A local professional baseball park district created under subch. III of ch. 229.

71.05(1)(c)5. 5. A local professional football stadium district created under subch. IV of ch. 229.

71.05(1)(c)6. 6. A local cultural arts district created under subch. V of ch. 229.

71.05(1)(c)6p. 6p. A sponsoring municipality borrowing to assist a local exposition district created under subch. II of ch. 229.

71.05(1)(c)7. 7. The Wisconsin Aerospace Authority.

71.05(1)(c)8. 8. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in s. 231.01 (5), to fund the acquisition of information technology hardware or software.

71.05(1)(c)10. 10. A commission created under s. 66.0304, if any of the following applies:

71.05(1)(c)10.a. a. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and the Wisconsin Housing and Economic Development Authority has the authority to issue its bonds or notes for the project being funded.

71.05(1)(c)10.b. b. The bonds or notes are used by a health facility, as defined in s. 231.01 (5), to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded.

71.05(1)(c)10.c. c. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s. 66.1201, 66.1333, or 66.1335.

71.05(1)(c)11. 11. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued under s. 231.03 (6) and the interest income received from the other bonds or notes is exempt from taxation under this subchapter.

71.05(1)(c)12. 12. The Wisconsin Housing and Economic Development Authority, if the bonds or notes are issued to provide loans to a public affairs network under s. 234.75 (4).

71.05(1)(c)13. 13. An entity described under, or an entity whose bonds are issued under, s. 66.1201, 66.1333, or 66.1335.

71.05(1)(c)14. 14. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), if the bonds or notes are issued in an amount totaling $35,000,000 or less, and to the extent that the interest income received is not otherwise exempt under this subsection.

71.05(1)(f) (f) Income from the sales of certain insurance policies. Income received by the original policyholder or original certificate holder who has a catastrophic or life-threatening illness or condition from the sale of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a life settlement contract, as defined in s. 632.69 (1) (k). In this paragraph, “catastrophic or life-threatening illness or condition” includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d).

71.05(1)(g) (g) Income from work performed during a declared state of emergency. Income of an out-of-state business, as defined in s. 323.12 (5) (a) 6., and an out-of-state employee, as defined in s. 323.12 (5) (a) 7., from disaster relief work, as defined under s. 323.12 (5) (a) 3.

71.05(1)(h) (h) Wisconsin allocations from the federal coronavirus relief fund. Income received in the form of allocations issued by this state with moneys received from the coronavirus relief fund authorized under 42 USC 801 to be used for any of the following purposes:

71.05(1)(h)1. 1. Broadband expansion.

71.05(1)(h)2. 2. Privately owned movie theater grants.

71.05(1)(h)3. 3. A nonprofit grant program.

71.05(1)(h)4. 4. A tourism grants program.

71.05(1)(h)5. 5. A cultural organization grant program.

71.05(1)(h)6. 6. Music and performance venue grants.

71.05(1)(h)7. 7. Lodging industry grants.

71.05(1)(h)8. 8. Low-income home energy assistance.

71.05(1)(h)9. 9. A rental assistance program.

71.05(1)(h)10. 10. Supplemental child care grants.

71.05(1)(h)11. 11. A food insecurity initiative.

71.05(1)(h)12. 12. A farm support program.

71.05(1)(h)13. 13. Grants to small businesses.

71.05(1)(h)14. 14. Ethanol industry assistance.

71.05(1)(h)15. 15. Wisconsin Eye.

71.05(1)(hn) (hn) Wisconsin grants awarded during and related to the pandemic. Income received in the form of a grant issued by the Wisconsin Economic Development Corporation during and related to the COVID-19 pandemic under the ethnic minority emergency grant program. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible.

71.05(1)(hp) (hp) Grants from the federal restaurant revitalization fund. Income received in the form of a grant from the restaurant revitalization fund under section 5003 of the federal American Rescue Plan Act of 2021, P.L. 117-2. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. Amounts excluded under this paragraph by a tax-option corporation or partnership shall be treated as tax-exempt income for purposes of sections 705 and 1366 of the Internal Revenue Code.

71.05(1)(i) (i) Commercial loans. Income of a tax-option corporation that is a financial institution, as defined in s. 69.30 (1) (b), including interest, fees, and penalties, derived from a commercial loan of five million dollars or less provided to a person residing or located in this state and used primarily for a business or agricultural purpose in this state.

71.05(2) (2) Nonresident reciprocity. All payments received by natural persons domiciled outside Wisconsin who derive income from the performance of personal services in Wisconsin shall be excluded from Wisconsin gross income to the extent that it is subjected to an income tax imposed by the state of domicile; provided that the law of the state of domicile allows a similar exclusion of income from personal services earned in such state by natural persons domiciled in Wisconsin, or a credit against the tax imposed by such state on such income equal to the Wisconsin tax on such income.