Amendment ASA1-AB538

AB538-ASA1, s. 2 Section 2. 71.05 (6) (b) 9m. of the statutes is created to read:

AB538-ASA1,3,14 71.05 (6) (b) 9m. On assets held more than one year, to the extent that the gains are not excluded from taxation under subd. 9., 100 percent of the capital gain as computed under the Internal Revenue Code if the gain is realized from the sale of an asset that is an investment in a qualified new business venture that is certified under s. 560.03 (26) or a venture capital fund that is certified under s. 560.03 (27). For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage.

AB538-ASA1, s. 3 Section 3. 71.07 (5d) of the statutes is created to read:

AB538-ASA1,3,16 71.07 (5d) Qualified new business venture credit. (a) In this subsection:

AB538-ASA1,3,17 1. "Claimant" means a person who files a claim under this subsection.

AB538-ASA1,3,19 2. "Qualified new business venture" means a business that is certified under s. 560.03 (26).

AB538-ASA1,4,5 (b) Subject to the limitations provided in this subsection and in s. 560.03 (26), 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, an amount equal to 20 percent of the claimant's equity investment made directly in a qualified new business venture in the taxable year, except that if the claimant's investment exceeds $100,000 in the taxable year the claimant may claim 20 percent of $100,000 plus 10 percent of the amount of the investment that exceeds $100,000.

AB538-ASA1,4,9 (bm) 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.

AB538-ASA1,4,11 (c) The carry-over provisions of s. 71.28 (4) (e) and (f), as they apply to the credit under s. 71.28 (4), apply to the credit under this subsection.

AB538-ASA1,4,19 (d) 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 the amounts described under par. (b) that are attributable to their business operations. 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.

AB538-ASA1,4,21 (e) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

AB538-ASA1, s. 4 Section 4. 71.08 (1) (intro.) of the statutes is amended to read:

AB538-ASA1,5,6 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), (5d), (6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) 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:

AB538-ASA1, s. 5 Section 5. 71.10 (4) (gx) of the statutes is created to read:

AB538-ASA1,5,8 71.10 (4) (gx) Qualified new business venture credit under s. 71.07 (5d).

AB538-ASA1, s. 6 Section 6. 71.21 (4) of the statutes is amended to read:

AB538-ASA1,5,12 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), and (3s) , and (5d) and passed through to partners shall be added to the partnership's income.

AB538-ASA1, s. 7 Section 7. 71.26 (2) (a) of the statutes is amended to read:

AB538-ASA1,6,3 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) plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), and (3g), 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, 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).

AB538-ASA1, s. 8 Section 8. 71.28 (5d) of the statutes is created to read:

AB538-ASA1,6,5 71.28 (5d) Qualified new business venture credit. (a) In this subsection:

AB538-ASA1,6,6 1. "Claimant" means a person who files a claim under this subsection.

AB538-ASA1,6,8 2. "Qualified new business venture" means a business that is certified under s. 560.03 (26).

AB538-ASA1,6,15 (b) Subject to the limitations provided in this subsection and in s. 560.03 (26), a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, an amount equal to 20 percent of the claimant's equity investment made directly in a qualified new business venture in the taxable year, except that if the claimant's investment exceeds $100,000 in the taxable year the claimant may claim 20 percent of $100,000 plus 10 percent of the amount of the investment that exceeds $100,000.

AB538-ASA1,6,19 (bm) 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.

AB538-ASA1,6,21 (c) The carry-over provisions of sub. (4) (e) and (f), as they apply to the credit under sub. (4), apply to the credit under this subsection.

AB538-ASA1,7,4 (d) 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 the amounts described under par. (b) that are attributable to their business operations. 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.

AB538-ASA1,7,6 (e) Subsection (4) (g) and (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

AB538-ASA1, s. 9 Section 9. 71.30 (3) (eop) of the statutes is created to read:

AB538-ASA1,7,8 71.30 (3) (eop) Qualified new business venture credit under s. 71.28 (5d).

AB538-ASA1, s. 10 Section 10. 71.34 (1) (g) of the statutes is amended to read:

AB538-ASA1,7,12 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), and (3g), and (5d) and passed through to shareholders.

AB538-ASA1, s. 11 Section 11. 71.45 (2) (a) 10. of the statutes is amended to read:

AB538-ASA1,7,19 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx) 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, 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), (4) and (5).

AB538-ASA1, s. 12 Section 12. 71.47 (5d) of the statutes is created to read:

AB538-ASA1,7,21 71.47 (5d) Qualified new business venture credit. (a) In this subsection:

AB538-ASA1,7,22 1. "Claimant" means a person who files a claim under this subsection.

AB538-ASA1,7,24 2. "Qualified new business venture" means a business that is certified under s. 560.03 (26).

AB538-ASA1,8,7 (b) Subject to the limitations provided in this subsection and in s. 560.03 (26), a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, an amount equal to 20 percent of the claimant's direct investment made directly in a qualified new business venture in the taxable year, except that if the claimant's investment exceeds $100,000 in the taxable year the claimant may claim 20 percent of $100,000 plus 10 percent of the amount of the investment that exceeds $100,000.

AB538-ASA1,8,11 (bm) 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.

AB538-ASA1,8,13 (c) The carry-over provisions of s. 71.28 (4) (e) and (f), as they apply to the credit under s. 71.28 (4), apply to the credit under this subsection.

AB538-ASA1,8,21 (d) 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 the amounts described under par. (b) that are attributable to their business operations. 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.

AB538-ASA1,8,23 (e) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

AB538-ASA1, s. 13 Section 13. 71.49 (1) (eop) of the statutes is created to read:

AB538-ASA1,8,25 71.49 (1) (eop) Qualified new business venture credit under s. 71.47 (5d).

AB538-ASA1, s. 14 Section 14. 77.92 (4) of the statutes is amended to read:

AB538-ASA1,9,16 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), and (3g), and (3s), and (5d); 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.

AB538-ASA1, s. 15 Section 15. 560.03 (24) to (27) of the statutes are created to read:

AB538-ASA1,9,24 560.03 (24) 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.

AB538-ASA1,10,4 (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 investors that review new businesses or proposed new businesses for potential investment.

AB538-ASA1,10,17 (26) Certify businesses as qualified new business ventures for purposes of ss. 71.05 (6) (b) 9m., 71.07 (5d), 71.28 (5d), and 71.47 (5d). The department shall promulgate rules for the administration of this subsection. The rules shall require a business desiring certification to submit an application to the department in each taxable year for which the business desires certification. The department shall process applications in the order in which they were received and shall certify only the first 1,000 eligible businesses that apply for certification for a taxable year. The department shall maintain a list of businesses certified under this subsection and shall permit public access to the list through the department's Internet website. The department shall notify the department of revenue of every business certified under this subsection and the date on which any such business is decertified. A business may be certified under this subsection, and may maintain such certification, only if the business satisfies all of the following conditions:

AB538-ASA1,10,18 (a) It has its headquarters in this state.

AB538-ASA1,10,20 (b) At least 51 percent of the employees employed by the business are employed in this state.

AB538-ASA1,10,22 (c) Its average annual net income for each of the 2 taxable years immediately preceding the taxable year for which a credit is claimed does not exceed $20,000,000.

AB538-ASA1,10,24 (d) It's net worth in the taxable year for which a credit is claimed does not exceed $40,000,000.

AB538-ASA1,11,2 (e) It is not engaged predominantly in providing professional services by accountants, lawyers, or physicians.

AB538-ASA1,11,4 (f) It is not engaged predominantly in wholesale or retail trade or in the leisure and hospitality industry.

AB538-ASA1,11,5 (g) It is not engaged in banking or lending or in developing real estate for resale.

AB538-ASA1,11,7 (h) It does not make loans to, or investments in, certified capital companies, as defined in s. 560.30 (2).

AB538-ASA1,11,8 (i) It has been in operation in this state for not more than 10 consecutive years.

AB538-ASA1,11,9 (j) It is a corporation or limited liability company.

AB538-ASA1,11,10 (k) It is not engaged in the transportation or construction business.

AB538-ASA1,11,11 (27) Certify venture capital funds as follows:

AB538-ASA1,11,14 (a) The department shall promulgate rules establishing a procedure for the department to certify venture capital funds for purposes of the capital gains tax exemption under s. 71.05 (6) (b) 9m. The rules shall do all of the following:

AB538-ASA1,11,16 1. Require a venture capital fund that desires to obtain a certification to file an application with the department.

AB538-ASA1,11,22 2. Permit a venture capital fund to obtain a certification only if the venture capital fund is a private seed and venture capital partnership or entity fund, the venture capital fund has its principal place of business in Wisconsin, and the venture capital fund commits to maintain an average, calculated over a 4-year period, of 50 percent of its equity investments in businesses, as described under sub. (26), that are located in Wisconsin.

AB538-ASA1,12,2 3. Require an applicant for certification or a certified venture capital fund to provide the department with any information the department determines is necessary to ensure eligibility for certification and compliance with this subsection and rules promulgated under this subsection.

AB538-ASA1,12,11 (b) Upon request of any person, the department shall issue a written notice indicating whether a venture capital fund is certified under this subsection for purposes of the capital gains tax exemption under s. 71.05 (6) (b) 9m. Each notice under this paragraph that indicates a venture capital fund is certified shall include the following statement: "The Wisconsin Department of Commerce has not recommended or approved an investment in this venture capital fund or assessed the merits or risks of such an investment. Investors should rely solely on their own investigation and analysis and seek investment, financial, legal, and tax advice before making their own decision regarding investment in this enterprise."

AB538-ASA1,12,14 (c) Upon the issuance or discontinuance of a certification, the department of commerce shall notify the department of revenue and provide the department of revenue a copy of the certification or discontinuance.

AB538-ASA1, s. 16 Section 16 . Nonstatutory provisions.

AB538-ASA1,12,19 (1) Rules. The department of commerce shall submit in proposed form the rules required under section 560.03 (26) and (27) of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 6th month beginning after the effective date of this subsection.

AB538-ASA1, s. 17 Section 17. Initial applicability.

AB538-ASA1,12,24 (1) Qualified new business venture credit. The treatment of sections 71.05 (6) (a) 15., 71.07 (5d), 71.08 (1) (intro.), 71.10 (4) (gx), 71.21 (4), 71.26 (2) (a), 71.28 (5d), 71.30 (3) (eop), 71.34 (1) (g), 71.45 (2) (a) 10., 71.47 (5d), 71.49 (1) (eop), and 77.92 (4) of the statutes first applies to taxable years beginning on January 1, 2006.

AB538-ASA1,13,2 (2) Increased capital gains exclusion. The treatment of section 71.05 (6) (b) 9m. of the statutes first applies to taxable years beginning on January 1, 2006.

AB538-ASA1, s. 18 Section 18. Effective dates. This act takes effect on July 1, 2004, except as follows:

AB538-ASA1,13,5 (1) Rules. Section 16 (1) of this act takes effect on the day after publication.

AB538-ASA1,13,6 (End)