Chapter 71

71.365(4m)(b) (b) It is the intent of the election under par. (a) that shareholders of a tax-option corporation may not include in their Wisconsin adjusted gross income their proportionate share of all items of income, gain, loss, or deduction of the tax-option corporation. It is also the intent that the tax-option corporation shall pay tax on items that would otherwise be taxed if this election was not made.

71.365(4m)(c) (c) If persons who, on the day on which the election under this paragraph is made, hold more than 50 percent of the shares of a corporation that has elected to be taxed at the entity level under par. (a) consent, a corporation that is an S corporation for federal income tax purposes may elect, on or before the due date or extended due date of its return under this chapter, to revoke for that taxable year its election under par. (a).

71.365(4m)(d) (d) If an election is made under par. (a), all of the following apply:

71.365(4m)(d)1. 1. The net income of the tax-option corporation is computed under s. 71.34 (1k), with the following modifications, and the situs of income shall be determined as if the election was not made:

71.365(4m)(d)1.a. a. For taxable years beginning after December 31, 2019, and before January 1, 2023, an adjustment shall be made so that the net capital loss, after netting capital gains and capital losses to arrive at total capital gain or loss, is offset against income only to the extent of $500. Losses in excess of $500 shall be carried forward to the next taxable year for which an election is made under par. (a) and offset against income up to the limit under this subd. 1. a. Losses shall be used in the order in which they accrue.

71.365(4m)(d)1.am. am. For taxable years beginning after December 31, 2022, an adjustment shall be made so that the net capital loss, after netting capital gains and capital losses to arrive at total capital gain or loss, is offset against income only to the extent of $3,000. Losses in excess of $3,000 shall be carried forward to the next taxable year for which an election is made under par. (a) and offset against income up to the limit under this subd. 1. am. Losses shall be used in the order in which they accrue.

71.365(4m)(d)1.b. b. The subtraction under s. 71.05 (6) (b) 9. or 9m. shall be allowed.

71.365(4m)(d)1.bd. bd. For taxable years beginning after December 31, 2022, the income exclusion under s. 71.05 (1) (i) shall be allowed.

71.365(4m)(d)2. 2. Except as provided in s. 71.07 (7) (b) 3., the tax credits under this chapter may not be claimed by the tax-option corporation.

71.365(4m)(d)3. 3. The tax-option corporation may not claim losses under ss. 71.05 (8) and 71.26 (4).

71.365(4m)(d)4. 4. The provisions of ss. 71.29 and 71.84 relating to estimated payments and underpayment interest shall apply to the tax-option corporation for the taxable year beginning in 2019 and later years.

71.365(4m)(d)5. 5. If the tax-option corporation fails to pay the amount owed to the department with respect to income as a result of the election under par. (a), the department may collect such amount from the shareholders based on their proportionate share of such income.

71.365(4m)(e) (e) The department may promulgate rules to implement this subsection.

71.365(5) (5) Federal return copy. A tax-option corporation shall file with its state franchise or income tax return an exact copy of its federal income tax return for the same year and shall file any other return or statement filed with or made to, or any document received from, the U.S. internal revenue service, and any form required of that corporation and prescribed by the department of revenue, affecting the taxation of its shareholders.

71.365(6) (6) Notice to shareholders of appeals and other proceedings. Except as provided in s. 71.745, any notice of determination by the department of any tax-option item may be contested by a tax-option corporation under subch. XIV. A tax-option corporation shall timely notify all shareholders of any administrative or judicial proceeding about the determination of any tax-option item. Each shareholder may participate in any such proceeding and shall be bound by the final determination in that proceeding.

71.365(7) (7) Qualified subchapter S subsidiaries. If a tax-option corporation elects to treat a subsidiary as a qualified subchapter S subsidiary for federal purposes, that election also applies for this chapter. If this state has jurisdiction to impose the taxes under this chapter on the qualified subchapter S subsidiary, this state has the jurisdiction to impose the taxes under this chapter on the tax-option corporation.

71.365(9) (9) Adjustment under rules. A corporation that elects under sub. (4) (a) not to be a tax-option corporation and a corporation that elects to become a tax-option corporation shall adjust its income, under rules promulgated by the department of revenue, for the taxable year for which that election is first effective to avoid the omission or double inclusion of any item of income, loss or deduction.

71.365 History History: 1987 a. 312; 1987 a. 411 ss. 40, 50, 147; 1989 a. 31, 336; 1991 a. 39, 269; 1993 a. 16, 437; 1995 a. 27, 380; 1997 a. 27, 37, 237; 1999 a. 9, 194; 2001 a. 109; 2005 a. 362; 2009 a. 28; 2013 a. 20; 2017 a. 368; 2021 a. 2, 157, 262; 2023 a. 146.

71.365 Cross-reference Cross-reference: See also s. Tax 2.03, Wis. adm. code.

subch. VI of ch. 71 SUBCHAPTER VI

URBAN TRANSIT COMPANIES

71.37 71.37 Conformity. Unless otherwise provided in this subchapter or the context requires otherwise, urban transit companies are subject to this chapter.

71.37 History History: 1987 a. 312.

71.38 71.38 Definition. In this subchapter, “urban mass transportation of passengers” means the transportation of passengers by means of vehicles having a passenger-carrying capacity of 10 or more persons including the operator, such capacity to be determined by dividing by 20 the total seating space measured in inches, when such transportation takes place entirely within contiguous cities, villages or towns and in cities, villages or towns contiguous to that in which the carrier has its principal place of business, or within or between cities, villages or towns located within a radius of 10 miles of the city, village or town in which the carrier has its principal place of business, or entirely within one city, village or town contiguous thereto, or within a county having a population of 750,000 or more or within such county and the counties contiguous thereto, or suburban operations classified as such by the department of transportation.

71.38 History History: 1987 a. 312; 1993 a. 16, 246; 2017 a. 207 s. 5.

71.385 71.385 Determination of cost. The cost of property used and useful in providing urban mass transportation of passengers and the depreciation accrued on such property shall be determined on the basis of the reports and orders on file with the department of transportation.

71.385 History History: 1987 a. 312; 1993 a. 16.

71.39 71.39 Imposition of tax.

71.39(1) (1) Special tax; computation. In lieu of the income and franchise tax rates prescribed in s. 71.27, there shall be assessed, levied and collected upon the taxable income of every corporation whose principal source (defined for purposes of this subchapter as being 50 percent or more) of gross income is the urban mass transportation of passengers a special income tax of 50 percent determined in accordance with this chapter, except that:

71.39(1)(a) (a) United States income, excess or war profits and defense taxes shall be allowed as a deduction from gross income to the extent of the total payment actually made during the tax year.

71.39(1)(b) (b) A deduction shall be allowed from such taxable income before the imposition of the special tax levied by this section, in an amount equivalent to 8 percent of the amount by which the cost of the property of such corporation used and useful in providing its urban mass transportation of passengers exceeds the cumulated amount of the depreciation accrued against such property as of the end of the fiscal year for which the income or franchise tax return is filed.

71.39(1)(c) (c) An amount shall be added to such taxable income, before imposition of the special tax levied by this section, which amount shall be equivalent to the interest paid during the year in the operation of the business from which its income is derived.

71.39(2) (2) Determination of net business loss. The addition to and deductions from income of urban transit companies under sub. (1) shall be used in determining the Wisconsin net business loss of such companies to be offset against the Wisconsin net business income as determined under this section for purposes of s. 71.26 (4).

71.39 History History: 1987 a. 312; 1991 a. 39.

71.40 71.40 Filing of returns. The special income tax assessed under this subchapter shall be reported in an income or franchise tax return filed in accordance with this chapter, except as modified by this subchapter. The tax so reported and assessed shall be payable to the department of revenue.

71.40 History History: 1987 a. 312; 1991 a. 39.

subch. VII of ch. 71 SUBCHAPTER VII

TAXATION OF INSURANCE COMPANIES

71.42 71.42 Definitions. In this subchapter:

71.42(1b) (1b) “Aggregate effective tax rate” means the sum of the effective tax rates imposed by a state, U.S. possession, foreign country, or any combination thereof, on the person or entity.

71.42(1g) (1g) “Corporation” means insurance corporations, insurance joint stock companies, insurance associations and insurance common law trusts, unless the context requires otherwise.

71.42(1m) (1m) “Department” means the department of revenue.

71.42(1s) (1s) “Effective tax rate” means the maximum tax rate imposed by the state, U.S. possession, or foreign country, multiplied by the apportionment percentage, if any, applicable to the person or entity under the laws of that state, U.S. possession, or foreign country.

71.42(1sg) (1sg) For purposes of ss. 71.45 (2) (a) 16. and 18. and 71.255 (2) (d) 1., “intangible expenses” include the following, to the extent that the amounts would otherwise be deductible in computing net income under the Internal Revenue Code, as adjusted under s. 71.45 (2):

71.42(1sg)(a) (a) Expenses, losses, and costs for, related to, or directly or indirectly in connection with the acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property.

71.42(1sg)(b) (b) Losses related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions.

71.42(1sg)(c) (c) Royalty, patent, technical, and copyright fees.

71.42(1sg)(d) (d) Licensing fees.

71.42(1sg)(e) (e) Other similar expenses, losses, and costs.

71.42(1sh) (1sh) “Intangible property” includes stocks, bonds, financial instruments, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.

71.42(1t) (1t) For purposes of ss. 71.45 (2) (a) 16. and 18. and 71.255 (2) (d) 1., “interest expenses” means interest that would otherwise be deductible under section 163 of the Internal Revenue Code, as adjusted under s. 71.45 (2).

71.42(2) (2) 

71.42(2)(j) (j)

71.42(2)(j)1. 1. For taxable years beginning after December 31, 2013, and before January 1, 2017, “Internal Revenue Code” means the federal Internal Revenue Code as amended to December 31, 2013, except as provided in subds. 2. to 4. and subject to subd. 5.

71.42(2)(j)2. 2. For purposes of this paragraph, “Internal Revenue Code” does not include the following provisions of federal public laws for taxable years beginning after December 31, 2013: section 13113 of P.L 103-66; sections 1, 3, 4, and 5 of P.L. 106-519; sections 101, 102, and 422 of P.L 108-357; sections 1310 and 1351 of P.L. 109-58; section 11146 of P.L. 109-59; section 403 (q) of P.L. 109-135; section 513 of P.L. 109-222; sections 104 and 307 of P.L. 109-432; sections 8233 and 8235 of P.L. 110-28; section 11 (e) and (g) of P.L. 110-172; section 301 of P.L. 110-245; sections 15303 and 15351 of P.L. 110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L. 110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L. 111-5; sections 211, 212, 213, 214, and 216 of P.L. 111-226; sections 2011 and 2122 of P.L. 111-240; sections 753, 754, and 760 of P.L. 111-312; section 1106 of P.L. 112-95; and sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L. 112-240.

71.42(2)(j)3. 3. For purposes of this paragraph, “Internal Revenue Code” does not include amendments to the federal Internal Revenue Code enacted after December 31, 2013, except that “Internal Revenue Code” includes the provisions of the following federal public laws:

71.42(2)(j)3.a. a. P.L. 113-97.

71.42(2)(j)3.b. b. P.L. 113-159.

71.42(2)(j)3.c. c. P.L. 113-168.

71.42(2)(j)3.d. d. Section 302901 of P.L. 113-287.

71.42(2)(j)3.e. e. Sections 171, 172, and 201 to 221 of P.L. 113-295.

71.42(2)(j)3.f. f. Sections 102, 105, and 207 of division B of P.L. 113-295.

71.42(2)(j)3.g. g. P.L. 114-14.

71.42(2)(j)3.h. h. P.L. 114-26.

71.42(2)(j)3.i. i. Section 2004 of P.L. 114-41.

71.42(2)(j)3.j. j. Sections 503 and 504 of P.L. 114-74.

71.42(2)(j)3.k. k. Sections 103, 104, 124, 168, 184, 185, 190, 204, 303, 306, 336, and 341 of division Q of P.L. 114-113.

71.42(2)(j)3.L. L. P.L. 114-239.

71.42(2)(j)3.m. m. Sections 101 (m), (n), (o), (p), and (q), 104 (a), and 109 of division U of P.L. 115-141.

71.42(2)(j)3.n. n. Section 102 of division M and sections 110, 111, and 116 (b) of division O of P.L. 116-94.

71.42(2)(j)4. 4. For purposes of this paragraph, “Internal Revenue Code” does not include section 847 of the federal Internal Revenue Code.

71.42(2)(j)5. 5. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes.

71.42(2)(k) (k)

71.42(2)(k)1. 1. For taxable years beginning after December 31, 2016, and before January 1, 2018, “Internal Revenue Code” means the federal Internal Revenue Code as amended to December 31, 2016, except as provided in subds. 2. to 4. and s. 71.98, and subject to subd. 5.

71.42(2)(k)2. 2. For purposes of this paragraph, “Internal Revenue Code” does not include the following provisions of federal public laws for taxable years beginning after December 31, 2016: section 13113 of P.L. 103-66; sections 1, 3, 4, and 5 of P.L. 106-519; sections 101, 102, and 422 of P.L. 108-357; sections 1310 and 1351 of P.L. 109-58; section 11146 of P.L. 109-59; section 403 (q) of P.L. 109-135; section 513 of P.L. 109-222; section 104 of P.L. 109-432; sections 8233 and 8235 of P.L. 110-28; section 11 (e) and (g) of P.L. 110-172; section 301 of P.L. 110-245; section 15351 of P.L. 110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L. 110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L. 111-5; sections 211, 212, 213, 214, and 216 of P.L. 111-226; sections 2011 and 2122 of P.L. 111-240; sections 753, 754, and 760 of P.L. 111-312; sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L. 112-240; P.L. 114-7; section 1101 of P.L. 114-74; section 305 of division P of P.L. 114-113; and sections 112, 123, 125 to 128, 143, 144, 151 to 153, 165 to 167, 169 to 171, 189, 191, 326, and 411 of division Q of P.L. 114-113.

71.42(2)(k)3. 3. For purposes of this paragraph, “Internal Revenue Code” does not include amendments to the federal Internal Revenue Code, including provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, enacted after December 31, 2016, except that “Internal Revenue Code” includes sections 11024, 11025, and 13543 of P.L. 115-97; sections 40307 and 40413 of P.L. 115-123; sections 101 (m), (n), (o), (p), and (q), 104 (a), and 109 of division U of P.L. 115-141; section 102 of division M and sections 110, 111, and 116 (b) of division O of P.L. 116-94; and section 9707 of P.L. 117-2.

71.42(2)(k)4. 4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes, except as follows:

71.42(2)(k)4.a. a. Changes made by section 4007 (b) of P.L. 114-41, section 1102 of P.L. 114-74, and sections 105, 111, 113 to 115, 133, 301, 302, 304, 305, 308, 311, 313 to 323, 325, 331, and 343 to 345 of division Q of P.L. 114-113 first apply for taxable years beginning after December 31, 2016.

71.42(2)(k)4.b. b. Changes made by section 1201 of P.L. 108-173 and section 307 of P.L. 109-432 first apply for taxable years beginning after December 31, 2010.

71.42(2)(k)5. 5. For purposes of this paragraph, “Internal Revenue Code” does not include section 847 of the federal Internal Revenue Code.

71.42(2)(L) (L)

71.42(2)(L)1. 1. For taxable years beginning after December 31, 2017, and before January 1, 2021, “Internal Revenue Code” means the federal Internal Revenue Code as amended to December 31, 2017, except as provided in subds. 2. to 4. and s. 71.98, and subject to subd. 5.

71.42(2)(L)2. 2. For purposes of this paragraph, “Internal Revenue Code” does not include the following provisions of federal public laws for taxable years beginning after December 31, 2017: sections 1, 3, 4, and 5 of P.L. 106-519; sections 101, 102, and 422 of P.L. 108-357; sections 1310 and 1351 of P.L. 109-58; section 11146 of P.L. 109-59; section 403 (q) of P.L. 109-135; section 513 of P.L. 109-222; section 104 of P.L. 109-432; sections 8233 and 8235 of P.L. 110-28; section 11 (e) and (g) of P.L. 110-172; section 301 of P.L. 110-245; section 15351 of P.L. 110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L. 110-343; sections 1232, 1251, 1501, and 1502 of division B of P.L. 111-5; sections 211, 212, 213, 214, and 216 of P.L. 111-226; section 2122 of P.L. 111-240; sections 754 and 760 of P.L. 111-312; sections 104, 318, 322, 323, 326, 327, and 411 of P.L. 112-240; P.L. 114-7; section 1101 of P.L. 114-74; section 305 of division P of P.L. 114-113; sections 123, 125 to 128, 143, 144, 151 to 153, 165 to 167, 169 to 171, 189, 191, 326, and 411 of division Q of P.L. 114-113; and sections 11011, 11012, 13201 (a) to (e) and (g), 13206, 13221, 13301, 13304 (a), (b), and (d), 13531, 13601, 13801, 14101, 14102, 14103, 14201, 14202, 14211, 14212, 14213, 14214, 14215, 14221, 14222, 14301, 14302, 14304, and 14401 of P.L. 115-97.

71.42(2)(L)3. 3. For purposes of this paragraph, “Internal Revenue Code” does not include amendments to the federal Internal Revenue Code, including provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, enacted after December 31, 2017, except that “Internal Revenue Code” includes sections 40307, 40413, and 41113 of P.L. 115-123; sections 101 (m), (n), (o), (p), and (q), 104 (a), 109, 401 (a) (54) and (b) (15) (A), (B), and (C) 19, 20, 23, 26, 27, and 28 of division U of P.L. 115-141; sections 102 and 104 of division M, sections 102, 103, 106, 107, 108, 109, 110, 111, 113, 114, 115, 116, 201, 204, 205, 206, 302, 401, and 601 of division O, section 1302 of division P, and sections 131, 202 (d), and 205 of division Q of P.L. 116-94; sections 1106, 2202, 2203, 2204, 2205, 2206, 2307, 3608, 3609, 3701, and 3702 of division A of P.L. 116-136; sections 202, 208, 209, 211, and 214 of division EE and sections 276 (a) and (b), 277, 278 (a), (b), (c), and (d), 280, and 285 of division N of P.L. 116-260; and sections 9701, 9702, 9703, 9704, 9705, 9706, and 9707 of P.L. 117-2.

71.42(2)(L)4. 4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes, except as follows:

71.42(2)(L)4.a. a. Changes made by P.L. 115-63 and sections 11026, 11027, 11028, 13207, 13306, 13307, 13308, 13311, 13312, 13501, 13705, 13821, and 13823 of P.L. 115-97 first apply for taxable years beginning after December 31, 2017.

71.42(2)(L)4.b. b. Changes made by section 1201 of P.L. 108-173 and section 307 of P.L. 109-432 first apply for taxable years beginning after December 31, 2010.

71.42(2)(L)4.c. c. Changes made by section 13113 of P.L. 103-66; section 1241 of division B of P.L. 111-5; section 2011 of P.L. 111-240; section 753 of P.L. 111-312; and section 324 of P.L. 112-240 first apply for taxable years beginning after December 31, 2018.

71.42(2)(L)5. 5. For purposes of this paragraph, “Internal Revenue Code” does not include section 847 of the federal Internal Revenue Code.