Amendment SSA1-AB133

AB133-SSA1,877,2 3. The use of a vessel or mobile equipment in this state is determined by multiplying the gross receipts from the lease or rental of the vessel or mobile equipment by a fraction having as a numerator the number of days that the vessel or mobile equipment is in this state while leased or rented in the taxable year and having as a denominator the total number of days that the vessel or mobile equipment is leased or rented in the taxable year.

AB133-SSA1,877,6 4. If the taxpayer does not know the location of moving property while such property is leased or rented in the taxable year, the moving property is used in the state in which such property is located at the time the lessee or renter takes possession of the property.

AB133-SSA1, s. 1735 Section 1735. 71.25 (9) (dn) of the statutes is created to read:

AB133-SSA1,877,10 71.25 (9) (dn) For taxable years beginning after December 31, 1999, gross royalties and gross income received for the use of intangible property are attributed to this state if any of the following applies:

AB133-SSA1,877,13 1. The purchaser of intangible property uses the intangible property in the production, fabrication or manufacturing of a product that is sold to a customer who is located in this state.

AB133-SSA1,877,16 2. The purchaser of intangible property uses the intangible property in the printing or publication of materials that are sold to a customer who is located in this state.

AB133-SSA1,877,18 3. The purchaser of intangible property uses the intangible property in the operation of a trade or business at a location in this state.

AB133-SSA1,877,20 4. The purchaser of intangible property is billed for the purchase of the intangible property at a location in this state.

AB133-SSA1,877,22 5. The taxpayer is not subject to income tax in the state in which the intangible property is used but the taxpayer's commercial domicile is in this state.

AB133-SSA1, s. 1736 Section 1736. 71.25 (9) (dr) of the statutes is created to read:

AB133-SSA1,878,2 71.25 (9) (dr) 1. For taxable years beginning after December 31, 1999, receipts from a service are attributed to the state where the purchaser of the service received the benefit of the service. The benefit of a service is received in this state if any of the following applies:

AB133-SSA1,878,3 a. The service relates to real property that is located in this state.

AB133-SSA1,878,5 b. The service relates to tangible personal property that is located in this state at the time that the service is received.

AB133-SSA1,878,6 c. The service is provided to a person who is located in this state.

AB133-SSA1,878,7 d. The service is provided to a person doing business in this state.

AB133-SSA1,878,8 e. The service is performed at a location in this state.

AB133-SSA1,878,17 2. If the purchaser of a service receives the benefit of a service in more than one state, the receipts from the performance of the service are included in the numerator of the sales factor under par. (a) according to the portion of the service received in this state. If the state where a purchaser received the benefit of a service cannot be determined, the benefit of a service is received in the state where the purchaser, in the regular course of the purchaser's business, ordered the service. If the state where a purchaser ordered a service cannot be determined, the benefit of the service is received in the state where the purchaser, in the regular course of the purchaser's business, receives a bill for the service.

AB133-SSA1,878,21 3. If the taxpayer is not subject to income tax in the state in which the benefit of the service is received, the benefit of the service is received in this state to the extent that the taxpayer's employes or representatives performed services from a location in this state.

AB133-SSA1, s. 1736b Section 1736b. 71.25 (9) (ds) of the statutes is created to read:

AB133-SSA1,879,2 71.25 (9) (ds) 1. For taxable years beginning after December 31, 1999, the gate receipts from professional sporting events are attributed to the state in which the taxpayer's sports facility is located. Gate receipts include the taxpayer's in-state gate receipts and the taxpayer's share of out-of-state gate receipts.

AB133-SSA1,879,8 2. For taxable years beginning after December 31, 1999, radio and television receipts received by the taxpayer from a professional sports association contract with a communications network are attributed to this state in proportion to the number of events held in this state in which the taxpayer's team is a participant and that are related to the contract compared to the total number of events in which the taxpayer's team is a participant and that are related to the contract.

AB133-SSA1, s. 1736c Section 1736c. 71.25 (9) (dt) of the statutes is created to read:

AB133-SSA1,879,13 71.25 (9) (dt) 1. For taxable years beginning after December 31, 1999, the gross receipts from radio and television broadcasting, including advertising revenue, are attributed to this state in proportion to the audience in this state as compared to the total audience.

AB133-SSA1,879,16 2. For taxable years beginning after December 31, 1999, the gross receipts from newspapers and magazines, including advertising revenue, are attributed to this state in proportion to the circulation in this state as compared to the total circulation.

AB133-SSA1, s. 1736d Section 1736d. 71.25 (9) (dw) of the statutes is created to read:

AB133-SSA1,879,22 71.25 (9) (dw) 1. Except as provided in subds. 2. and 3., if a person doing business in this state and outside this state owns a business that is subject to apportionment under sub. (6) or s. 71.04 (4) and a business that is a subject to apportionment under sub. (10), the person shall apportion income as provided under sub. (6) or s. 71.04 (4).

AB133-SSA1,880,6 2. A person who has filed a tax return and who has reported income on the return as apportioned under subd. 1 may request permission from the department to use an alternative apportionment method in the next taxable year, if the person receives at least 50% of the person's total gross receipts in a taxable year from a business described under sub. (10) (c). If the department grants permission to a person to use an alternative apportionment method under this subdivision, the person may not use the alternative method, and shall apportion income under subd. 1., if the person receives less than 50% of the person's total gross receipts in a taxable year from a business described under sub. (10) (c).

AB133-SSA1,880,9 3. The department may require that a person who is subject to apportionment under this subsection use an alternative apportionment method to accurately reflect income that is attributable to this state.

AB133-SSA1, s. 1737 Section 1737. 71.25 (9) (e) (title) of the statutes is repealed.

AB133-SSA1, s. 1738 Section 1738. 71.25 (9) (f) (title) of the statutes is repealed.

AB133-SSA1, s. 1738g Section 1738g. 71.25 (9d) of the statutes is created to read:

AB133-SSA1,880,13 71.25 (9d) Financial organizations. (a) Definitions. In this subsection:

AB133-SSA1,880,15 1. "Billing address" means the address to which a taxpayer under this subsection sends a notice, statement or bill to the taxpayer's customer.

AB133-SSA1,880,16 2. "Credit card" includes a debit card and a travel and entertainment card.

AB133-SSA1,880,19 3. "Credit card reimbursement fee" means the fee that a taxpayer receives from a merchant's bank because a person to whom the taxpayer has issued a credit card has paid for merchandise or services sold by the merchant with the credit card.

AB133-SSA1,881,6 4. "Financial organization" means a bank; a savings bank; a bank holding company; a savings and loan association; a trust company; a credit union, except a credit union that is exempt from taxes under s. 71.26 (1) (a); a production credit association; or an agency or branch of a foreign depository; whether chartered under the laws of this state, another state or territory, the laws of the United States or the laws of a foreign county. "Financial organization" includes a corporation that derives at least 50% of its total gross income from finance leases, including direct finance leases and leverage leases as defined by rule, and a corporation that derives at least 50% of its total gross income from an activity that a financial organization performs, except that "financial organization" does not include an insurance company that is taxable under s. 71.43 or a real estate broker, securities dealer or broker-dealer that is taxable under s. 71.26.

AB133-SSA1,881,16 5. "Loan" means any extension of credit or creation of debt that results from direct negotiations between the taxpayer under this subsection and the taxpayer's customer; the purchase, in whole or in part, of an extension of credit; and participations, syndications and leases that are considered loans for federal income tax purposes. "Loan" does not include loans under section 595 of the Internal Revenue Code; futures or forward contracts; options; notional principal contracts; credit card receivables; purchased credit card relationships; noninterest bearing balances that are due from depository institutions; cash items in the process of collection; federal funds sold; securities; assets held in a trading account; and interest in any mortgage-backed or assets-backed security.

AB133-SSA1,881,19 6. "Merchant discount" means a fee or discount that is charged to a merchant for accepting a credit card as payment for merchandise or services that are sold to the credit card holder.

AB133-SSA1,881,21 7. "State" means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico or a territory or possession of the United States.

AB133-SSA1,881,23 8. "Taxpayer" means a financial organization that is subject to apportionment under this subsection.

AB133-SSA1,882,9 (b) Apportionment. For taxable years beginning after December 31, 1999, a financial organization that does business in this state and outside this state shall apportion its net business income as provided in this subsection. A taxpayer that is subject to this subsection shall apportion its nonbusiness income under sub. (5) (b) and shall deduct the net business income that follows the situs of its property from its total net business income. The taxpayer's remaining net business income shall be apportioned to this state by multiplying the remaining net business income by an apportionment fraction that has as a numerator the gross receipts of the taxpayer in this state during the taxable year and that has a denominator the taxpayer's total gross receipts during the taxable year. The following sources of a taxpayer's business income are subject to apportionment:

AB133-SSA1,882,12 1. `Gross receipts from the lease of real property.' Gross receipts from the lease, rental or sublease of real property owned by the taxpayer shall be apportioned under sub. (9) (dc).

AB133-SSA1,882,15 2. `Gross receipts from the lease of tangible personal property.' Gross receipts from the lease, rental or sublease of tangible personal property owned by the taxpayer shall be apportioned under sub. (9) (dc) and (dg).

AB133-SSA1,882,25 3. `Gross interest from loans secured by real property.' The numerator of the apportionment fraction includes gross interest, fees or penalties from loans that are secured by real property if the real property is located in this state at the time the loan is secured and if the value of the real property represents at least 50% of the aggregate value of the collateral that is used to secure the loan. If the real property that is used to secure a loan is located in this state and in another state or a foreign country, the gross interest, fees or penalties from the loan are included in the numerator of the apportionment fraction, if at least 50% of the fair market value of the real property is located within this state or if the loan borrower is located in this state.

AB133-SSA1,883,3 4. `Gross interest from loans.' The numerator of the apportionment fraction includes gross interest, fees or penalties from loans that are not secured by real property, if the loan borrower is located in this state.

AB133-SSA1,883,6 5. `Sale of loans.' The numerator of the apportionment fraction includes income from the sale of loans and income under section 1286 of the Internal Revenue Code. The income that is included in the numerator is determined as follows:

AB133-SSA1,883,10 a. The gross receipts from the sale of loans secured by real property is multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 3. and that has as a denominator the total amount of interest, fees and penalties from loans that are secured by real property.

AB133-SSA1,883,14 b. The net gains from the sale of loans that are not secured by real property is multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 4. and that has as a denominator the total amount of interest, fees and penalties from loans that are not secured by real property.

AB133-SSA1,883,18 6. `Credit card receivables.' The numerator of the apportionment fraction includes gross interest, fees or penalties from credit card receivables and gross receipts from fees charged to credit card holders, if the billing address of the credit card holder is in this state.

AB133-SSA1,883,23 7. `Gross receipts from the sale of credit card receivables.' The numerator of the apportionment fraction includes gross receipts from the sale of credit card receivables, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 6. and that has as a denominator the total amount of interest, fees and penalties that are charged to credit card holders.

AB133-SSA1,884,3 8. `Credit card reimbursement fees.' The numerator of the apportionment fraction includes credit card reimbursement fees, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 6. and that has as a denominator the total amount of interest, fees and penalties that are charged to credit card holders.

AB133-SSA1,884,9 9. `Gross receipts from a merchant discount.' The numerator of the apportionment fraction includes gross receipts from a merchant discount if the merchant's business is principally managed from a location in this state. The gross receipts from a merchant discount shall not include credit card holder charge backs. The amount of gross receipts from a merchant discount shall not be reduced by interchange transaction fees or by a credit card reimbursement fee.

AB133-SSA1,884,19 10. `Loan servicing fees.' a. The numerator of the apportionment fraction includes loan servicing fees derived from loans that are secured by real property, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 3. and that has as a denominator the total amount of interest, fees and penalties from loans that are secured by real property. The numerator of the apportionment fraction also includes loan servicing fees derived from loans that are not secured by real property, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 4. and that has as a denominator the total amount of interest, fees and penalties from loans that are not secured by real property.

AB133-SSA1,884,22 b. If the taxpayer receives loan servicing fees for servicing a loan, the numerator of the apportionment fraction shall include such fees if the borrower of the loan is located in this state.

AB133-SSA1,885,2 11. `Gross income from investment banking services.' The numerator of the apportionment fraction includes gross income, including commissions, management fees or underwriting fees, earned from investment banking services if the purchaser of the services is located in this state.

AB133-SSA1,885,4 12. `Gross receipts from other services.' The gross receipts from services that are not described under subds. 1. to 11. shall be apportioned under sub. (9) (dr).

AB133-SSA1,885,6 13. `Other sales.' Sales under sub. (9) that are not apportioned under this subsection shall be apportioned under sub. (9).

AB133-SSA1,885,10 (c) Receipts not taxed. Fifty percent of the gross receipts of the taxpayer that are apportioned under this subsection to a state in which the taxpayer is not taxable is included in the numerator of the apportionment fraction under par. (b), if the taxpayer's commercial domicile is in this state.

AB133-SSA1, s. 1738k Section 1738k. 71.25 (9g) of the statutes is created to read:

AB133-SSA1,885,13 71.25 (9g) Brokers-dealer and underwriters. (a) Definitions. In this subsection:

AB133-SSA1,885,14 1. "Billing address" has the meaning given in sub. (9d) (a) 1.

AB133-SSA1,885,16 2. "Brokerage commission" includes sales fees on agency or principal transactions.

AB133-SSA1,885,22 3. "Broker-dealer" means a person who does business as a broker of securities or commodities. "Broker-dealer" does not include a sales agent; a bank, savings institution or trust company that enters a securities or commodities transaction as an agent; a executor, guardian or conservator who enters a securities or commodities transaction as an agent for another; or a person who purchases or sells the person's own securities or commodities.

AB133-SSA1,885,24 4. "Taxpayer" means a broker-dealer or an underwriter who is subject to apportionment under this subsection.

AB133-SSA1,886,5 5. "Underwriter" means a person who guarantees to provide a definite sum of money by a definite date to a corporate or government entity in exchange for securities; who markets a corporate or government security offering to the public; or who buys a security offering for a specified price and sells the security offering to the public.

AB133-SSA1,886,16 (b) Apportionment. For taxable years beginning after December 31, 1999, a broker-dealer or an underwriter who does business in this state and outside this state shall apportion its net business income as provided under this subsection. A taxpayer that is subject to this subsection shall apportion its nonbusiness income under sub. (5) (b) and shall deduct the net business income that follows the situs of its property from its total net business income. The taxpayer's remaining net business income shall be apportioned to this state by multiplying the remaining net business income by an apportionment fraction that has as a numerator the gross receipts of the taxpayer in this state during the taxable year and that has a denominator the taxpayer's total gross receipts during the taxable year. The following sources of a taxpayer's business income are subject to apportionment:

AB133-SSA1,886,20 1. `Security brokerage services.' The numerator of the apportionment fraction includes gross brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by customers, if the billing address of the customer is in this state.

AB133-SSA1,886,24 2. `Underwriting services.' The numerator of the apportionment fraction includes gross income, including commissions, management fees or underwriting fees, earned from underwriting services if the purchaser of the services is located in this state.

AB133-SSA1,887,4 3. `Other services.' The numerator of the apportionment fraction includes gross income, including commissions or management fees, earned from providing investment research, management services or financial services to a customer, if the customer's billing address is in this state.

AB133-SSA1,887,6 4. `Other sales.' Sales under sub. (9) that are not apportioned under this subsection shall be apportioned under sub. (9).

AB133-SSA1,887,10 (c) Receipts not taxed. Fifty percent of the gross receipts of the taxpayer that are apportioned under this subsection to a state in which the taxpayer is not taxable are included in the numerator of the apportionment fraction under par. (b), if the taxpayer's commercial domicile is in this state.

AB133-SSA1, s. 1738m Section 1738m. 71.25 (10) (title) of the statutes is amended to read:

AB133-SSA1,887,13 71.25 (10) (title) Railroads, financial organizations telecommunications companies and public utilities.

AB133-SSA1, s. 1738n Section 1738n. 71.25 (10) (a) of the statutes is amended to read:

AB133-SSA1,887,20 71.25 (10) (a) In this section, "financial organization" means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, credit union, cooperative bank, small loan company, sales finance company, investment company, brokerage house, underwriter or any type of insurance company. This paragraph does not apply to taxable years beginning after December 31, 1999.

AB133-SSA1, s. 1738p Section 1738p. 71.25 (10) (c) of the statutes is amended to read:

AB133-SSA1,888,3 71.25 (10) (c) The net business income of railroads, sleeping car companies, car line companies, financial organizations, telecommunications companies and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state. For taxable years beginning after December 31, 1999, the net business income of financial organizations shall be apportioned under sub. (9d).

AB133-SSA1, s. 1738r Section 1738r. 71.25 (11) of the statutes is amended to read:

AB133-SSA1,888,14 71.25 (11) Department may waive factor. Where, in the case of any corporation engaged in business within and without the state of Wisconsin and required to apportion its income as provided in sub. (6), it shall be shown to the satisfaction of the department of revenue that the use of any one of the 3 factors provided in sub. (6) gives an unreasonable or inequitable final average ratio because of the fact that such corporation does not employ, to any appreciable extent in its trade or business in producing the income taxed, the factors made use of in obtaining such ratio, this factor may, with the approval of the department of revenue, be omitted in obtaining the final average ratio which is to be applied to the remaining net income. This subsection does not apply to taxable years beginning after December 31, 2002.

AB133-SSA1, s. 1738s Section 1738s. 71.25 (15) of the statutes is created to read:

AB133-SSA1,888,20 71.25 (15) Partnerships and limited liability companies. (a) A general or limited partner's share of the numerator and denominator of a partnership's apportionment fractions under this section are included in the numerator and denominator of the general or limited partner's apportionment fractions under this section.

AB133-SSA1,888,25 (b) If a limited liability company is considered by the department of revenue to be a partnership, for tax purposes, a member's share of the numerator and denominator of a limited liability company's apportionment fractions under this section are included in the numerator and denominator of the member's apportionment fractions under this section.

AB133-SSA1, s. 1740 Section 1740. 71.26 (1) (b) of the statutes is amended to read:

AB133-SSA1,889,5 71.26 (1) (b) Political units. Income received by the United States, the state and all counties, cities, villages, towns, school districts, technical college districts, joint local water authorities created under s. 66.0735, family care districts under s. 46.2895 or other political units of this state.

AB133-SSA1, s. 1740c Section 1740c. 71.26 (2) (a) of the statutes is amended to read:

AB133-SSA1,889,21 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) and (3) to (5) plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds) and , (1dx) and (1dy) 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).

AB133-SSA1, s. 1740d Section 1740d. 71.26 (2) (b) 5. of the statutes is repealed.

AB133-SSA1, s. 1740e Section 1740e. 71.26 (2) (b) 6. of the statutes is amended to read:

AB133-SSA1,891,19 71.26 (2) (b) 6. For taxable years that begin after December 31, 1990, and before January 1, 1992, for a corporation, conduit or common law trust which qualifies as a regulated investment company, real estate mortgage investment conduit or real estate investment trust under the internal revenue code Internal Revenue Code as amended to December 31, 1990, and as amended by P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and, P.L. 105-34, P.L. 105-206 and P.L. 105-277, and as indirectly affected in the provisions applicable to this subchapter by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277, "net income" means the federal regulated investment company taxable income, federal real estate mortgage investment conduit taxable income or federal real estate investment trust taxable income of the corporation, conduit or trust as determined under the internal revenue code Internal Revenue Code as amended to December 31, 1990, and as amended by P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277 and as indirectly affected in the provisions applicable to this subchapter by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277, except that property that, under s. 71.02 (1) (c) 8. to 11., 1985 stats., is required to be depreciated for taxable years 1983 to 1986 under the internal revenue code Internal Revenue Code as amended to December 31, 1980, shall continue to be depreciated under the internal revenue code Internal Revenue Code as amended to December 31, 1980, and except that the appropriate amount shall be added or subtracted to reflect differences between the depreciation or adjusted basis for federal income tax purposes and the depreciation or adjusted basis under this chapter of any property disposed of during the taxable year. The internal revenue code Internal Revenue Code as amended to December 31, 1990, and as amended by P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277, and as indirectly affected in the provisions applicable to this subchapter by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277, applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the internal revenue code Internal Revenue Code enacted after December 31, 1990, do not apply to this subdivision with respect to taxable years that begin after December 31, 1990, and before January 1, 1992, except that changes to the internal revenue code Internal Revenue Code made by P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and P.L. 105-34, P.L. 105-206 and P.L. 105-277 and changes that indirectly affect the provisions applicable to this subchapter made by P.L. 102-227, P.L. 102-486, P.L. 103-66, P.L. 104-188, excluding section 1311 of P.L. 104-188, and, P.L. 105-34, P.L. 105-206 and P.L. 105-277, apply for Wisconsin purposes at the same time as for federal purposes.