Amendment MR8 CSA1-AB1

AB1-CSA1,24,13 71.01 (5s) For purposes of s. 71.05 (6) (a) 24. and (b) 46., "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code and deductible in the computation of Wisconsin adjusted gross income.

AB1-CSA1, s. 56 Section 56. 71.01 (9ad) of the statutes is created to read:

AB1-CSA1,24,16 71.01 (9ad) "Qualified real estate investment trust" has the meaning given in s. 71.22 (9ad).

AB1-CSA1, s. 57 Section 57. 71.01 (9am) of the statutes is created to read:

AB1-CSA1,25,3 71.01 (9am) "Related entity" means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer's taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

AB1-CSA1, s. 58 Section 58. 71.01 (9an) of the statutes is created to read:

AB1-CSA1,25,10 71.01 (9an) For purposes of s. 71.05 (6) (a) 24. and (b) 46., "rental expenses" means the gross amounts that would otherwise be deductible in the computation of Wisconsin adjusted gross income for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

AB1-CSA1, s. 59 Section 59. 71.05 (6) (a) 15. of the statutes, as affected by 2007 Wisconsin Acts 20 and 96, is amended to read:

AB1-CSA1,25,17 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3h), (3n), (3p), (3s), (3t), (3w), (5e), (5f), (5h), (5i), (5j), and (5k) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (1k) (g).

AB1-CSA1, s. 60 Section 60. 71.05 (6) (a) 24. of the statutes is created to read:

AB1-CSA1,25,22 71.05 (6) (a) 24. The amount deducted or excluded under the Internal Revenue Code for interest expenses and rental expenses that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB1-CSA1, s. 61 Section 61. 71.05 (6) (b) 45. of the statutes is created to read:

AB1-CSA1,25,25 71.05 (6) (b) 45. An amount added to federal adjusted gross income under par. (a) 24., to the extent that the conditions under s. 71.80 (23) are satisfied.

AB1-CSA1, s. 62 Section 62. 71.05 (6) (b) 46. of the statutes is created to read:

AB1-CSA1,26,6 71.05 (6) (b) 46. An amount added, pursuant to par. (a) 24. or s. 71.26 (2) (a) 7., 71.34 (1k) (j), or 71.45 (2) (a) 16., to the federal income of a related entity that paid interest expenses or rental expenses to the individual or fiduciary, to the extent that the related entity could not offset such amount with the deduction allowable under subd. 45. or s. 71.26 (2) (a) 8., 71.34 (1k) (k), or 71.45 (2) (a) 17.

AB1-CSA1, s. 63 Section 63. 71.22 (1b) of the statutes is created to read:

AB1-CSA1,26,10 71.22 (1b) "Aggregate effective tax rate" means the sum of the effective tax rates imposed by a state, U.S. possession, foreign country, or any combination thereof, on the person or entity.

AB1-CSA1, s. 64 Section 64. 71.22 (1tm) of the statutes is created to read:

AB1-CSA1,26,15 71.22 (1tm) "Effective tax rate" means the maximum tax rate imposed by the state, U.S. possession, or foreign country, multiplied by the apportionment percentage, if any, applicable to the person or entity under the laws of that state, U.S. possession, or foreign country.

AB1-CSA1, s. 65 Section 65. 71.22 (3m) of the statutes is created to read:

AB1-CSA1,26,19 71.22 (3m) For purposes of s. 71.26 (2) (a) 7. and 9., "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code, as modified under s. 71.26 (3).

AB1-CSA1, s. 66 Section 66. 71.22 (9ad) of the statutes is created to read:

AB1-CSA1,27,2 71.22 (9ad) (a) "Qualified real estate investment trust" means a real estate investment trust, except a real estate investment trust the shares or beneficial interests of which are not regularly traded on an established securities market and more than 50 percent of the voting power or value of any class of the beneficial interests or shares of which are owned or controlled, directly, indirectly or constructively, by a single entity that is treated as an association taxable as a corporation under the Internal Revenue Code.

AB1-CSA1,27,4 (b) For purposes of this subsection, the following entities are not considered an association taxable as a corporation:

AB1-CSA1,27,7 1. An entity that is exempt from taxation under s. 71.26 (1) and exempt from federal income tax pursuant to the provisions of section 501 (a) of the Internal Revenue Code.

AB1-CSA1,27,8 2. A real estate investment trust that is a qualified real estate investment trust.

AB1-CSA1,27,11 3. A qualified real estate investment trust subsidiary under section 856 (i) of the Internal Revenue Code that is a subsidiary of a qualified real estate investment trust.

AB1-CSA1,27,17 4. An Australian unit trust under the Australian Corporations Act in which the principal class of units is listed on a recognized stock exchange in Australia and is regularly traded on an established securities market, or an entity organized as a trust, if an Australian unit trust described in this subdivision owns or controls, directly or indirectly, 75 percent or more of the voting power or value of the beneficial interests or shares of such trust.

AB1-CSA1,27,19 5. A corporation, trust, association, or partnership organized outside the laws of the United States that satisfies all of the following:

AB1-CSA1,27,22 a. At least 75 percent of the entity's total asset value at the close of its taxable year consists of real estate assets, as defined in section 856 (c) (5) (B) of the Internal Revenue Code, cash and cash equivalents, and U.S. government securities.

AB1-CSA1,27,24 b. The entity is not subject to tax on amounts distributed to its beneficial owners or is exempt from entity-level taxation.

AB1-CSA1,28,3 c. The entity distributes at least 85 percent of its taxable income, as computed in the jurisdiction in which it is organized, to the holders of its shares or certificates of beneficial interest on an annual basis.

AB1-CSA1,28,7 d. Either no more than 10 percent of the voting power or value in the entity is held directly, indirectly, or constructively by a single entity or individual or the shares or beneficial interests of the entity are regularly traded on an established securities market.

AB1-CSA1,28,9 e. The entity is organized in a country that has a tax treaty with the United States.

AB1-CSA1,28,13 (c) For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

AB1-CSA1, s. 67 Section 67. 71.22 (9am) of the statutes is created to read:

AB1-CSA1,28,25 71.22 (9am) "Related entity" means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer's taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

AB1-CSA1, s. 68 Section 68. 71.22 (9an) of the statutes is created to read:

AB1-CSA1,29,7 71.22 (9an) For purposes of s. 71.26 (2) (a) 7. and 9., "rental expenses" means the gross amounts that would otherwise be deductible under the Internal Revenue Code, as modified under s. 71.26 (3), for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

AB1-CSA1, s. 69 Section 69. 71.26 (2) (a) of the statutes, as affected by 2007 Wisconsin Acts 20 and 96, is renumbered 71.26 (2) (a) (intro.) and amended to read:

AB1-CSA1,29,12 71.26 (2) (a) Corporations in general. (intro.) The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus and modified as follows:

AB1-CSA1,29,13 1. Minus the amount of recapture under s. 71.28 (1di) plus.

AB1-CSA1,29,14 2. Plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) minus,.

AB1-CSA1,29,17 3. 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.

AB1-CSA1,29,23 4. Plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), (3h), (3n), (3p), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k) 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) (1k) (g) plus.

AB1-CSA1,30,2 5. 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.

AB1-CSA1,30,6 6. 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).

AB1-CSA1, s. 70 Section 70. 71.26 (2) (a) 7. of the statutes is created to read:

AB1-CSA1,30,11 71.26 (2) (a) 7. Plus the amount deducted or excluded under the Internal Revenue Code for interest expenses and rental expenses that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB1-CSA1, s. 71 Section 71. 71.26 (2) (a) 8. of the statutes is created to read:

AB1-CSA1,30,14 71.26 (2) (a) 8. Minus the amount added to gross income under subd. 7., to the extent that the conditions under s. 71.80 (23) are satisfied.

AB1-CSA1, s. 72 Section 72. 71.26 (2) (a) 9. of the statutes is created to read:

AB1-CSA1,30,20 71.26 (2) (a) 9. Minus the amount added, pursuant to subd. 7. or s. 71.05 (6) (a) 24., 71.34 (1k) (j), or 71.45 (2) (a) 16., to the federal income of a related entity that paid interest expenses or rental expenses to the corporation, to the extent that the related entity could not offset such amount with the deduction allowable under subd. 8. or s. 71.05 (6) (b) 45., 71.34 (1k) (k), or 71.45 (2) (a) 17.

AB1-CSA1, s. 73 Section 73. 71.30 (2) of the statutes is amended to read:

AB1-CSA1,31,8 71.30 (2) Allocation of gross income, deductions, credits between 2 or more businesses. In any case of 2 or more organizations, trades or businesses (whether or not incorporated, whether or not organized in the United States and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the secretary or his or her delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if he or she determines that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses. The authority granted under this subsection is in addition to, and not a limitation of or dependent on, the provisions of ss. 71.05 (6) (a) 24. and (b) 45., 71.26 (2) (a) 7. and 8., 71.34 (1k) (j) and (k), 71.45 (2) (a) 16. and 17., and 71.80 (23).

AB1-CSA1, s. 74 Section 74. 71.34 (1) of the statutes is renumbered 71.34 (1k).

AB1-CSA1, s. 75 Section 75. 71.34 (1am) of the statutes is created to read:

AB1-CSA1,31,13 71.34 (1am) "Aggregate effective tax rate" means the sum of the effective tax rates imposed by a state, U.S. possession, foreign country, or any combination thereof, on the person or entity.

AB1-CSA1, s. 76 Section 76. 71.34 (1b) of the statutes is created to read:

AB1-CSA1,31,18 71.34 (1b) "Effective tax rate" means the maximum tax rate imposed by the state, U.S. possession, or foreign country, multiplied by the apportionment percentage, if any, applicable to the person or entity under the laws of that state, U.S. possession, or foreign country.

AB1-CSA1, s. 77 Section 77. 71.34 (1e) of the statutes is created to read:

AB1-CSA1,31,23 71.34 (1e) For purposes of sub. (1k) (j) and (L), "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code and deductible in the computation of Wisconsin adjusted gross income.

AB1-CSA1, s. 78 Section 78. 71.34 (1k) (j) of the statutes is created to read:

AB1-CSA1,32,5 71.34 (1k) (j) An addition shall be made for any amount deducted or excluded under the Internal Revenue Code for interest expenses and rental expenses that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB1-CSA1, s. 79 Section 79. 71.34 (1k) (k) of the statutes is created to read:

AB1-CSA1,32,9 71.34 (1k) (k) A deduction shall be allowed for the amount added to gross income under par. (j), to the extent that the conditions under s. 71.80 (23) are satisfied.

AB1-CSA1, s. 80 Section 80. 71.34 (1k) (L) of the statutes is created to read:

AB1-CSA1,32,15 71.34 (1k) (L) A deduction shall be allowed for the amount added, pursuant to par. (j) or s. 71.05 (6) (a) 24., 71.26 (2) (a) 7., or 71.45 (2) (a) 16., to the federal income of a related entity that paid interest expenses or rental expenses to the corporation, to the extent that the related entity could not offset such amount with the deduction allowable under par. (k) or s. 71.05 (6) (b) 45., 71.26 (2) (a) 8., or 71.45 (2) (a) 17.

AB1-CSA1, s. 81 Section 81. 71.34 (1L) of the statutes is created to read:

AB1-CSA1,32,18 71.34 (1L) "Qualified real estate investment trust" has the meaning given in s. 71.22 (9ad).

AB1-CSA1, s. 82 Section 82. 71.34 (1p) of the statutes is created to read:

AB1-CSA1,33,5 71.34 (1p) "Related entity" means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer's taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

AB1-CSA1, s. 83 Section 83. 71.34 (1r) of the statutes is created to read:

AB1-CSA1,33,12 71.34 (1r) For purposes of sub. (1k) (j) and (L), "rental expenses" means the gross amounts that would otherwise be deductible in the computation of Wisconsin adjusted gross income for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

AB1-CSA1, s. 84 Section 84. 71.42 (1) of the statutes is renumbered 71.42 (1g).

AB1-CSA1, s. 85 Section 85. 71.42 (1b) of the statutes is created to read:

AB1-CSA1,33,17 71.42 (1b) "Aggregate effective tax rate" means the sum of the effective tax rates imposed by a state, U.S. possession, foreign country, or any combination thereof, on the person or entity.

AB1-CSA1, s. 86 Section 86. 71.42 (1s) of the statutes is created to read:

AB1-CSA1,33,22 71.42 (1s) "Effective tax rate" means the maximum tax rate imposed by the state, U.S. possession, or foreign country, multiplied by the apportionment percentage, if any, applicable to the person or entity under the laws of that state, U.S. possession, or foreign country.

AB1-CSA1, s. 87 Section 87. 71.42 (1t) of the statutes is created to read:

AB1-CSA1,34,3 71.42 (1t) For purposes of s. 71.45 (2) (a) 16. and 18., "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code, as adjusted under s. 71.45 (2).

AB1-CSA1, s. 88 Section 88. 71.42 (4d) of the statutes is created to read:

AB1-CSA1,34,6 71.42 (4d) "Qualified real estate investment trust" has the meaning given in s. 71.22 (9ad).

AB1-CSA1, s. 89 Section 89. 71.42 (4m) of the statutes is created to read:

AB1-CSA1,34,18 71.42 (4m) "Related entity" means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer's taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

AB1-CSA1, s. 90 Section 90. 71.42 (4n) of the statutes is created to read:

AB1-CSA1,34,25 71.42 (4n) For purposes of s. 71.45 (2) (a) 16. and 18., "rental expenses" means the gross amounts that would otherwise be deductible under the Internal Revenue Code, as adjusted under s. 71.45 (2), for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

AB1-CSA1, s. 91 Section 91. 71.45 (2) (a) 10. of the statutes, as affected by 2007 Wisconsin Acts 20 and 96, is amended to read:

AB1-CSA1,35,8 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3h), (3n), (3p), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k) 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) (1k) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4), and (5).