2003 WISCONSIN ACT 255
(Vetoed in Part)
An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2) (a) 10. and 77.92 (4); and to create 20.143 (1) (dk), 20.143 (1) (ik), 71.07 (5b), 71.07 (5d), 71.10 (4) (gwb), 71.10 (4) (gx), 71.28 (5b), 71.30 (3) (eop), 71.47 (5b), 71.49 (1) (eop), 560.03 (25), 560.03 (26), 560.205 and 560.275 of the statutes; relating to: creating a technology commercialization grant and loan program, creating an angel investment tax credit and an early stage seed investment tax credit, facilitating the development of certain investor networks, and granting rule-making authority and making an appropriation.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
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1b. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated:
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See PDF for table 
255,1m
Section 1m. 20.143 (1) (dk) of the statutes is created to read:
20.143 (1) (dk) Technology commercialization grant and loan program; assistance. Biennially, the amounts in the schedule for grants and loans under s. 560.275 (2).
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2. 20.143 (1) (ik) of the statutes is created to read:
20.143 (1) (ik) Technology commercialization grant and loan program; repayments. All moneys received in repayment of grants and loans made under s. 560.275 (2), to be used for grants and loans under s. 560.275 (2).
71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s), and (3t), (5b), and (5d) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).
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4. 71.07 (5b) of the statutes is created to read:
71.07 (5b) Early stage seed investment credit. (a) Definitions. In this subsection:
1. "Claimant" means a person who files a claim under this subsection.
2. "Fund manager"means an investment fund manager certified under s. 560.205 (2).
(b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under ss. 71.02 and 71.08, up to the amount of those taxes, 25 percent of the claimant's initial investment paid in the taxable year to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).
(c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.28 (5b) and 71.47 (5b) for all taxable years combined is $35,000,000.
2. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest or as specially allocated in their organizational documents.
(d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.
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5. 71.07 (5d) of the statutes is created to read:
71.07 (5d) Angel investment credit. (a) Definitions. In this subsection:
1. "Bona fide angel investment" means a purchase of an equity interest, or any other expenditure, as determined by rule under s. 560.205, that is made by any of the following:
a. An individual who reviews new businesses or proposed new businesses for potential investment of the individual's money.
b. A network of individuals who satisfy subd. 1.
2. "Claimant" means an individual who files a claim under this subsection.
3. "Qualified new business venture" means a business that is certified under s. 560.205 (1).
(b) Filing claims. Subject to the limitations provided in this subsection and in s. 560.205, a claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08, up to the amount of those taxes, in each taxable year for 2 years, beginning with the taxable year in which the claimant's initial investment is made, an amount equal to 12.5 percent of the claimant's bona fide angel investment made directly in a qualified new business venture in the taxable year.
(c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection for all taxable years combined is $30,000,000.
2. The maximum amount of a claimant's investment that may be used as the basis for a credit under this subsection is $500,000 for each investment made directly in a business certified under s. 560.205 (1).
3. For a claimant who is a nonresident or part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant or the claimant's spouse, or both, are nonresidents or part-year residents of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.
(d) Administration. 1. If an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than one year, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.
2. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.
3. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.
71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s), (3t), (5b), (5d), (6), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), and (3t) and subchs. VIII and IX and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:
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7. 71.10 (4) (gwb) of the statutes is created to read:
71.10 (4) (gwb) Early stage seed investment credit under s. 71.07 (5b).
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8. 71.10 (4) (gx) of the statutes is created to read:
71.10 (4) (gx) Angel investment credit under s. 71.07 (5d).
71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3s), and (3t), and (5b) and passed through to partners shall be added to the partnership's income.
71.26 (2) (a) Corporations in general. The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c) 7., the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), and (3t), and (5b) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or other disposition of assets the gain from which would be wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and minus deductions, as computed under the Internal Revenue Code as modified under sub. (3), plus or minus, as appropriate, an amount equal to the difference between the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
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11. 71.28 (5b) of the statutes is created to read:
71.28 (5b) Early stage seed investment credit. (a) Definitions. In this subsection:
1. "Claimant" means a person who files a claim under this subsection.
2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).
(b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, 25 percent of the claimant's initial investment paid in the taxable year to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).
(c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.07 (5b) and 71.47 (5b) for all taxable years combined is $35,000,000.
2. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest or as specially allocated in their organizational documents.
(d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.
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12. 71.30 (3) (eop) of the statutes is created to read:
71.30 (3) (eop) Early stage seed investment credit under s. 71.28 (5b).
71.34 (1) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g), and (3t), and (5b) and passed through to shareholders.
71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx) and (5b) and not passed through by a partnership, limited liability company or tax-option corporation that has added that amount to the partnership's, limited liability company's or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4) and (5).
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15. 71.47 (5b) of the statutes is created to read:
71.47 (5b) Early stage seed investment credit. (a) Definitions. In this subsection:
1. "Claimant" means a person who files a claim under this subsection.
2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).
(b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, 25 percent of the claimant's initial investment paid in the taxable year to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).
(c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.07 (5b) and 71.28 (5b) for all taxable years combined is $35,000,000.
2. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest or as specially allocated in their organizational documents.
(d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.
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16. 71.49 (1) (eop) of the statutes is created to read:
71.49 (1) (eop) Early stage seed investment credit under s. 71.47 (5b).
77.92
(4) "Net business income", with respect to a partnership, means taxable income as calculated under section
703 of the Internal Revenue Code; plus the items of income and gain under section
702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section
702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section
707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s),
and (3t)
, and (5b); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain, loss, and deductions from farming. "Net business income", with respect to a natural person, estate, or trust, means profit from a trade or business for federal income tax purposes and includes net income derived as an employee as defined in section
3121 (d) (3) of the Internal Revenue Code.
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18. 560.03 (25) of the statutes is created to read:
560.03 (25) In cooperation with the department of financial institutions and the board of regents of the University of Wisconsin System, provide education and other support to facilitate the development networks of bona fide angel investors, as defined in s. 71.07 (5d) (a) 1.
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19. 560.03 (26) of the statutes is created to read:
560.03 (26) In cooperation with the department of financial institutions and the board of regents of the University of Wisconsin System, annually conduct and publish the results of a study of Wisconsin businesses to determine new business formation trends and identify obstacles faced by new Wisconsin businesses and areas where changes in governmental policy may satisfy the needs of new Wisconsin businesses. As part of the study, the department of commerce shall conduct a survey of Wisconsin businesses.
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20. 560.205 of the statutes is created to read:
560.205 Early stage business investment program. (1) Angel investment tax credits. The department shall implement a program to certify businesses for purposes of s. 71.07 (5d). A business desiring certification shall submit an application to the department in each taxable year for which the business desires certification. Unless otherwise provided under the rules of the department, a business may be certified under this subsection, and may maintain such certification, only if the business satisfies all of the following conditions:
(a) It has its headquarters in this state.
(b) At least 51 percent of the employees employed by the business are employed in this state.
(f) It is engaged in, or has committed to engage in, manufacturing, agriculture, or processing or assembling products and conducting research and development or developing a new product or business process.
(g) It is not engaged in real estate development, insurance, banking, lending, lobbying, political consulting, professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants, wholesale or retail trade, leisure, hospitality, transportation, or construction.
(h) It has less than 100 employees.
(j) It has been in operation in this state for not more than 7 consecutive years.
(k) It has not received more than $1,000,000 in investments that have qualified for tax credits under s. 71.07 (5d).
(2) Early stage seed investment tax credits. The department shall implement a program to certify investment fund managers for purposes of ss. 71.07 (5b), 71.28 (5b), and 71.47 (5b). An investment fund manager desiring certification shall submit an application to the department. In determining whether to certify an investment fund manager, the department shall consider the investment fund manager's experience in managing venture capital funds, the past performance of investment funds managed by the applicant, the expected level of investment in the investment fund to be managed by the applicant, and any other relevant factors. The department may certify only investment fund managers that commit to consider placing investments in businesses certified under sub. (1).
(3) Administration. (a) List of certified businesses and investment fund managers. The department shall maintain a list of businesses certified under sub. (1) and investment fund managers certified under sub. (2) and shall permit public access to the lists through the department's Internet website.
(b) Notification of department of revenue. The department of commerce shall notify the department of revenue of every certification issued under sub. (1) and (2) and the date on which any such certification is revoked or expires.
(c) Annual report. Annually, no later than September 15, the department shall submit a report to the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2), listing all of the following information:
1. The total amount of tax credits claimed under ss. 71.07 (5b) and (5d), 71.28 (5b), and 71.47 (5b) per taxable year.
