2005 - 2006 LEGISLATURE
March 18, 2005 - Introduced by Representatives McCormick, Pettis, Sheridan,
Musser, Vos, F. Lasee, Krawczyk, Van Roy, Gunderson, Albers,
Hundertmark, Honadel, Townsend and Vrakas, cosponsored by Senators
Kanavas, Darling, Stepp, Leibham, A. Lasee and Roessler. Referred to Joint
Committee on Finance.
AB243,1,5
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 (5) (ab), 71.28 (5) (ad) 2., 71.47 (4) (ab), 71.47 (4)
4(ad) 2., 71.47 (5) (ab) and 71.47 (5) (ad) 2. of the statutes;
relating to: the
5income and franchise tax credit for research and research 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 bill, 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 manufacturing 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
manufacturing internal combustion engines, including expenses related to
designing vehicles that are powered by such engines.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB243, s. 1
1Section
1. 71.28 (4) (a) of the statutes is renumbered 71.28 (4) (ad) 1. and
2amended to read:
AB243,2,173
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 and except that "qualified research expenses" does not include
12compensation used in computing the credit under subs. (1dj) and (1dx), the
13corporation's base amount, as defined in section
41 (c) of the
internal revenue code 14Internal Revenue Code, except that gross receipts used in calculating the base
15amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9)
16(b) 1. and 2. and (d). Section
41 (h) of the
internal revenue code Internal Revenue
17Code does not apply to the credit under this paragraph.
AB243, s. 2
18Section
2. 71.28 (4) (ab) of the statutes is created to read:
AB243,2,1919
71.28
(4) (ab)
Definitions. In this subsection:
AB243,2,2020
1. "Frame" includes:
AB243,2,2121
a. Every part of a motorcycle, except the tires.
AB243,3,2
1b. In the case of a truck, the control system and the fuel and drive train,
2excluding any comfort features located in the cab or the tires.
AB243,3,53
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
4process, fuel mixers, generator, heat exchangers, exhaust train, and similar
5components.
AB243,3,96
2. "Vehicle" means any vehicle or frame in which or on which an engine is
7mounted for use in mobile or stationary applications. "Vehicle" includes any truck,
8tractor, motorcycle, snowmobile, or generator, but does not include any automobile,
9bus, or aircraft.
AB243, s. 3
10Section
3. 71.28 (4) (ad) 2. of the statutes is created to read:
AB243,4,211
71.28
(4) (ad) 2. For taxable years beginning after December 31, 2006, any
12corporation may credit against taxes otherwise due under this chapter an amount
13equal to 10 percent of the amount obtained by subtracting from the corporation's
14qualified research expenses, as defined in section
41 of the Internal Revenue Code,
15except that "qualified research expenses" includes only expenses incurred by the
16claimant for research related to manufacturing internal combustion engines for
17vehicles, including expenses related to designing vehicles that are powered by such
18engines, incurred for research conducted in this state for the taxable year, except that
19a taxpayer may elect the alternative computation under section
41 (c) (4) of the
20Internal Revenue Code and that election applies until the department permits its
21revocation and except that "qualified research expenses" does not include
22compensation used in computing the credit under subs. (1dj) and (1dx), the
23corporation's base amount, as defined in section
41 (c) of the Internal Revenue Code,
24except that gross receipts used in calculating the base amount means gross receipts
1from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
241 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.
AB243, s. 4
3Section
4. 71.28 (4) (am) 1. of the statutes is amended to read:
AB243,5,34
71.28
(4) (am) 1. In addition to the credit under par.
(a) (ad), any corporation
5may credit against taxes otherwise due under this chapter an amount equal to
5% 65 percent of the amount obtained by subtracting from the corporation's qualified
7research expenses, as defined in section
41 of the
internal revenue code Internal
8Revenue Code, except that "qualified research expenses" include only expenses
9incurred by the claimant in a development zone under subch. VI of ch. 560, except
10that a taxpayer may elect the alternative computation under section
41 (c) (4) of the
11Internal Revenue Code and that election applies until the department permits its
12revocation and except that "qualified research expenses" do not include
13compensation used in computing the credit under sub. (1dj) nor research expenses
14incurred before the claimant is certified for tax benefits under s. 560.765 (3), the
15corporation's base amount, as defined in section
41 (c) of the
internal revenue code 16Internal Revenue Code, in a development zone, except that gross receipts used in
17calculating the base amount means gross receipts from sales attributable to
18Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d) and research expenses used in
19calculating the base amount include research expenses incurred before the claimant
20is certified for tax benefits under s. 560.765 (3), in a development zone, if the claimant
21submits with the claimant's return a copy of the claimant's certification for tax
22benefits under s. 560.765 (3) and a statement from the department of commerce
23verifying the claimant's qualified research expenses for research conducted
24exclusively in a development zone. The rules under s. 73.03 (35) apply to the credit
25under this subdivision. The rules under sub. (1di) (f) and (g) as they apply to the
1credit under that subsection apply to claims under this subdivision. Section
41 (h)
2of the
internal revenue code Internal Revenue Code does not apply to the credit under
3this subdivision.
AB243, s. 5
4Section
5. 71.28 (5) (a) of the statutes is renumbered 71.28 (5) (ad) 1. and
5amended to read:
AB243,5,136
71.28
(5) (ad)
Credit. 1.
For Except as provided in subd. 2., for taxable year
71986 and subsequent years, any corporation may credit against taxes otherwise due
8under this chapter an amount equal to
5% 5 percent of the amount paid or incurred
9by that corporation during the taxable year to construct and equip new facilities or
10expand existing facilities used in this state for qualified research, as defined in
11section
41 of the
internal revenue code Internal Revenue Code. Eligible amounts
12include only amounts paid or incurred for tangible, depreciable property but do not
13include amounts paid or incurred for replacement property.
AB243, s. 6
14Section
6. 71.28 (5) (ab) of the statutes is created to read:
AB243,5,1515
71.28
(5) (ab)
Definitions. In this subsection:
AB243,5,1616
1. "Frame" includes:
AB243,5,1717
a. Every part of a motorcycle, except the tires.
AB243,5,1918
b. In the case of a truck, the control system and the fuel and drive train,
19excluding any comfort features located in the cab or the tires.
AB243,5,2220
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
21process, fuel mixers, generator, heat exchangers, exhaust train, and similar
22components.
AB243,6,223
2. "Vehicle" means any vehicle or frame in which or on which an engine is
24mounted for use in mobile or stationary applications. "Vehicle" includes any truck,
1tractor, motorcycle, snowmobile, or generator, but does not include any automobile,
2bus, or aircraft.
AB243, s. 7
3Section
7. 71.28 (5) (ad) 2. of the statutes is created to read:
AB243,6,144
71.28
(5) (ad) 2. For taxable years beginning after December 31, 2006, any
5corporation may credit against taxes otherwise due under this chapter an amount
6equal to 10 percent of the amount paid or incurred by that corporation during the
7taxable year to construct and equip new facilities or expand existing facilities used
8in this state for qualified research, as defined in section
41 of the Internal Revenue
9Code, except that "qualified research expenses" includes only expenses paid or
10incurred by the claimant for research related to manufacturing internal combustion
11engines for vehicles, including expenses related to designing vehicles that are
12powered by such engines. Eligible amounts include only amounts paid or incurred
13for tangible, depreciable property but do not include amounts paid or incurred for
14replacement property.
AB243, s. 8
15Section
8. 71.47 (4) (a) of the statutes is renumbered 71.47 (4) (ad) 1. and
16amended to read:
AB243,7,617
71.47
(4) (ad)
Credit. 1.
Any Except as provided in subd. 2., any corporation
18may credit against taxes otherwise due under this chapter an amount equal to
5% 195 percent of the amount obtained by subtracting from the corporation's qualified
20research expenses, as defined in section
41 of the
internal revenue code Internal
21Revenue Code, except that "qualified research expenses" includes only expenses
22incurred by the claimant, incurred for research conducted in this state for the taxable
23year, except that a taxpayer may elect the alternative computation under section
41 24(c) (4) of the Internal Revenue Code and that election applies until the department
25permits its revocation and except that "qualified research expenses" does not include
1compensation used in computing the credit under subs. (1dj) and (1dx), the
2corporation's base amount, as defined in section
41 (c) of the
internal revenue code 3Internal Revenue Code, except that gross receipts used in calculating the base
4amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9)
5(b) 1. and 2. and (d). Section
41 (h) of the
internal revenue code Internal Revenue
6Code does not apply to the credit under this paragraph.
AB243, s. 9
7Section
9. 71.47 (4) (ab) of the statutes is created to read:
AB243,7,88
71.47
(4) (ab)
Definitions. In this subsection:
AB243,7,99
1. "Frame" includes:
AB243,7,1010
a. Every part of a motorcycle, except the tires.
AB243,7,1211
b. In the case of a truck, the control system and the fuel and drive train,
12excluding any comfort features located in the cab or the tires.
AB243,7,1513
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
14process, fuel mixers, generator, heat exchangers, exhaust train, and similar
15components.
AB243,7,1916
2. "Vehicle" means any vehicle or frame in which or on which an engine is
17mounted for use in mobile or stationary applications. "Vehicle" includes any truck,
18tractor, motorcycle, snowmobile, or generator, but does not include any automobile,
19bus, or aircraft.
AB243, s. 10
20Section
10. 71.47 (4) (ad) 2. of the statutes is created to read:
AB243,8,1121
71.47
(4) (ad) 2. For taxable years beginning after December 31, 2006, any
22corporation may credit against taxes otherwise due under this chapter an amount
23equal to 10 percent of the amount obtained by subtracting from the corporation's
24qualified research expenses, as defined in section
41 of the Internal Revenue Code,
25except that "qualified research expenses" includes only expenses incurred by the
1claimant for research related to manufacturing internal combustion engines for
2vehicles, including expenses related to designing vehicles that are powered by such
3engines, incurred for research conducted in this state for the taxable year, except that
4a taxpayer may elect the alternative computation under section
41 (c) (4) of the
5Internal Revenue Code and that election applies until the department permits its
6revocation and except that "qualified research expenses" does not include
7compensation used in computing the credit under subs. (1dj) and (1dx), the
8corporation's base amount, as defined in section
41 (c) of the Internal Revenue Code,
9except that gross receipts used in calculating the base amount means gross receipts
10from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section
1141 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.
AB243, s. 11
12Section
11. 71.47 (4) (am) of the statutes is amended to read:
AB243,9,1513
71.47
(4) (am)
Development zone additional research credit. In addition to the
14credit under par.
(a) (ad), any corporation may credit against taxes otherwise due
15under this chapter an amount equal to
5% 5 percent of the amount obtained by
16subtracting from the corporation's qualified research expenses, as defined in section
1741 of the
internal revenue code Internal Revenue Code, except that "qualified
18research expenses" include only expenses incurred by the claimant in a development
19zone under subch. VI of ch. 560, except that a taxpayer may elect the alternative
20computation under section
41 (c) (4) of the Internal Revenue Code and that election
21applies until the department permits its revocation and except that "qualified
22research expenses" do not include compensation used in computing the credit under
23sub. (1dj) nor research expenses incurred before the claimant is certified for tax
24benefits under s. 560.765 (3), the corporation's base amount, as defined in section
41 25(c) of the
internal revenue code Internal Revenue Code, in a development zone,
1except that gross receipts used in calculating the base amount means gross receipts
2from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d) and
3research expenses used in calculating the base amount include research expenses
4incurred before the claimant is certified for tax benefits under s. 560.765 (3), in a
5development zone, if the claimant submits with the claimant's return a copy of the
6claimant's certification for tax benefits under s. 560.765 (3) and a statement from the
7department of commerce verifying the claimant's qualified research expenses for
8research conducted exclusively in a development zone. The rules under s. 73.03 (35)
9apply to the credit under this paragraph. The rules under sub. (1di) (f) and (g) as they
10apply to the credit under that subsection apply to claims under this paragraph.
11Section
41 (h) of the
internal revenue code Internal Revenue Code does not apply to
12the credit under this paragraph. No credit may be claimed under this paragraph for
13taxable years that begin on January 1, 1998, or thereafter. Credits under this
14paragraph for taxable years that begin before January 1, 1998, may be carried
15forward to taxable years that begin on January 1, 1998, or thereafter.
AB243, s. 12
16Section
12. 71.47 (5) (a) of the statutes is renumbered 71.47 (5) (ad) 1. and
17amended to read:
AB243,9,2518
71.47
(5) (ad)
Credit. 1.
For Except as provided in subd. 2., for taxable year 1986
19and subsequent years, any corporation may credit against taxes otherwise due under
20this chapter an amount equal to
5% 5 percent of the amount paid or incurred by that
21corporation during the taxable year to construct and equip new facilities or expand
22existing facilities used in this state for qualified research, as defined in section
41 of
23the
internal revenue code Internal Revenue Code. Eligible amounts include only
24amounts paid or incurred for tangible, depreciable property but do not include
25amounts paid or incurred for replacement property.
AB243, s. 13
1Section
13. 71.47 (5) (ab) of the statutes is created to read:
AB243,10,22
71.47
(5) (ab)
Definitions. In this subsection:
AB243,10,33
1. "Frame" includes:
AB243,10,44
a. Every part of a motorcycle, except the tires.
AB243,10,65
b. In the case of a truck, the control system and the fuel and drive train,
6excluding any comfort features located in the cab or the tires.
AB243,10,97
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
8process, fuel mixers, generator, heat exchangers, exhaust train, and similar
9components.
AB243,10,1310
2. "Vehicle" means any vehicle or frame in which or on which an engine is
11mounted for use in mobile or stationary applications. "Vehicle" includes any truck,
12tractor, motorcycle, snowmobile, or generator, but does not include any automobile,
13bus, or aircraft.
AB243, s. 14
14Section
14. 71.47 (5) (ad) 2. of the statutes is created to read:
AB243,11,215
71.47
(5) (ad) 2. For taxable years beginning after December 31, 2006, any
16corporation may credit against taxes otherwise due under this chapter an amount
17equal to 10 percent of the amount paid or incurred by that corporation during the
18taxable year to construct and equip new facilities or expand existing facilities used
19in this state for qualified research, as defined in section
41 of the Internal Revenue
20Code, except that "qualified research expenses" includes only expenses paid or
21incurred by the claimant for research related to manufacturing internal combustion
22engines for vehicles, including expenses related to designing vehicles that are
23powered by such engines. Eligible amounts include only amounts paid or incurred
1for tangible, depreciable property but do not include amounts paid or incurred for
2replacement property.