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) minus, as provided under s. 71.28 (3) (c) 7., the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), and (3t), 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).
255,11
Section
11. 71.28 (5b) of the statutes is created to read:
71.28 (5b) Early stage seed investment credit. (a) Definitions. In this subsection:
1. "Claimant" means a person who files a claim under this subsection.
2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).
(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, 25 percent of the claimant's initial investment paid in the taxable year to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).
(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.
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.
(d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.
255,12
Section
12. 71.30 (3) (eop) of the statutes is created to read:
71.30 (3) (eop) Early stage seed investment credit under s. 71.28 (5b).
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), (1ds), (1dx), (3), (3g), and (3t), and (5b) and passed through to shareholders.
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), (3t), (4) and (5).
255,15
Section
15. 71.47 (5b) of the statutes is created to read:
71.47 (5b) Early stage seed investment credit. (a) Definitions. In this subsection:
1. "Claimant" means a person who files a claim under this subsection.
2. "Fund manager" means an investment fund manager certified under s. 560.205 (2).
(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, 25 percent of the claimant's initial investment paid in the taxable year to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).
(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.
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.
(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.
255,16
Section
16. 71.49 (1) (eop) of the statutes is created to read:
71.49 (1) (eop) Early stage seed investment credit under s. 71.47 (5b).
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), (2ds), (2dx), (3g), (3s),
and (3t)
, 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.
255,18
Section
18. 560.03 (25) of the statutes is created to read:
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.
255,19
Section
19. 560.03 (26) of the statutes is created to read:
560.03 (26) In cooperation with the department of financial institutions and the board of regents of the University of Wisconsin System, annually conduct and publish the results of a study of Wisconsin businesses to determine new business formation trends and identify obstacles faced by new Wisconsin businesses and areas where changes in governmental policy may satisfy the needs of new Wisconsin businesses. As part of the study, the department of commerce shall conduct a survey of Wisconsin businesses.
255,20
Section
20. 560.205 of the statutes is created to read:
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:
(a) It has its headquarters in this state.
(b) At least 51 percent of the employees employed by the business are employed in this state.
(f) 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.
(g) 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.
(h) It has less than 100 employees.
(j) It has been in operation in this state for not more than 7 consecutive years.
(k) It has not received more than $1,000,000 in investments that have qualified for tax credits under s. 71.07 (5d).
(2) Early stage seed investment tax credits. The department shall implement a program to certify investment fund managers for purposes of ss. 71.07 (5b), 71.28 (5b), and 71.47 (5b). An investment fund manager desiring certification shall submit an application to the department. In determining whether to certify an investment fund manager, the department shall consider the investment fund manager's experience in managing venture capital funds, the past performance of investment funds managed by the applicant, the expected level of investment in the investment fund to be managed by the applicant, and any other relevant factors. The department may certify only investment fund managers that commit to consider placing investments in businesses certified under sub. (1).
(3) Administration. (a) List of certified businesses and investment fund managers. The department shall maintain a list of businesses certified under sub. (1) and investment fund managers certified under sub. (2) and shall permit public access to the lists through the department's Internet website.
(b) Notification of department of revenue. The department of commerce shall notify the department of revenue of every certification issued under sub. (1) and (2) and the date on which any such certification is revoked or expires.
(c) Annual report. Annually, no later than September 15, the department shall submit a report to the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2), listing all of the following information:
1. The total amount of tax credits claimed under ss. 71.07 (5b) and (5d), 71.28 (5b), and 71.47 (5b) per taxable year.
2. The name of each business in which investments qualifying for such tax credits were made, the amount of such tax credits, and the amount of such investments.
3. Any other information the department considers reasonable to include.
(d) Rules. The department of commerce, in consultation with the department of revenue, shall promulgate rules to administer this section. The rules shall further define "bona fide angel investment" for purposes of s. 71.07 (5d) (a) 1. The rules shall limit the aggregate amount of tax credits under s. 71.07 (5d) that may be claimed for investments in businesses certified under sub. (1) at $3,000,000 per taxable year for taxable years beginning after December 31, 2004
, and before January 1, 2015. The rules shall also limit the aggregate amount of the tax credits under ss. 71.07 (5b), 71.28 (5b), and 71.47 (5b) that may be claimed for investments paid to fund managers certified under sub. (2) at $3,500,000 per taxable year for taxable years beginning after December 31, 2004
, and before January 1, 2015. The rules may not permit the department of commerce or the department of revenue to assign a dollar amount of investments qualifying for tax credits that a particular business may subsequently raise.
255,21
Section
21. 560.275 of the statutes is created to read:
560.275 Technology commercialization grant and loan program. (1) Definition. In this section, "Project costs" means the total cost of a project financed, at least in part, by a grant or loan under sub. (2), calculated as provided by rule of the department.
(2) Authorized grants and loans. (a) Early stage planning grants and loans. The department may make a grant or loan from the appropriation under s. 20.143 (1) (dk) or (ik) for the purpose of funding professional services related to completing an application to be submitted to the federal government for the purpose of obtaining early stage research and development funding or for the purpose of funding professional services that are required to accomplish specific tasks established as a condition of receiving early stage financing from 3rd parties that is necessary for business development.
(b) Matching grants and loans. 1. The department may make a grant or loan from the appropriation under s. 20.143 (1) (dk) or (ik) for the purpose of funding professional services related to developing a proposed technologically innovative product, process, or service, if the applicant has received a grant from the federal government for a substantially similar purpose.
2. The department may make a grant or loan from the appropriation under s. 20.143 (1) (dk) or (ik) for the purpose of funding professional services related to the accelerated commercialization of a technologically innovative product, process, or service, if the federal government has notified the applicant that the applicant will receive a grant from the federal government for a substantially similar purpose.
(c) Bridge grants and loans. The department may make a grant or loan from the appropriation under s. 20.143 (1) (dk) or (ik) to a person who has received early stage financing from 3rd parties or a grant from the federal government to fund early stage research and development and who has sought additional early stage financing from 3rd parties or applied for an additional grant from the federal government to fund early stage research and development. A grant or loan under this paragraph shall be for the purpose of funding professional services necessary to maintain the project research and management team and funding basic operations until the applicant's additional 3rd party financing request or federal grant application is approved or denied.
(d) Venture capital grants and loans. The department may make a grant or loan from the appropriation under s. 20.143 (1) (dk) or (ik) for the purpose of enhancing the applicant's ability to obtain early stage financing from 3rd parties.
(e) Entrepreneurial and technology transfer center grants. The department may make a grant from the appropriation under s. 20.143 (1) (dk) or (ik) for the purpose of supporting any entrepreneurial and technology transfer center that satisfies all of the following criteria:
1. The center serves multiple regions of this state.
2. The center provides assistance, other than financial assistance, to entrepreneurs to facilitate business development.
3. The center reviews and analyzes entrepreneurial business plans and offers advice concerning the improvement of the plans.
4. The center provides advice to entrepreneurs concerning patent, trademark, and copyright issues.
5. The center provides appropriate referral services to entrepreneurs.
(3) Grant and loan amounts. (a) Early stage planning grants and loans. In determining the amount of a grant or loan under sub. (2) (a), the department shall consider all of the following, in addition to any other information the department considers relevant:
1. The amount of economic impact the applicant, if successful, will have in this state.
2. The quality of any businesses assisting the applicant.
3. The level of need demonstrated by the applicant.
4. The applicant's record of obtaining early stage financing in the past.
(b) Matching grants and loans. In determining the amount of a grant or loan under sub. (2) (b), the department shall consider all of the following criteria, in addition to any other information the department considers relevant:
1. The viability of the applicant's business.
2. The likelihood that the applicant will successfully commercialize technology.
3. The applicant's management plan and management team.
4. The amount of economic impact the applicant, if successful, will have in this state.
5. The applicant's record of obtaining early stage financing in the past.
(4) Limitations on grant and loan amounts. (a) Early stage planning grants and loans. A grant or loan under sub. (2) (a) may not exceed $15,000.
(b) Matching grants and loans. A grant or loan under sub. (2) (b) may not exceed 20 percent of the project costs or $250,000, whichever is less.
(c) Bridge grants and loans. A grant or loan under sub. (2) (c) may not exceed 75 percent of the project costs or $100,000, whichever is less.
(d) Venture capital grants and loans. A grant or loan under sub. (2) (d) may not exceed 50 percent of the project costs or $250,000, whichever is less.
(e) Entrepreneurial and technology transfer grants. The total amount of grants under sub. (2) (e) may not exceed $500,000 in any fiscal year.
(5) Eligibility. The department may make a grant or loan under sub. (2) (a) to (d) to an applicant only if all of the following apply:
(a) The applicant:
1. Is a small business, or individual entrepreneur who intends to form a small business, that is completing a grant application to be submitted to the federal government for the purpose of obtaining early stage research and development funding, except that if the application is for a grant under sub. (2) (b), the requirement that the applicant be completing a federal grant application does not apply; or
2. Is an individual who is starting or developing a business which has significant growth potential, as evidenced by the potential to attract and receive early stage financing from 3rd parties, but who needs assistance with a specific facet of starting or developing the business.
(b) If the applicant seeks a grant or loan under sub. (2) (a), the applicant has sufficient funding from sources other than the state to finance at least 25% of the project costs.
(c) The applicant has or will have a business location in this state.
(d) If the application relates to a product, the product will be manufactured substantially in this state.
(e) If the application relates to a service, the principal place of business from which the service will be sold will be located in this state.
(f) All grant moneys will be spent in this state.
(6) Grant and loan distribution plan. No later than December 1 of each even-numbered year, the department shall develop a biennial plan for awarding grants and loans under sub. (2) and shall submit the plan to the governor and to the chief clerk of each house of the legislature, for distribution to the appropriate standing committees under s. 13.172 (3).
(7) Administration. (a) In-kind grants of services. The department may contract with, and pay the proceeds of any grant under sub. (2) (a) to (d) directly to, any person who provides services which the grant is intended to fund.
(b) Rules. The department shall promulgate rules to administer this section. The rules shall establish application, reporting, auditing, and monitoring requirements.
