2019 - 2020 LEGISLATURE
January 8, 2020 - Introduced by Representatives Brooks, Dittrich, Gundrum,
Horlacher, Katsma, Knodl, Kuglitsch, Magnafici, Steffen, Zimmerman and
Skowronski, cosponsored by Senators Stroebel, Jacque and Kooyenga.
Referred to Committee on Ways and Means.
1An Act to renumber and amend
71.05 (10) (c); and to create
71.05 (10) (c) 2. 2
and 3. of the statutes; relating to: increasing the net capital loss deduction.
Analysis by the Legislative Reference Bureau
Under current law, an individual subtracts his or her capital losses from capital
gains when computing the amount of gain subject to the state income tax. If the
capital losses exceed the capital gains, the individual may use up to $500 of the net
loss to offset ordinary income, thus reducing the amount of ordinary income subject
to tax. If the individual's net capital loss exceeds $500, the individual may carry
forward the excess to future years and offset up to $500 of ordinary income each year
until the net loss is used up. Federal law similarly allows individuals to offset net
capital losses against ordinary income and carry forward the excess. However, the
maximum annual offset under federal law is $3,000, which is reduced to $1,500 for
married individuals who file separate returns. This bill increases the maximum
annual offset for Wisconsin income tax purposes from $500 to $1,500 for married
individuals filing separately and $3,000 for all other individuals.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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:
71.05 (10) (c) of the statutes is renumbered 71.05 (10) (c) 1. and 2
amended to read:
(c) 1. The For taxable years ending before January 1, 2020, the 4
amount required so that the net capital loss, after netting capital gains and capital 5
losses to arrive at total capital gain or loss, is offset against ordinary income only to 6
the extent of $500. Losses and, except as provided in subd. 3., losses
in excess of $500 7
shall be carried forward to the next taxable year and offset against ordinary income 8
up to the limit under this paragraph subdivision
. Losses shall be used in the order 9
in which they accrue.
71.05 (10) (c) 2. and 3. of the statutes are created to read:
(c) 2. For taxable years beginning after December 31, 2019, the 12
amount required so that the net capital loss, after netting capital gains and capital 13
losses to arrive at total capital gain or loss, is offset against ordinary income only to 14
the extent of $3,000. Any excess net capital loss shall be carried forward to the next 15
taxable year, subject to subd. 3. If the taxpayer is a married person who files 16
separately, the $3,000 limitation in this subdivision shall be $1,500.
3. A net capital loss that is carried forward to a taxable year beginning after 18
December 31, 2019, shall be offset against ordinary income, limited to $3,000, in that 19
taxable year. Losses shall be used in the order in which they accrue. If the taxpayer 20
is a married person who files separately, the $3,000 limitation in this subdivision 21
shall be $1,500.