LRBs0266/1
JK&MES:kjf:rs
2005 - 2006 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2005 ASSEMBLY BILL 243
November 30, 2005 - Offered by
Joint Committee on Finance.
AB243-ASA1,1,6
1An Act to renumber and amend 71.28 (4) (a), 71.28 (5) (a), 71.47 (4) (a) and
271.47 (5) (a);
to amend 71.28 (4) (am) 1. and 71.47 (4) (am); and
to create 71.28
3(4) (ab), 71.28 (4) (ad) 2., 71.28 (4) (af), 71.28 (5) (ab), 71.28 (5) (ad) 2., 71.47 (4)
4(ab), 71.47 (4) (ad) 2., 71.47 (4) (af), 71.47 (5) (ab) and 71.47 (5) (ad) 2. of the
5statutes;
relating to: the income and franchise tax credit for research and
6research facilities.
Analysis by the Legislative Reference Bureau
Under current law, a corporation may claim an income and franchise tax credit
in an amount equal to 5 percent of its qualified research expenses, as defined by the
Internal Revenue Code for research conducted in this state. In addition, a
corporation may claim an income and franchise tax credit equal to 5 percent of the
amount it paid in the taxable year to construct and equip new facilities or expand
existing facilities used in this state for qualified research, as defined by the Internal
Revenue Code. Under this substitute amendment, a corporation may claim an
income and franchise tax credit in an amount equal to 10 percent of its qualified
research expenses related to engine and vehicle design for research conducted in this
state and 10 percent of the amount it paid in the taxable year to construct and equip
new facilities or expand existing facilities used in this state for qualified research
related to designing internal combustion engines, including expenses related to
designing vehicles that are powered by such engines.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB243-ASA1, s. 1
1Section
1. 71.28 (4) (a) of the statutes is renumbered 71.28 (4) (ad) 1. and
2amended to read:
AB243-ASA1,2,183
71.28
(4) (ad)
Credit. 1.
Any Except as provided in subd. 2., any corporation
4may credit against taxes otherwise due under this chapter an amount equal to
5% 55 percent of the amount obtained by subtracting from the corporation's qualified
6research expenses, as defined in section
41 of the
internal revenue code Internal
7Revenue Code, except that "qualified research expenses" includes only expenses
8incurred by the claimant, incurred for research conducted in this state for the taxable
9year, except that a taxpayer may elect the alternative computation under section
41 10(c) (4) of the Internal Revenue Code and that election applies until the department
11permits its revocation
, except as provided in par. (af), and except that "qualified
12research expenses" does not include compensation used in computing the credit
13under subs. (1dj) and (1dx), the corporation's base amount, as defined in section
41 14(c) of the
internal revenue code Internal Revenue Code, except that gross receipts
15used in calculating the base amount means gross receipts from sales attributable to
16Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
41 (h) of the
internal
17revenue code Internal Revenue Code does not apply to the credit under this
18paragraph.
AB243-ASA1, s. 2
19Section
2. 71.28 (4) (ab) of the statutes is created to read:
AB243-ASA1,2,2020
71.28
(4) (ab)
Definitions. In this subsection:
AB243-ASA1,3,1
11. "Frame" includes:
AB243-ASA1,3,22
a. Every part of a motorcycle, except the tires.
AB243-ASA1,3,43
b. In the case of a truck, the control system and the fuel and drive train,
4excluding any comfort features located in the cab or the tires.
AB243-ASA1,3,75
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
6process, fuel mixers, generator, heat exchangers, exhaust train, and similar
7components.
AB243-ASA1,3,98
2. "Internal combustion engine" includes substitute products such as fuel cell,
9electric, and hybrid drives.
AB243-ASA1,3,1510
3. "Vehicle" means any vehicle or frame, including parts, accessories, and
11component technologies, in which or on which an engine is mounted for use in mobile
12or stationary applications. "Vehicle" includes any truck, tractor, motorcycle,
13snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction
14equipment, lawn and garden maintenance equipment, automobile, van, sports
15utility vehicle, motor home, bus, or aircraft.
AB243-ASA1, s. 3
16Section
3. 71.28 (4) (ad) 2. of the statutes is created to read:
AB243-ASA1,4,817
71.28
(4) (ad) 2. For taxable years beginning after December 31, 2007, any
18corporation may credit against taxes otherwise due under this chapter an amount
19equal to 10 percent of the amount obtained by subtracting from the corporation's
20qualified research expenses, as defined in section
41 of the Internal Revenue Code,
21except that "qualified research expenses" includes only expenses incurred by the
22claimant for research related to designing internal combustion engines for vehicles,
23including expenses related to designing vehicles that are powered by such engines
24and improving production processes for such engines and vehicles, incurred for
25research conducted in this state for the taxable year, except that a taxpayer may elect
1the alternative computation under section
41 (c) (4) of the Internal Revenue Code
2and that election applies until the department permits its revocation, except as
3provided in par. (af), and except that "qualified research expenses" does not include
4compensation used in computing the credit under subs. (1dj) and (1dx), the
5corporation's base amount, as defined in section
41 (c) of the Internal Revenue Code,
6except that gross receipts used in calculating the base amount means gross receipts
7from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
841 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.
AB243-ASA1,4,1310
71.28
(4) (af)
Computation. If in any taxable year a corporation claims a credit
11under both par. (ad) 1. and 2., the corporation may use a different computation
12method under par. (ad) 2. than it uses under par. (ad) 1. and may choose to change
13the computation method once for each credit without the department's approval.
AB243-ASA1, s. 5
14Section
5. 71.28 (4) (am) 1. of the statutes is amended to read:
AB243-ASA1,5,1415
71.28
(4) (am) 1. In addition to the credit under par.
(a) (ad), any corporation
16may credit against taxes otherwise due under this chapter an amount equal to
5% 175 percent of the amount obtained by subtracting from the corporation's qualified
18research expenses, as defined in section
41 of the
internal revenue code Internal
19Revenue Code, except that "qualified research expenses" include only expenses
20incurred by the claimant in a development zone under subch. VI of ch. 560, except
21that a taxpayer may elect the alternative computation under section
41 (c) (4) of the
22Internal Revenue Code and that election applies until the department permits its
23revocation and except that "qualified research expenses" do not include
24compensation used in computing the credit under sub. (1dj) nor research expenses
25incurred before the claimant is certified for tax benefits under s. 560.765 (3), the
1corporation's base amount, as defined in section
41 (c) of the
internal revenue code 2Internal Revenue Code, in a development zone, except that gross receipts used in
3calculating the base amount means gross receipts from sales attributable to
4Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d) and research expenses used in
5calculating the base amount include research expenses incurred before the claimant
6is certified for tax benefits under s. 560.765 (3), in a development zone, if the claimant
7submits with the claimant's return a copy of the claimant's certification for tax
8benefits under s. 560.765 (3) and a statement from the department of commerce
9verifying the claimant's qualified research expenses for research conducted
10exclusively in a development zone. The rules under s. 73.03 (35) apply to the credit
11under this subdivision. The rules under sub. (1di) (f) and (g) as they apply to the
12credit under that subsection apply to claims under this subdivision. Section
41 (h)
13of the
internal revenue code Internal Revenue Code does not apply to the credit under
14this subdivision.
AB243-ASA1, s. 6
15Section
6. 71.28 (5) (a) of the statutes is renumbered 71.28 (5) (ad) 1. and
16amended to read:
AB243-ASA1,5,2417
71.28
(5) (ad)
Credit. 1.
For Except as provided in subd. 2., for taxable year
181986 and subsequent years, any corporation may credit against taxes otherwise due
19under this chapter an amount equal to
5% 5 percent of the amount paid or incurred
20by that corporation during the taxable year to construct and equip new facilities or
21expand existing facilities used in this state for qualified research, as defined in
22section
41 of the
internal revenue code Internal Revenue Code. Eligible amounts
23include only amounts paid or incurred for tangible, depreciable property but do not
24include amounts paid or incurred for replacement property.
AB243-ASA1, s. 7
25Section
7. 71.28 (5) (ab) of the statutes is created to read:
AB243-ASA1,6,1
171.28
(5) (ab)
Definitions. In this subsection:
AB243-ASA1,6,22
1. "Frame" includes:
AB243-ASA1,6,33
a. Every part of a motorcycle, except the tires.
AB243-ASA1,6,54
b. In the case of a truck, the control system and the fuel and drive train,
5excluding any comfort features located in the cab or the tires.
AB243-ASA1,6,86
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
7process, fuel mixers, generator, heat exchangers, exhaust train, and similar
8components.
AB243-ASA1,6,109
2. "Internal combustion engine" includes substitute products such as fuel cell,
10electric, and hybrid drives.
AB243-ASA1,6,1611
3. "Vehicle" means any vehicle or frame, including parts, accessories, and
12component technologies, in which or on which an engine is mounted for use in mobile
13or stationary applications. "Vehicle" includes any truck, tractor, motorcycle,
14snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction
15equipment, lawn and garden maintenance equipment, automobile, van, sports
16utility vehicle, motor home, bus, or aircraft.
AB243-ASA1, s. 8
17Section
8. 71.28 (5) (ad) 2. of the statutes is created to read:
AB243-ASA1,7,418
71.28
(5) (ad) 2. For taxable years beginning after December 31, 2007, any
19corporation may credit against taxes otherwise due under this chapter an amount
20equal to 10 percent of the amount paid or incurred by that corporation during the
21taxable year to construct and equip new facilities or expand existing facilities used
22in this state for qualified research, as defined in section
41 of the Internal Revenue
23Code, except that "qualified research expenses" includes only expenses paid or
24incurred by the claimant for research related to designing internal combustion
25engines for vehicles, including expenses related to designing vehicles that are
1powered by such engines and improving production processes for such engines and
2vehicles. Eligible amounts include only amounts paid or incurred for tangible,
3depreciable property but do not include amounts paid or incurred for replacement
4property.
AB243-ASA1, s. 9
5Section
9. 71.47 (4) (a) of the statutes is renumbered 71.47 (4) (ad) 1. and
6amended to read:
AB243-ASA1,7,227
71.47
(4) (ad)
Credit. 1.
Any Except as provided in subd. 2., any corporation
8may credit against taxes otherwise due under this chapter an amount equal to
5% 95 percent of the amount obtained by subtracting from the corporation's qualified
10research expenses, as defined in section
41 of the
internal revenue code Internal
11Revenue Code, except that "qualified research expenses" includes only expenses
12incurred by the claimant, incurred for research conducted in this state for the taxable
13year, except that a taxpayer may elect the alternative computation under section
41 14(c) (4) of the Internal Revenue Code and that election applies until the department
15permits its revocation
, except as provided in par. (af), and except that "qualified
16research expenses" does not include compensation used in computing the credit
17under subs. (1dj) and (1dx), the corporation's base amount, as defined in section
41 18(c) of the
internal revenue code Internal Revenue Code, except that gross receipts
19used in calculating the base amount means gross receipts from sales attributable to
20Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
41 (h) of the
internal
21revenue code Internal Revenue Code does not apply to the credit under this
22paragraph.
AB243-ASA1,7,2424
71.47
(4) (ab)
Definitions. In this subsection:
AB243-ASA1,7,2525
1. "Frame" includes:
AB243-ASA1,8,1
1a. Every part of a motorcycle, except the tires.
AB243-ASA1,8,32
b. In the case of a truck, the control system and the fuel and drive train,
3excluding any comfort features located in the cab or the tires.
AB243-ASA1,8,64
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
5process, fuel mixers, generator, heat exchangers, exhaust train, and similar
6components.
AB243-ASA1,8,87
2. "Internal combustion engine" includes substitute products such as fuel cell,
8electric, and hybrid drives.
AB243-ASA1,8,149
3. "Vehicle" means any vehicle or frame, including parts, accessories, and
10component technologies, in which or on which an engine is mounted for use in mobile
11or stationary applications. "Vehicle" includes any truck, tractor, motorcycle,
12snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction
13equipment, lawn and garden maintenance equipment, automobile, van, sports
14utility vehicle, motor home, bus, or aircraft.
AB243-ASA1, s. 11
15Section
11. 71.47 (4) (ad) 2. of the statutes is created to read:
AB243-ASA1,9,716
71.47
(4) (ad) 2. For taxable years beginning after December 31, 2007, any
17corporation may credit against taxes otherwise due under this chapter an amount
18equal to 10 percent of the amount obtained by subtracting from the corporation's
19qualified research expenses, as defined in section
41 of the Internal Revenue Code,
20except that "qualified research expenses" includes only expenses incurred by the
21claimant for research related to designing internal combustion engines for vehicles,
22including expenses related to designing vehicles that are powered by such engines
23and improving production processes for such engines and vehicles, incurred for
24research conducted in this state for the taxable year, except that a taxpayer may elect
25the alternative computation under section
41 (c) (4) of the Internal Revenue Code
1and that election applies until the department permits its revocation, except as
2provided in par. (af), and except that "qualified research expenses" does not include
3compensation used in computing the credit under subs. (1dj) and (1dx), the
4corporation's base amount, as defined in section
41 (c) of the Internal Revenue Code,
5except that gross receipts used in calculating the base amount means gross receipts
6from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
741 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.
AB243-ASA1,9,129
71.47
(4) (af)
Computation. If in any taxable year a corporation claims a credit
10under both par. (ad) 1. and 2., the corporation may use a different computation
11method under par. (ad) 2. than it uses under par. (ad) 1. and may choose to change
12the computation method once for each credit without the department's approval.
AB243-ASA1,9,2514
71.47
(4) (am)
Development zone additional research credit. In addition to the
15credit under par.
(a) (ad), any corporation may credit against taxes otherwise due
16under this chapter an amount equal to
5% 5 percent of the amount obtained by
17subtracting from the corporation's qualified research expenses, as defined in section
1841 of the
internal revenue code Internal Revenue Code, except that "qualified
19research expenses" include only expenses incurred by the claimant in a development
20zone under subch. VI of ch. 560, except that a taxpayer may elect the alternative
21computation under section
41 (c) (4) of the Internal Revenue Code and that election
22applies until the department permits its revocation and except that "qualified
23research expenses" do not include compensation used in computing the credit under
24sub. (1dj) nor research expenses incurred before the claimant is certified for tax
25benefits under s. 560.765 (3), the corporation's base amount, as defined in section
41
1(c) of the
internal revenue code Internal Revenue Code, in a development zone,
2except that gross receipts used in calculating the base amount means gross receipts
3from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d) and
4research expenses used in calculating the base amount include research expenses
5incurred before the claimant is certified for tax benefits under s. 560.765 (3), in a
6development zone, if the claimant submits with the claimant's return a copy of the
7claimant's certification for tax benefits under s. 560.765 (3) and a statement from the
8department of commerce verifying the claimant's qualified research expenses for
9research conducted exclusively in a development zone. The rules under s. 73.03 (35)
10apply to the credit under this paragraph. The rules under sub. (1di) (f) and (g) as they
11apply to the credit under that subsection apply to claims under this paragraph.
12Section
41 (h) of the
internal revenue code Internal Revenue Code does not apply to
13the credit under this paragraph. No credit may be claimed under this paragraph for
14taxable years that begin on January 1, 1998, or thereafter. Credits under this
15paragraph for taxable years that begin before January 1, 1998, may be carried
16forward to taxable years that begin on January 1, 1998, or thereafter.
AB243-ASA1, s. 14
17Section
14. 71.47 (5) (a) of the statutes is renumbered 71.47 (5) (ad) 1. and
18amended to read:
AB243-ASA1,11,219
71.47
(5) (ad)
Credit. 1.
For Except as provided in subd. 2., for taxable year 1986
20and subsequent years, any corporation may credit against taxes otherwise due under
21this chapter an amount equal to
5% 5 percent of the amount paid or incurred by that
22corporation during the taxable year to construct and equip new facilities or expand
23existing facilities used in this state for qualified research, as defined in section
41 of
24the
internal revenue code Internal Revenue Code. Eligible amounts include only
1amounts paid or incurred for tangible, depreciable property but do not include
2amounts paid or incurred for replacement property.
AB243-ASA1,11,44
71.47
(5) (ab)
Definitions. In this subsection:
AB243-ASA1,11,55
1. "Frame" includes:
AB243-ASA1,11,66
a. Every part of a motorcycle, except the tires.
AB243-ASA1,11,87
b. In the case of a truck, the control system and the fuel and drive train,
8excluding any comfort features located in the cab or the tires.
AB243-ASA1,11,119
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
10process, fuel mixers, generator, heat exchangers, exhaust train, and similar
11components.
AB243-ASA1,11,1312
2. "Internal combustion engine" includes substitute products such as fuel cell,
13electric, and hybrid drives.