71.01 (7r) Notwithstanding sub. (6), for purposes of computing amortization or depreciation, "internal revenue code" means either the federal internal revenue code as amended to December 31, 1995 1996, or the federal internal revenue code in effect for the taxable year for which the return is filed, except that property that, under s. 71.02 (2) (d) 12., 1985 stats., is required to be depreciated for taxable year 1986 under the internal revenue code as amended to December 31, 1980, shall continue to be depreciated under the internal revenue code as amended to December 31, 1980.
SECTION 2255. 71.01 (8r) of the statutes is created to read:
71.01 (8r) "Pay", in regard to submissions to or for the department, means mail or deliver funds to the department or, if the department prescribes another method of submitting or another destination, use that other method or submit to that other destination.
SECTION 2256. 71.01 (9c) of the statutes is created to read:
71.01 (9c) "Sign" means write one's signature or, if the department prescribes another method of authenticating, use that other method.
SECTION 2256m. 71.01 (15) of the statutes is repealed.
SECTION 2257. 71.02 (1) of the statutes is amended to read:
71.02 (1) For the purpose of raising revenue for the state and the counties, cities, villages and towns, there shall be assessed, levied, collected and paid a tax on all net incomes of individuals and fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds subject to the tax under s. 71.23 (2), by every natural person residing within the state or by his or her personal representative in case of death, and trusts administered within the state; by every nonresident natural person and trust of this state, upon such income as is derived from property located or business transacted within the state including, but not limited by enumeration, income derived from a limited partner's distributive share of partnership income, income derived from a limited liability company member's distributive share of limited liability company income, the state lottery under ch. 565, any multistate multijurisdictional lottery under ch. 565 if the winning lottery ticket or lottery share was purchased from a retailer, as defined in s. 565.01 (6), located in this state or from the department and pari-mutuel wager winnings or purses under ch. 562, and also by every nonresident natural person upon such income as is derived from the performance of personal services within the state, except as exempted under s. 71.05 (1) to (3). Every natural person domiciled in the state shall be deemed to be residing within the state for the purposes of determining liability for income taxes and surtaxes. A single-owner entity that is disregarded as a separate entity under section 7701 of the Internal Revenue Code is disregarded as a separate entity under this chapter, and its owner is subject to the tax on the entity's income.
SECTION 2258. 71.04 (1) (a) of the statutes is amended to read:
71.04 (1) (a) All income or loss of resident individuals and resident estates and trusts shall follow the residence of the individual, estate or trust. Income or loss of nonresident individuals and nonresident estates and trusts from business, not requiring apportionment under sub. (4), (10) or (11), shall follow the situs of the business from which derived. All items of income, loss and deductions of nonresident individuals and nonresident estates and trusts derived from a tax-option corporation not requiring apportionment under sub. (9) shall follow the situs of the business of the corporation from which derived. Income or loss of nonresident individuals and nonresident estates and trusts derived from rentals and royalties from real estate or tangible personal property, or from the operation of any farm, mine or quarry, or from the sale of real property or tangible personal property shall follow the situs of the property from which derived. Income from personal services of nonresident individuals, including income from professions, shall follow the situs of the services. A nonresident limited partner's distributive share of partnership income shall follow the situs of the business. A nonresident limited liability company member's distributive share of limited liability company income shall follow the situs of the business. Income of nonresident individuals, estates and trusts from the state lottery under ch. 565 is taxable by this state. Income of nonresident individuals, estates and trusts from any multistate multijurisdictional lottery under ch. 565 is taxable by this state, but only if the winning lottery ticket or lottery share was purchased from a retailer, as defined in s. 565.01 (6), located in this state or from the department. Income of nonresident individuals, nonresident trusts and nonresident estates from pari-mutuel winnings or purses under ch. 562 is taxable by this state. All other income or loss of nonresident individuals and nonresident estates and trusts, including income or loss derived from land contracts, mortgages, stocks, bonds and securities or from the sale of similar intangible personal property, shall follow the residence of such persons, except as provided in par. (b) and sub. (9).
SECTION 2260m. 71.05 (6) (intro.) of the statutes is amended to read:
71.05 (6) MODIFICATIONS AND TRANSITIONAL ADJUSTMENTS. (intro.) Some of the modifications referred to in s. 71.01 (13), and (14) and (15) are:
SECTION 2260t. 71.05 (6) (a) 10. of the statutes is amended to read:
71.05 (6) (a) 10. For the taxable year, for a person who is not "actively engaged in farming", as that term is used in 7 CFR 1497.201, combined net losses, exclusive of net gains from the sale or exchange of capital or business assets and exclusive of net profits, from businesses, from rents, from partnerships, from limited liability companies, from S corporations, from estates or from trusts, under section 165 of the internal revenue code, except losses allowable under sections 1211 and 1231 of the internal revenue code, otherwise includable in calculating Wisconsin income if those losses are incurred in the operation of a farming business, as defined in section 464 (e) 1. of the internal revenue code to the extent that those combined net losses exceed $20,000 if nonfarm Wisconsin adjusted gross income exceeds $55,000 but does not exceed $75,000, exceed $17,500 if nonfarm Wisconsin adjusted gross income exceeds $75,000 but does not exceed $100,000, exceed $15,000 if nonfarm Wisconsin adjusted gross income exceeds $100,000 but does not exceed $150,000, exceed $12,500 if nonfarm Wisconsin adjusted gross income exceeds $150,000 but does not exceed $200,000, exceed $10,000 if nonfarm Wisconsin adjusted gross income exceeds $200,000 but does not exceed $250,000, exceed $7,500 if nonfarm Wisconsin adjusted gross income exceeds $250,000 but does not exceed $300,000, exceed $5,000 if nonfarm Wisconsin adjusted gross income exceeds $300,000 but does not exceed $400,000 $600,000 and exceed $0 if nonfarm adjusted gross income exceeds $400,000 $600,000, except that the amounts applicable to married persons filing separately are 50% of the amounts specified in this subdivision.
SECTION 2261. 71.05 (6) (a) 15. of the statutes is amended to read:
71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dr) and, (2ds), (2dx) and (3s) 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).
SECTION 2261am. 71.05 (6) (a) 19. of the statutes is repealed.
SECTION 2261ao. 71.05 (6) (a) 20. of the statutes is created to read:
71.05 (6) (a) 20. The amount of any excess distribution, as that term is used in section 1291 (b) of the Internal Revenue Code, from a passive foreign investment company.
SECTION 2261b. 71.05 (6) (b) 24. of the statutes is repealed.
SECTION 2261c. 71.05 (6) (b) 25. of the statutes is created to read:
71.05 (6) (b) 25. All gains that are not excluded from taxation under subd. 9., on business assets or on assets used in farming, including shares in a corporation or trust that meets the standards under s. 182.001 (1), or both, held more than one year, that are sold or otherwise disposed of to persons who are related to the seller or transferor by blood, marriage or adoption within the 3rd degree of kinship as that term is used in s. 852.03 (2), as computed under the Internal Revenue Code, not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason.
SECTION 2261d. 71.05 (6) (b) 26. of the statutes is created to read:
71.05 (6) (b) 26. For taxable years beginning on or after January 1, 1998, an amount paid by a person for a long-term care insurance policy for the person and his or her spouse, calculated as follows:
a. One hundred percent of the amount paid by the person for a long-term care insurance policy. In this subdivision, "long-term care insurance policy" means a disability insurance policy or certificate advertised, marketed, offered or designed primarily to provide coverage for care that is provided in the insured person's home or in institutional and community-based settings and that is convalescent or custodial care or care for a chronic condition or terminal illness; the term does not include a medicare supplement policy or medicare replacement policy or a continuing care contract, as defined in s. 647.01 (2). "Long-term care insurance policy" applies to a policy that covers the person and his or her spouse.
b. From the amount calculated under subd. 26. a., subtract the amounts deducted from gross income for a long-term care insurance policy in the calculation of federal adjusted gross income.
c. For a person who is a nonresident or a part-year resident of this state, modify the amount calculated under subd. 26. b. by multiplying the amount by a fraction the numerator of which is the person's wages, unearned income and net earnings from a trade or business that are taxable by this state and the denominator of which is the person's total wages, unearned income and net earnings from a trade or business.
d. Reduce the amount calculated under subd. 26. b. or c. to the person's aggregate wages, unearned income and net earnings from a trade or business that are taxable by this state.
SECTION 2261ds. 71.05 (22) (ds) of the statutes is created to read:
71.05 (22) (ds) Standard deduction indexing. For taxable years beginning after December 31, 1998, the dollar amounts of the standard deduction that is allowable under par. (dm) and all of the dollar amounts of Wisconsin adjusted gross income under par. (dm) shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the year before the previous year, as determined by the federal department of labor. Each amount that is revised under this paragraph shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this paragraph and incorporate the changes into the income tax forms and instructions.
SECTION 2261e. 71.06 (1) (intro.) of the statutes is amended to read:
71.06 (1) (title) FIDUCIARIES, SINGLE INDIVIDUALS AND HEADS OF HOUSEHOLDS; 1986 TO 1997. (intro.) The tax to be assessed, levied and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals for taxable years beginning on or after August 1, 1986, and before January 1, 1994, and upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households for taxable years beginning on or after January 1, 1994 December 31, 1993, and before January 1, 1998, shall be computed at the following rates:
SECTION 2261ee. 71.06 (1m) of the statutes is created to read:
71.06 (1m) FIDUCIARIES, SINGLE INDIVIDUALS AND HEADS OF HOUSEHOLDS; AFTER 1997. The tax to be assessed, levied and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 1997:
(a) On all taxable income from $0 to $7,500, 4.85%.
(b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.48%.
(c) On all taxable income exceeding $15,000, 6.87%.
SECTION 2261eg. 71.06 (2) (intro.) of the statutes is amended to read:
71.06 (2) MARRIED PERSONS. (intro.) The tax to be assessed, levied and collected upon the taxable incomes of all married persons for calendar year 1987 and corresponding fiscal years and for calendar and fiscal years thereafter shall be computed at the following rates:
SECTION 2261ei. 71.06 (2) (a) (intro.) of the statutes is amended to read:
71.06 (2) (a) (intro.) For joint returns, for taxable years beginning after July 31, 1986, and before January 1, 1998:
SECTION 2261ek. 71.06 (2) (b) (intro.) of the statutes is amended to read:
71.06 (2) (b) (intro.) For married persons filing separately, for taxable years beginning after July 31, 1986, and before January 1, 1998:
SECTION 2261eL. 71.06 (2) (c) of the statutes is created to read:
71.06 (2) (c) For joint returns, for taxable years beginning after December 31, 1997:
1. On all taxable income from $0 to $10,000, 4.85%.
2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.48%.
3. On all taxable income exceeding $20,000, 6.87%.
SECTION 2261em. 71.06 (2) (d) of the statutes is created to read:
71.06 (2) (d) For married persons filing separately, for taxable years beginning after December 31, 1997:
1. On all taxable income from $0 to $5,000, 4.85%.
2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.48%.
3. On all taxable income exceeding $10,000, 6.87%.
SECTION 2261en. 71.06 (2e) of the statutes is created to read:
71.06 (2e) BRACKET INDEXING. For taxable years beginning after December 31, 1998, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2) (c) and (d) shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the year before the previous year, as determined by the federal department of labor. Each amount that is revised under this subsection shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subsection and incorporate the changes into the income tax forms and instructions.
SECTION 2261eo. 71.06 (2m) of the statutes is amended to read:
71.06 (2m) RATE CHANGES. If a rate under sub. (1), (1m) or (2) changes during a taxable year, the taxpayer shall compute the tax for that taxable year by the methods applicable to the federal income tax under section 15 of the internal revenue code.
SECTION 2261f. 71.06 (2s) of the statutes is created to read:
71.06 (2s) NONRESIDENTS AND PART-YEAR RESIDENTS. For taxable years beginning after December 31, 1996, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1) and (2) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this subsection, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1) and (2) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.
SECTION 2261fm. 71.06 (2s) of the statutes, as created by 1997 Wisconsin Act .... (this act), is renumbered 71.06 (2s) (a) and amended to read:
71.06 (2s) (a) For taxable years beginning after December 31, 1996, and ending before January 1, 1998, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1) and (2) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this subsection paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1) and (2) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.
SECTION 2261fn. 71.06 (2s) (b) of the statutes is created to read:
71.06 (2s) (b) For taxable years beginning after December 31, 1997, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1m) and (2) (c) and (d) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1m) and (2) (c) and (d) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.
SECTION 2261h. 71.07 (2dd) (e) of the statutes is created to read:
71.07 (2dd) (e) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261j. 71.07 (2de) (d) of the statutes is created to read:
71.07 (2de) (d) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261k. 71.07 (2di) (i) of the statutes is created to read:
71.07 (2di) (i) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261m. 71.07 (2dj) (i) of the statutes is created to read:
71.07 (2dj) (i) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261p. 71.07 (2dL) (h) of the statutes is created to read:
71.07 (2dL) (h) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261q. 71.07 (2dr) (a) of the statutes is amended to read:
71.07 (2dr) (a) Credit. Any person may credit against taxes otherwise due under this chapter an amount equal to 5% of the amount obtained by subtracting from the person's qualified research expenses, as defined in section 41 of the internal revenue code, except that "qualified research expenses" include only expenses incurred by the claimant in a development zone under subch. VI of ch. 560, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation and except that "qualified research expenses" do not include compensation used in computing the credit under sub. (2dj) nor research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), the person's base amount, as defined in section 41 (c) of the internal revenue code, in a development zone, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.04 (7) (b) 1. and 2. and (d) and research expenses used in calculating the base amount include research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), in a development zone, if the claimant submits with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.765 (3) and a statement from the department of commerce verifying the claimant's qualified research expenses for research conducted exclusively in a development zone. The rules under s. 73.03 (35) apply to the credit under this paragraph. The rules under sub. (2di) (f) and (g), as they apply to the credit under that subsection, apply to claims under this paragraph. Section 41 (h) of the internal revenue code does not apply to the credit under this paragraph.
SECTION 2261t. 71.07 (2dr) (i) of the statutes is created to read:
71.07 (2dr) (i) Sunset. No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2261v. 71.07 (2ds) (i) of the statutes is created to read:
71.07 (2ds) (i) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
SECTION 2262. 71.07 (2dx) of the statutes is created to read:
71.07 (2dx) DEVELOPMENT ZONES CREDIT. (a) Definitions. In this subsection:
1. "Brownfield" means an industrial or commercial facility the expansion or redevelopment of which is complicated by environmental contamination.
2. "Development zone" means a development zone under s. 560.70, a development opportunity zone under s. 560.795 or an enterprise development zone under s. 560.797.
3. "Environmental remediation" means removal or containment of environmental pollution, as defined in s. 299.01 (4), and restoration of soil or groundwater that is affected by environmental pollution, as defined in s. 299.01 (4), in a brownfield if that removal, containment or restoration fulfills the requirement under sub. (2de) (a) 1. and investigation unless the investigation determines that remediation is required and that remediation is not undertaken.
4. "Full-time job" means a regular, nonseasonal full-time position in which an individual, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays, and for which the individual receives pay that is equal to at least 150% of the federal minimum wage and receives benefits that are not required by federal or state law. "Full-time job" does not include initial training before an employment position begins.
5. "Member of a targeted group" means a person under sub. (2dj) (am) 1., a person who resides in an empowerment zone, or an enterprise community, that the U.S. government designates, a person who is employed in an unsubsidized job but meets the eligibility requirements under s. 49.145 (2) and (3) for a Wisconsin works employment position, a person who is employed in a trial job, as defined in s. 49.141 (1) (n), a person who is eligible for the Wisconsin works health plan under s. 49.153 or a person who is eligible for child care assistance under s. 49.155; if the person has been certified in the manner under sub. (2dj) (am) 3. by a designated local agency, as defined in sub. (2dj) (am) 2.
(b) Credit. Except as provided in s. 73.03 (35) and subject to s. 560.785, for any taxable year for which the person is certified under s. 560.765 (3), any person may claim as a credit against taxes the following amounts:
1. Fifty percent of the amount expended for environmental remediation in a development zone.
2. The amount determined by multiplying the amount determined under s. 560.785 (1) (b) by the number of full-time jobs created in a development zone and filled by a member of a targeted group and by then subtracting the subsidies paid under s. 49.147 (3) (a) for those jobs.