Amendment SSA2-SB261

2003 - 2004 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 2, TO 2003 SENATE BILL 261

November 13, 2003 - Offered by Senators Panzer, Erpenbach, Darling, Plale, Roessler, Moore, Lassa, Leibham and Kanavas.

SB261-SSA2,1,8 An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2) (a) 10. and 77.92 (4); and to create 20.143 (1) (dk), 20.143 (1) (ik), 71.07 (5b), 71.07 (5d), 71.10 (4) (gwb), 71.10 (4) (gx), 71.28 (5b), 71.30 (3) (eop), 71.47 (5b), 71.49 (1) (eop), 560.03 (25), 560.205 and 560.275 of the statutes; relating to: creating a technology commercialization grant and loan program, creating a qualified new business venture tax credit and an early stage investment tax credit, facilitating the development of certain investor networks, and granting rule-making authority and making an appropriation.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB261-SSA2, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

SB261-SSA2, s. 2 Section 2. 20.143 (1) (dk) of the statutes is created to read:

SB261-SSA2,2,4 20.143 (1) (dk) Technology commercialization grant and loan program; assistance. Biennially, the amounts in the schedule for grants and loans under s. 560.275 (2).

SB261-SSA2, s. 3 Section 3. 20.143 (1) (ik) of the statutes is created to read:

SB261-SSA2,2,8 20.143 (1) (ik) Technology commercialization grant and loan program; repayments. All moneys received in repayment of grants and loans made under s. 560.275 (2), to be used for grants and loans under s. 560.275 (2).

SB261-SSA2, s. 4 Section 4. 71.05 (6) (a) 15. of the statutes is amended to read:

SB261-SSA2,2,14 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ts), (2dx), (3g), and (3s), (5b), 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, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).

SB261-SSA2, s. 5 Section 5. 71.07 (5b) of the statutes is created to read:

SB261-SSA2,2,16 71.07 (5b) Early stage investment credit. (a) Definitions. In this subsection:

SB261-SSA2,2,17 1. "Claimant" means a person who files a claim under this subsection.

SB261-SSA2,3,2 2. "Fund manager"means an investment fund manager certified under s. 560.205 (2).

SB261-SSA2,3,9 (b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under ss. 71.02 and 71.08, up to the amount of those taxes, in each taxable year for 10 years, beginning with the taxable year in which the claimant's initial investment is made, 4 percent of the claimant's initial investment paid to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).

SB261-SSA2,3,12 (c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.28 (5b) and 71.47 (5b) for all taxable years combined is $35,000,000.

SB261-SSA2,3,21 2. 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 their payment of amounts under par. (b). 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 or as specially allocated in their organizational documents.

SB261-SSA2,3,23 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB261-SSA2, s. 6 Section 6. 71.07 (5d) of the statutes is created to read:

SB261-SSA2,4,2 71.07 (5d) Qualified new business venture credit. (a) Definitions. In this subsection:

SB261-SSA2,4,5 1. "Bona fide angel investment" means a purchase of an equity interest, or any other expenditure, as determined by rule by the department, that is made by any of the following:

SB261-SSA2,4,7 a. An individual who reviews new businesses or proposed new businesses for potential investment of the individual's money.

SB261-SSA2,4,8 b. A network of individuals who satisfy subd. 1.

SB261-SSA2,4,9 2. "Claimant" means an individual who files a claim under this subsection.

SB261-SSA2,4,11 3. "Qualified new business venture" means a business that is certified under s. 560.205 (1).

SB261-SSA2,4,16 (b) Filing claims. Subject to the limitations provided in this subsection and in s. 560.205, 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 40 percent of the claimant's bona fide angel investment made directly in a qualified new business venture in the taxable year.

SB261-SSA2,4,18 (c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection for all taxable years combined is $30,000,000.

SB261-SSA2,4,21 2. The maximum amount of a claimant's investment that may be used as the basis for a credit under this subsection is $500,000 for each investment made directly in a business certified under s. 560.205 (1).

SB261-SSA2,5,6 3. For a claimant who is a nonresident or part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant or the claimant's spouse, or both, are nonresidents or part-year residents of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.

SB261-SSA2,5,10 (d) Administration. 1. 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.

SB261-SSA2,5,12 2. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB261-SSA2,5,14 3. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

SB261-SSA2, s. 7 Section 7. 71.08 (1) (intro.) of the statutes is amended to read:

SB261-SSA2,5,24 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), (2ts), (2dx), (2fd), (3m), (3s), and (5b), (5d), (6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ts), (1dx), (1fd), (2m) and (3) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ts), (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:

SB261-SSA2, s. 8 Section 8. 71.10 (4) (gwb) of the statutes is created to read:

SB261-SSA2,6,1 71.10 (4) (gwb) Early stage investment credit under s. 71.07 (5b).

SB261-SSA2, s. 9 Section 9. 71.10 (4) (gx) of the statutes is created to read:

SB261-SSA2,6,3 71.10 (4) (gx) Qualified new business venture credit under s. 71.07 (5d).

SB261-SSA2, s. 10 Section 10. 71.21 (4) of the statutes is amended to read:

SB261-SSA2,6,7 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ts), (2dx), (3g), and (3s) , and (5b) and passed through to partners shall be added to the partnership's income.

SB261-SSA2, s. 11 Section 11. 71.26 (2) (a) of the statutes is amended to read:

SB261-SSA2,6,23 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), (1ts), (1dx), and (3g), and (5b) 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).

SB261-SSA2, s. 12 Section 12. 71.28 (5b) of the statutes is created to read:

SB261-SSA2,6,25 71.28 (5b) Early stage investment credit. (a) Definitions. In this subsection:

SB261-SSA2,7,1 1. "Claimant" means a person who files a claim under this subsection.

SB261-SSA2,7,3 2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).

SB261-SSA2,7,10 (b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, in each taxable year for 10 years, beginning with the taxable year in which the claimant's initial investment is made, 4 percent of the claimant's initial investment paid to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).

SB261-SSA2,7,13 (c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.07 (5b) and 71.47 (5b) for all taxable years combined is $35,000,000.

SB261-SSA2,7,22 2. 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 their payment of amounts under par. (b). 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 or as specially allocated in their organizational documents.

SB261-SSA2,7,24 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB261-SSA2, s. 13 Section 13. 71.30 (3) (eop) of the statutes is created to read:

SB261-SSA2,8,1 71.30 (3) (eop) Early stage investment credit under s. 71.28 (5b).

SB261-SSA2, s. 14 Section 14. 71.34 (1) (g) of the statutes is amended to read:

SB261-SSA2,8,5 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), (1ts), (1dx), (3), and (3g), and (5b) and passed through to shareholders.

SB261-SSA2, s. 15 Section 15. 71.45 (2) (a) 10. of the statutes is amended to read:

SB261-SSA2,8,12 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx) and (5b) 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).

SB261-SSA2, s. 16 Section 16. 71.47 (5b) of the statutes is created to read:

SB261-SSA2,8,14 71.47 (5b) Early stage investment credit. (a) Definitions. In this subsection:

SB261-SSA2,8,15 1. "Claimant" means a person who files a claim under this subsection.

SB261-SSA2,8,17 2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).

SB261-SSA2,8,24 (b) Filing claims. For taxable years beginning after December 31, 2004, subject to the limitations provided under this subsection and s. 560.205, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, in each taxable year for 10 years, beginning with the taxable year in which the claimant's initial investment is made, 4 percent of the claimant's initial investment paid to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).

SB261-SSA2,9,3 (c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection and ss. 71.07 (5b) and 71.28 (5b) for all taxable years combined is $35,000,000.

SB261-SSA2,9,12 2. 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 their payment of amounts under par. (b). 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 or as specially allocated in their organizational documents.

SB261-SSA2,9,14 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB261-SSA2, s. 17 Section 17. 71.49 (1) (eop) of the statutes is created to read:

SB261-SSA2,9,16 71.49 (1) (eop) Early stage investment credit under s. 71.47 (5b).

SB261-SSA2, s. 18 Section 18. 77.92 (4) of the statutes is amended to read:

SB261-SSA2,9,25 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), (2ts), (2dx), and (3g), and (3s), and (5b); 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.

SB261-SSA2, s. 19 Section 19. 560.03 (25) of the statutes is created to read:

SB261-SSA2,10,12 560.03 (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 bona fide angel investors, as defined in s. 71.07 (5d) (a) 1.

SB261-SSA2, s. 20 Section 20. 560.205 of the statutes is created to read:

SB261-SSA2,10,20 560.205 Early stage business investment program. (1) Angel investment tax credits. The department shall implement a program to certify businesses for purposes of s. 71.07 (5d). A business desiring certification shall submit an application to the department in each taxable year for which the business desires certification. Unless otherwise provided under the rules of the department, a business may be certified under this subsection, and may maintain such certification, only if the business satisfies all of the following conditions:

SB261-SSA2,10,21 (a) It has its headquarters in this state.

SB261-SSA2,10,23 (b) At least 51 percent of the employees employed by the business are employed in this state.

SB261-SSA2,11,3 (c) Its average annual net income, if any, for each of the 2 taxable years immediately preceding the taxable year to which the certification applies does not exceed $5,000,000.

SB261-SSA2,11,5 (d) Its net worth, if any, in the taxable year to which the certification applies does not exceed $10,000,000.

SB261-SSA2,11,8 (e) It is engaged in, or has committed to engage in, manufacturing, agriculture, or processing or assembling products and conducting research and development or developing a new product or business process.

SB261-SSA2,11,12 (f) It is not engaged in real estate development, insurance, banking, lending, lobbying, political consulting, professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants, wholesale or retail trade, leisure, hospitality, transportation, or construction.

SB261-SSA2,11,13 (g) It has less than 100 employees.

SB261-SSA2,11,14 (h) It has been in operation in this state for not more than 7 consecutive years.

SB261-SSA2,11,16 (j) It has not received more than $1,000,000 in investments that have qualified for tax credits under s. 71.07 (5d).