LRB-1804/1
MES:kaf:kat
1997 - 1998 LEGISLATURE
March 25, 1997 - Introduced by Representatives Gronemus, Freese, Ott, Dobyns,
Grothman, Gunderson, Hahn, Harsdorf, Hasenohrl, Hutchison, Kreibich, F.
Lasee, Lorge, Musser, Olsen, Otte, Owens and Seratti, cosponsored by
Senators Clausing, A. Lasee, Buettner and
Zien. Referred to Joint survey
committee on Tax Exemptions.
AB212,1,3
1An Act to create 71.05 (6) (b) 25. of the statutes;
relating to: excluding from
2income taxation capital gains derived from the intergenerational transfer of
3certain farming or small business assets.
Analysis by the Legislative Reference Bureau
Under current law, there is an income tax exclusion for 60% of the capital gain
from the sale of assets held at least one year and on all assets acquired from a
decedent.
This bill allows an income tax exclusion for 100% of the capital gains realized
from the intergenerational transfer of certain farming assets or the assets of a small
business, or both, to the extent that the capital gains on such assets are not excluded
from taxation under current law. The exclusion may be claimed only if the transfer
is to a person such as a child, grandchild, great-grandchild or niece or nephew of the
transferor. In this bill, "small business" means an independently owned and
operated entity which employs less than 25 full-time employes or which has gross
annual sales of less than $2,500,000.
This bill will be referred to the joint survey committee on tax exemptions for a
detailed analysis, which will be printed as an appendix to the bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB212, s. 1
1Section
1. 71.05 (6) (b) 25. of the statutes is created to read:
AB212,2,132
71.05
(6) (b) 25. To the extent that the capital gains are not excluded from
3taxation under subd. 9., on the assets of a small business, as that term is defined in
4s. 814.245 (2) (b), or on assets used in farming, including shares in a corporation or
5trust that meets the standards under s. 182.001 (1), or both, that are sold or
6otherwise disposed of to persons who are related to the seller or transferor by blood,
7marriage or adoption within the 3rd degree of kinship, as that term is used in s.
8852.03 (2), and who belong to a generation that is subsequent to the generation of the
9seller or transferor, 100% of the capital gains as computed under the Internal
10Revenue Code, not including amounts treated as ordinary income for federal income
11tax purposes because of the recapture of depreciation or any other reason. For
12purposes of this subdivision, the capital gains and capital losses for all assets shall
13be netted before application of the percentage.
AB212,2,1615
(1)
This act first applies to taxable years beginning on January 1 of the year
16in which this act takes effect.
