ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2003 ASSEMBLY BILL 507
October 16, 2003 - Offered by Joint Committee on Finance.
AB507-ASA1,1,8 1An Act to amend 71.05 (6) (a) 15., 71.07 (3s) (c) 1., 71.08 (1) (intro.), 71.21 (4),
271.26 (2) (a), 71.28 (3) (c) 1., 71.34 (1) (g), 71.45 (2) (a) 10., 71.47 (3) (c) 1., 77.54
3(2) and 77.92 (4); and to create 71.05 (6) (b) 3m., 71.07 (3s) (c) 7., 71.07 (3t),
471.10 (4) (gbb), 71.28 (3) (c) 7., 71.28 (3t), 71.30 (3) (bb), 71.45 (2) (a) 10b., 71.47
5(3) (c) 7., 71.47 (3t), 71.49 (1) (bb), 77.54 (30) (a) 6. and 560.28 of the statutes;
6relating to: the income and franchise tax credit for sales tax and use tax paid
7on fuel and electricity consumed in manufacturing and granting rule-making
8authority.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB507-ASA1, s. 1 9Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB507-ASA1,2,310 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
11(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), and (3s), and (3t) and not passed

1through by a partnership, limited liability company, or tax-option corporation that
2has added that amount to the partnership's, company's, or tax-option corporation's
3income under s. 71.21 (4) or 71.34 (1) (g).
AB507-ASA1, s. 2 4Section 2. 71.05 (6) (b) 3m. of the statutes is created to read:
AB507-ASA1,2,75 71.05 (6) (b) 3m. As provided under s. 71.07 (3s) (c) 7., the amount of the credit
6under s. 71.07 (3s) that the taxpayer added back to income under s. 71.05 (6) (a) at
7the time that the taxpayer first claimed the credit.
AB507-ASA1, s. 3 8Section 3. 71.07 (3s) (c) 1. of the statutes is amended to read:
AB507-ASA1,2,169 71.07 (3s) (c) 1. The credit under par. (b), including any credits carried over,
10may be offset only against the amount of the tax imposed upon or measured by the
11business operations of the claimant in which the fuel and electricity are consumed.
12If Except as provided in subd. 7., if the credit computed is not entirely offset against
13taxes otherwise due, the unused balance shall be carried forward and credited
14against taxes otherwise due for the following 15 taxable years to the extent not offset
15by taxes otherwise due in all intervening years between the year in which the
16expense was incurred and the year in which the carry-forward credit is claimed.
AB507-ASA1, s. 4 17Section 4. 71.07 (3s) (c) 7. of the statutes is created to read:
AB507-ASA1,3,218 71.07 (3s) (c) 7. No credit may be claimed under this subsection for taxable
19years that begin after December 31, 2005. Credits that are claimed under this
20subsection for taxable years that begin before January 1, 2006, may be carried
21forward for the following 2 taxable years, and in each year for an amount equal to
2250 percent of the taxpayer's unused credits, if the taxpayer has $25,000 or less in
23unused credits as of January 1, 2006. For taxable years beginning after December
2431, 2005, and before January 1, 2008, a taxpayer who has more than $25,000 in
25unused credits as of January 1, 2006, may deduct an amount in each year that is

1equal to 50 percent of the amount the taxpayer added back to income under s. 71.05
2(6) (a) at the time that the taxpayer first claimed the credit.
AB507-ASA1, s. 5 3Section 5. 71.07 (3t) of the statutes is created to read:
AB507-ASA1,3,54 71.07 (3t) Manufacturing investment credit. (a) Definition. In this
5subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA1,3,116 (b) Credit. Subject to the limitations provided in this subsection and in s.
7560.28, for taxable years beginning after December 31, 2007, a claimant may claim
8as a credit, amortized over 15 taxable years starting with the taxable year beginning
9after December 31, 2007, against the tax imposed under s. 71.02 and 71.08, up to the
10amount of the tax, an amount equal to the claimant's unused credits under s. 71.07
11(3s).
AB507-ASA1,3,1412 (c) Limitations. 1. No credit may be claimed under this subsection unless the
13claimant submits with the claimant's return a copy of the claimant's certification by
14the department of commerce under s. 560.28.
AB507-ASA1,3,2215 2. Partnerships, limited liability companies, and tax-option corporations may
16not claim the credit under this subsection, but the eligibility for, and the amount of,
17the credit are based on the amount of their unused credits under s. 71.07 (3s). A
18partnership, limited liability company, or tax-option corporation shall compute the
19amount of credit that each of its partners, members, or shareholders may claim and
20shall provide that information to each of them. Partners, members of limited liability
21companies, and shareholders of tax-option corporations may claim the credit in
22proportion to their ownership interest.
AB507-ASA1,3,2423 (d) Administration. Section 71.28 (4) (e), (g), and (h), as it applies to the credit
24under s. 71.28 (4), applies to the credit under this subsection.
AB507-ASA1, s. 6 25Section 6. 71.08 (1) (intro.) of the statutes is amended to read:
AB507-ASA1,4,9
171.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married
2couple filing jointly, trust or estate under s. 71.02, not considering the credits under
3ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s), (3t),
4(6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and,
5(3), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and, (3),
6and (3t)
and subchs. VIII and IX and payments to other states under s. 71.07 (7), is
7less than the tax under this section, there is imposed on that natural person, married
8couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative
9minimum tax computed as follows:
AB507-ASA1, s. 7 10Section 7. 71.10 (4) (gbb) of the statutes is created to read:
AB507-ASA1,4,1111 71.10 (4) (gbb) Manufacturing investment credit under s. 71.07 (3t).
AB507-ASA1, s. 8 12Section 8. 71.21 (4) of the statutes is amended to read:
AB507-ASA1,4,1513 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
14(2dj), (2dL), (2dm), (2ds), (2dx), (3g), and, (3s), and (3t) and passed through to
15partners shall be added to the partnership's income.
AB507-ASA1, s. 9 16Section 9. 71.26 (2) (a) of the statutes is amended to read:
AB507-ASA1,5,917 71.26 (2) (a) Corporations in general. The "net income" of a corporation means
18the gross income as computed under the Internal Revenue Code as modified under
19sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
20computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
217., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
22under this paragraph at the time that the taxpayer first claimed the credit
plus the
23amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
24(1ds), (1dx), and (3g), and (3t) and not passed through by a partnership, limited
25liability company, or tax-option corporation that has added that amount to the

1partnership's, limited liability company's, or tax-option corporation's income under
2s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or other disposition
3of assets the gain from which would be wholly exempt income, as defined in sub. (3)
4(L), if the assets were sold or otherwise disposed of at a gain and minus deductions,
5as computed under the Internal Revenue Code as modified under sub. (3), plus or
6minus, as appropriate, an amount equal to the difference between the federal basis
7and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed
8of in a taxable transaction during the taxable year, except as provided in par. (b) and
9s. 71.45 (2) and (5).
AB507-ASA1, s. 10 10Section 10. 71.28 (3) (c) 1. of the statutes is amended to read:
AB507-ASA1,5,1711 71.28 (3) (c) 1. If Except as provided in subd. 7., if the credit computed under
12par. (b) is not entirely offset against Wisconsin income or franchise taxes otherwise
13due, the unused balance shall be carried forward and credited against Wisconsin
14income or franchise taxes otherwise due for the following 15 taxable years to the
15extent not offset by these taxes otherwise due in all intervening years between the
16year in which the expense was incurred and the year in which the carry-forward
17credit is claimed.
AB507-ASA1, s. 11 18Section 11. 71.28 (3) (c) 7. of the statutes is created to read:
AB507-ASA1,6,319 71.28 (3) (c) 7. No credit may be claimed under this subsection for taxable years
20that begin after December 31, 2005. Credits that are claimed under this subsection
21for taxable years that begin before January 1, 2006, may be carried forward for the
22following 2 taxable years, and in each year for an amount equal to 50 percent of the
23taxpayer's unused credits, if the taxpayer has $25,000 or less in unused credits as
24of January 1, 2006. For taxable years beginning after December 31, 2005, and before
25January 1, 2008, a taxpayer who has more than $25,000 in unused credits as of

1January 1, 2006, may deduct an amount in each year that is equal to 50 percent of
2the amount the taxpayer added back to income under s. 71.26 (2) (a) at the time that
3the taxpayer first claimed the credit.
AB507-ASA1, s. 12 4Section 12. 71.28 (3t) of the statutes is created to read:
AB507-ASA1,6,65 71.28 (3t) Manufacturing investment credit. (a) Definition. In this
6subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA1,6,117 (b) Credit. Subject to the limitations provided in this subsection and in s.
8560.28, for taxable years beginning after December 31, 2007, a claimant may claim
9as a credit, amortized over 15 taxable years starting with the taxable year beginning
10after December 31, 2007, against the tax imposed under s. 71.23, up to the amount
11of the tax, an amount equal to the claimant's unused credits under s. 71.28 (3).
AB507-ASA1,6,1412 (c) Limitations. 1. No credit may be claimed under this subsection unless the
13claimant submits with the claimant's return a copy of the claimant's certification by
14the department of commerce under s. 560.28.
AB507-ASA1,6,2215 2. Partnerships, limited liability companies, and tax-option corporations may
16not claim the credit under this subsection, but the eligibility for, and the amount of,
17the credit are based on the amount of their unused credits under s. 71.28 (3). A
18partnership, limited liability company, or tax-option corporation shall compute the
19amount of credit that each of its partners, members, or shareholders may claim and
20shall provide that information to each of them. Partners, members of limited liability
21companies, and shareholders of tax-option corporations may claim the credit in
22proportion to their ownership interest.
AB507-ASA1,6,2423 (d) Administration. Subsection (4) (e), (g), and (h), as it applies to the credit
24under sub. (4), applies to the credit under this subsection.
AB507-ASA1, s. 13 25Section 13. 71.30 (3) (bb) of the statutes is created to read:
AB507-ASA1,7,1
171.30 (3) (bb) Manufacturing investment credit under s. 71.28 (3t).
AB507-ASA1, s. 14 2Section 14. 71.34 (1) (g) of the statutes is amended to read:
AB507-ASA1,7,53 71.34 (1) (g) An addition shall be made for credits computed by a tax-option
4corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), and
5(3g), and (3t) and passed through to shareholders.
AB507-ASA1, s. 15 6Section 15. 71.45 (2) (a) 10. of the statutes is amended to read:
AB507-ASA1,7,127 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
8computed under s. 71.47 (1dd) to (1dx) and not passed through by a partnership,
9limited liability company or tax-option corporation that has added that amount to
10the partnership's, limited liability company's or tax-option corporation's income
11under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47
12(1), (3), (3t), (4) and (5).
AB507-ASA1, s. 16 13Section 16. 71.45 (2) (a) 10b. of the statutes is created to read:
AB507-ASA1,7,1614 71.45 (2) (a) 10b. By subtracting from federal taxable income, as provided
15under s. 71.47 (3) (c) 7., the amount of the credit under s. 71.47 (3) that the taxpayer
16added to income under subd. 10. at the time that the taxpayer first claimed the credit.
AB507-ASA1, s. 17 17Section 17. 71.47 (3) (c) 1. of the statutes is amended to read:
AB507-ASA1,7,2418 71.47 (3) (c) 1. If Except as provided in subd. 7., if the credit computed under
19par. (b) is not entirely offset against Wisconsin income or franchise taxes otherwise
20due, the unused balance shall be carried forward and credited against Wisconsin
21income or franchise taxes otherwise due for the following 15 taxable years to the
22extent not offset by these taxes otherwise due in all intervening years between the
23year in which the expense was incurred and the year in which the carry-forward
24credit is claimed.
AB507-ASA1, s. 18 25Section 18. 71.47 (3) (c) 7. of the statutes is created to read:
AB507-ASA1,8,10
171.47 (3) (c) 7. No credit may be claimed under this subsection for taxable years
2that begin after December 31, 2005. Credits that are claimed under this subsection
3for taxable years that begin before January 1, 2005, may be carried forward for the
4following 2 taxable years, and in each year for an amount equal to 50 percent of the
5taxpayer's unused credits, if the taxpayer has $25,000 or less in unused credits as
6of January 1, 2006. For taxable years beginning after December 31, 2005, and before
7January 1, 2008, a taxpayer who has more than $25,000 in unused credits as of
8January 1, 2006, may deduct an amount in each year that is equal to 50 percent of
9the amount the taxpayer added back to income under s. 71.45 (2) (a) 10. at the time
10that the taxpayer first claimed the credit.
AB507-ASA1, s. 19 11Section 19. 71.47 (3t) of the statutes is created to read:
AB507-ASA1,8,1312 71.47 (3t) Manufacturing investment credit. (a) Definition. In this
13subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA1,8,1814 (b) Credit. Subject to the limitations provided in this subsection and in s.
15560.28, for taxable years beginning after December 31, 2007, a claimant may claim
16as a credit, amortized over 15 taxable years starting with the taxable year beginning
17after December 31, 2007, against the tax imposed under s. 71.43, up to the amount
18of the tax, an amount equal to the claimant's unused credits under s. 71.47 (3).
AB507-ASA1,8,2119 (c) Limitations. 1. No credit may be claimed under this subsection unless the
20claimant submits with the claimant's return a copy of the claimant's certification by
21the department of commerce under s. 560.28.
AB507-ASA1,9,422 2. Partnerships, limited liability companies, and tax-option corporations may
23not claim the credit under this subsection, but the eligibility for, and the amount of,
24the credit are based on the amount of their unused credits under s. 71.47 (3). A
25partnership, limited liability company, or tax-option corporation shall compute the

1amount of credit that each of its partners, members, or shareholders may claim and
2shall provide that information to each of them. Partners, members of limited liability
3companies, and shareholders of tax-option corporations may claim the credit in
4proportion to their ownership interest.
AB507-ASA1,9,65 (d) Administration. Section 71.28 (4) (e), (g), and (h), as it applies to the credit
6under s. 71.28 (4), applies to the credit under this subsection.
AB507-ASA1, s. 20 7Section 20. 71.49 (1) (bb) of the statutes is created to read:
AB507-ASA1,9,88 71.49 (1) (bb) Manufacturing investment credit under s. 71.47 (3t).
AB507-ASA1, s. 21 9Section 21. 77.54 (2) of the statutes is amended to read:
AB507-ASA1,9,1510 77.54 (2) The gross receipts from sales of and the storage, use or other
11consumption of tangible personal property becoming an ingredient or component
12part of an article of tangible personal property or which is consumed or destroyed or
13loses its identity in the manufacture of tangible personal property in any form
14destined for sale, but this exemption shall not include fuel or electricity except as
15provided in sub. (30) (a) 6
.
AB507-ASA1, s. 22 16Section 22. 77.54 (30) (a) 6. of the statutes is created to read:
AB507-ASA1,9,1817 77.54 (30) (a) 6. Fuel and electricity sold for use in manufacturing tangible
18personal property in this state.
AB507-ASA1, s. 23 19Section 23. 77.92 (4) of the statutes is amended to read:
AB507-ASA1,9,2520 77.92 (4) "Net business income", with respect to a partnership, means taxable
21income as calculated under section 703 of the Internal Revenue Code; plus the items
22of income and gain under section 702 of the Internal Revenue Code, including taxable
23state and municipal bond interest and excluding nontaxable interest income or
24dividend income from federal government obligations; minus the items of loss and
25deduction under section 702 of the Internal Revenue Code, except items that are not

1deductible under s. 71.21; plus guaranteed payments to partners under section 707
2(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), and (3g), and (3s), and (3t); and plus or
4minus, as appropriate, transitional adjustments, depreciation differences, and basis
5differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain,
6loss, and deductions from farming. "Net business income", with respect to a natural
7person, estate, or trust, means profit from a trade or business for federal income tax
8purposes and includes net income derived as an employee as defined in section 3121
9(d) (3) of the Internal Revenue Code.
AB507-ASA1, s. 24 10Section 24. 560.28 of the statutes is created to read:
AB507-ASA1,10,1411 560.28 Manufacturing investment credit. (1) Definition. In this section,
12"full-time job" means a regular, nonseasonal full-time position in which an
13individual, as a condition of employment, is required to work at least 35 hours in a
14week.
AB507-ASA1,10,18 15(2) Certification. The department shall promulgate rules for the certification
16of businesses as eligible to claim tax credits under s. 71.07 (3t), 71.28 (3t), or 71.47
17(3t). The rules shall permit a business to obtain a certification only if the person
18satisfies one of the following conditions:
AB507-ASA1,10,2019 (a) The business has retained from the effective date of this paragraph ....
20[revisor inserts date], 100 percent of the business's full-time jobs in this state.
AB507-ASA1,10,2321 (b) The business's average annual investment in this state since January 1,
222003, is equal to no less than 2 percent of the total book value of the business's
23depreciable assets in facilities that are based in this state.
AB507-ASA1,10,2524 (c) The business's average annual investment in this state since January 1,
252003, is no less than $5,000,000.
AB507-ASA1,11,2
1(d) Any other criteria that is specific to an industry, as promulgated by rule by
2the department of commerce, in consultation with the department of revenue.
AB507-ASA1, s. 25 3Section 25. Initial applicability.
AB507-ASA1,11,54 (1) The treatment of section 77.54 (2) and (30) (a) 6. of the statutes first applies
5to fuel and electricity sold on January 1, 2006.
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