August 30, 2005 - Introduced by Representatives Ainsworth, Albers, Ballweg,
Bies, Gronemus, Gunderson, Hines, F. Lasee, Loeffelholz, Musser, Nerison,
Ott, Petrowski, Suder, Towns
and Vos, cosponsored by Senators A. Lasee,
Leibham, Olsen
and Reynolds. Referred to Committee on Agriculture.
AB646,1,5 1An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2)
2(a) 10. and 77.92 (4); and to create 71.07 (5e), 71.10 (4) (cq), 71.28 (5e), 71.30
3(3) (dq), 71.47 (5e) and 71.49 (1) (dq) of the statutes; relating to: an income and
4franchise tax credit for the sales and use taxes paid on the purchase of tangible
5personal property used in farming.
Analysis by the Legislative Reference Bureau
This bill creates an income and franchise tax credit for the amount of sales and
use taxes that the taxpayer paid on the purchase of tangible personal property used
in the business of farming, not including, generally, the purchase of motor vehicles
for highway use or tangible personal property that is attached to, fastened to,
connected to, or built into real property.
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:
AB646, s. 1 6Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB646,2,5
171.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
2(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b), and (5d), and (5e)
3and not passed through by a partnership, limited liability company, or tax-option
4corporation that has added that amount to the partnership's, company's, or
5tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).
AB646, s. 2 6Section 2. 71.07 (5e) of the statutes is created to read:
AB646,2,87 71.07 (5e) Tangible personal property used in farming credit. (a) Definitions.
8In this subsection, "claimant" means a person who files a claim under this subsection.
AB646,2,159 (b) Filing claims. Subject to the limitations provided under this subsection, a
10claimant may claim as a credit against the taxes imposed under s. 71.02, up to the
11amount of those taxes, an amount that is equal to the amount of the taxes imposed
12under ss. 77.52 and 77.53 that the claimant paid in the taxable year on the purchase
13of tangible personal property that is used exclusively and directly, or consumed or
14loses its identity, in the business of farming, including dairy farming, agriculture,
15horticulture, floriculture, and custom farming services.
AB646,2,1716 (c) Limitations. 1. The credit under par. (b) does not apply to the purchase of
17any of the following:
AB646,2,1818 a. Automobiles, trucks, or other motor vehicles for highway use.
AB646,2,2119 b. Tangible personal property that is attached to, fastened to, connected to, or
20built into real property or that becomes an addition to, component of, or capital
21improvement of real property.
AB646,3,222 c. Tangible personal property used or consumed in the erection of a building or
23in the alteration, repair, or improvement of real property, regardless of any
24contribution that that personal property makes to the production process in that

1building or real property and regardless of the extent to which that personal property
2functions as a machine.
AB646,3,103 2. Partnerships, limited liability companies, and tax-option corporations may
4not claim the credit under this subsection, but the eligibility for, and the amount of,
5the credit are based on their payment of amounts under par. (b). A partnership,
6limited liability company, or tax-option corporation shall compute the amount of
7credit that each of its partners, members, or shareholders may claim and shall
8provide that information to each of them. Partners, members of limited liability
9companies, and shareholders of tax-option corporations may claim the credit in
10proportion to their ownership interests.
AB646,3,1211 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
12s. 71.28 (4), applies to the credit under this subsection.
AB646, s. 3 13Section 3. 71.10 (4) (cq) of the statutes is created to read:
AB646,3,1514 71.10 (4) (cq) Tangible personal property used in farming credit under s. 71.07
15(5e).
AB646, s. 4 16Section 4. 71.21 (4) of the statutes is amended to read:
AB646,3,1917 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
18(2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), and (5b), and (5e) and passed
19through to partners shall be added to the partnership's income.
AB646, s. 5 20Section 5. 71.26 (2) (a) of the statutes is amended to read:
AB646,4,1321 71.26 (2) (a) Corporations in general. The "net income" of a corporation means
22the gross income as computed under the Internal Revenue Code as modified under
23sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
24computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
257., the amount of the credit under s. 71.28 (3) that the taxpayer added to income

1under this paragraph at the time that the taxpayer first claimed the credit plus the
2amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
3(1ds), (1dx), (3g), (3n), (3t), and (5b), and (5e) and not passed through by a
4partnership, limited liability company, or tax-option corporation that has added that
5amount to the partnership's, limited liability company's, or tax-option corporation's
6income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or
7other disposition of assets the gain from which would be wholly exempt income, as
8defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and
9minus deductions, as computed under the Internal Revenue Code as modified under
10sub. (3), plus or minus, as appropriate, an amount equal to the difference between
11the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or
12otherwise disposed of in a taxable transaction during the taxable year, except as
13provided in par. (b) and s. 71.45 (2) and (5).
AB646, s. 6 14Section 6. 71.28 (5e) of the statutes is created to read:
AB646,4,1615 71.28 (5e) Tangible personal property used in farming credit. (a) Definitions.
16In this subsection, "claimant" means a person who files a claim under this subsection.
AB646,4,2317 (b) Filing claims. Subject to the limitations provided under this subsection, a
18claimant may claim as a credit against the taxes imposed under s. 71.23, up to the
19amount of those taxes, an amount that is equal to the amount of the taxes imposed
20under ss. 77.52 and 77.53 that the claimant paid in the taxable year on the purchase
21of tangible personal property that is used exclusively and directly, or consumed or
22loses its identity, in the business of farming, including dairy farming, agriculture,
23horticulture, floriculture, and custom farming services.
AB646,4,2524 (c) Limitations. 1. The credit under par. (b) does not apply to the purchase of
25any of the following:
AB646,5,1
1a. Automobiles, trucks, or other motor vehicles for highway use.
AB646,5,42 b. Tangible personal property that is attached to, fastened to, connected to, or
3built into real property or that becomes an addition to, component of, or capital
4improvement of real property.
AB646,5,95 c. Tangible personal property used or consumed in the erection of a building or
6in the alteration, repair, or improvement of real property, regardless of any
7contribution that that personal property makes to the production process in that
8building or real property and regardless of the extent to which that personal property
9functions as a machine.
AB646,5,1710 2. Partnerships, limited liability companies, and tax-option corporations may
11not claim the credit under this subsection, but the eligibility for, and the amount of,
12the credit are based on their payment of amounts under par. (b). A partnership,
13limited liability company, or tax-option corporation shall compute the amount of
14credit that each of its partners, members, or shareholders may claim and shall
15provide that information to each of them. Partners, members of limited liability
16companies, and shareholders of tax-option corporations may claim the credit in
17proportion to their ownership interests.
AB646,5,1918 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under
19sub. (4), applies to the credit under this subsection.
AB646, s. 7 20Section 7. 71.30 (3) (dq) of the statutes is created to read:
AB646,5,2221 71.30 (3) (dq) Tangible personal property used in farming credit under s. 71.28
22(5e).
AB646, s. 8 23Section 8. 71.34 (1) (g) of the statutes is amended to read:
AB646,6,3
171.34 (1) (g) An addition shall be made for credits computed by a tax-option
2corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g),
3(3n), (3t), and (5b), and (5e) and passed through to shareholders.
AB646, s. 9 4Section 9. 71.45 (2) (a) 10. of the statutes is amended to read:
AB646,6,105 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
6computed under s. 71.47 (1dd) to (1dx), (3n), and (5b), and (5e) and not passed
7through by a partnership, limited liability company, or tax-option corporation that
8has added that amount to the partnership's, limited liability company's, or
9tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of
10credit computed under s. 71.47 (1), (3), (3t), (4), and (5).
AB646, s. 10 11Section 10. 71.47 (5e) of the statutes is created to read:
AB646,6,1312 71.47 (5e) Tangible personal property used in farming credit. (a) Definitions.
13In this subsection, "claimant" means a person who files a claim under this subsection.
AB646,6,2014 (b) Filing claims. Subject to the limitations provided under this subsection, a
15claimant may claim as a credit against the taxes imposed under s. 71.43, up to the
16amount of those taxes, an amount that is equal to the amount of the taxes imposed
17under ss. 77.52 and 77.53 that the claimant paid in the taxable year on the purchase
18of tangible personal property that is used exclusively and directly, or consumed or
19loses its identity, in the business of farming, including dairy farming, agriculture,
20horticulture, floriculture, and custom farming services.
AB646,6,2221 (c) Limitations. 1. The credit under par. (b) does not apply to the purchase of
22any of the following:
AB646,6,2323 a. Automobiles, trucks, or other motor vehicles for highway use.
AB646,7,3
1b. Tangible personal property that is attached to, fastened to, connected to, or
2built into real property or that becomes an addition to, component of, or capital
3improvement of real property.
AB646,7,84 c. Tangible personal property used or consumed in the erection of a building or
5in the alteration, repair, or improvement of real property, regardless of any
6contribution that that personal property makes to the production process in that
7building or real property and regardless of the extent to which that personal property
8functions as a machine.
AB646,7,169 2. Partnerships, limited liability companies, and tax-option corporations may
10not claim the credit under this subsection, but the eligibility for, and the amount of,
11the credit are based on their payment of amounts under par. (b). A partnership,
12limited liability company, or tax-option corporation shall compute the amount of
13credit that each of its partners, members, or shareholders may claim and shall
14provide that information to each of them. Partners, members of limited liability
15companies, and shareholders of tax-option corporations may claim the credit in
16proportion to their ownership interests.
AB646,7,1817 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
18s. 71.28 (4), applies to the credit under this subsection.
AB646, s. 11 19Section 11. 71.49 (1) (dq) of the statutes is created to read:
AB646,7,2120 71.49 (1) (dq) Tangible personal property used in farming credit under s. 71.47
21(5e).
AB646, s. 12 22Section 12. 77.92 (4) of the statutes is amended to read:
AB646,8,1223 77.92 (4) "Net business income," with respect to a partnership, means taxable
24income as calculated under section 703 of the Internal Revenue Code; plus the items
25of income and gain under section 702 of the Internal Revenue Code, including taxable

1state and municipal bond interest and excluding nontaxable interest income or
2dividend income from federal government obligations; minus the items of loss and
3deduction under section 702 of the Internal Revenue Code, except items that are not
4deductible under s. 71.21; plus guaranteed payments to partners under section 707
5(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
6(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s), (3n), (3t), and (5b), and (5e); and
7plus or minus, as appropriate, transitional adjustments, depreciation differences,
8and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding
9income, gain, loss, and deductions from farming. "Net business income," with respect
10to a natural person, estate, or trust, means profit from a trade or business for federal
11income tax purposes and includes net income derived as an employee as defined in
12section 3121 (d) (3) of the Internal Revenue Code.
AB646, s. 13 13Section 13. Initial applicability.
AB646,8,1414 (1) This act first applies to taxable years beginning on January 1, 2006.
AB646,8,1515 (End)
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