Amendment MR8 CSA1-AB1

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).

AB1-CSA1, s. 92 Section 92. 71.45 (2) (a) 16. of the statutes is created to read:

AB1-CSA1,35,14 71.45 (2) (a) 16. By adding to federal taxable income 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. 93 Section 93. 71.45 (2) (a) 17. of the statutes is created to read:

AB1-CSA1,35,18 71.45 (2) (a) 17. By subtracting from federal taxable income the amount added to federal taxable income under subd. 16., to the extent that the conditions under s. 71.80 (23) are satisfied.

AB1-CSA1, s. 94 Section 94. 71.45 (2) (a) 18. of the statutes is created to read:

AB1-CSA1,35,24 71.45 (2) (a) 18. A deduction shall be allowed for the amount added, pursuant to subd. 16. or s. 71.05 (6) (a) 24., 71.26 (2) (a) 7., or 71.34 (1k) (j), to the federal income of a related entity that paid interest expenses or rental expenses to the insurer, to the extent that the related entity could not offset such amount with the deduction allowable under subd. 17. or s. 71.05 (6) (b) 45., 71.26 (2) (a) 8., or 71.34 (1k) (k).

AB1-CSA1, s. 95 Section 95. 71.80 (1) (b) of the statutes is amended to read:

AB1-CSA1,36,11 71.80 (1) (b) 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 the secretary's delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if the secretary 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 sub. (23) and ss. 71.05 (6) (a) 24. and (b) 45., 71.26 (2) (a) 7. and 8., 71.34 (1k) (j) and (k), and 71.45 (2) (a) 16. and 17.

AB1-CSA1, s. 96 Section 96. 71.80 (23) of the statutes is created to read:

AB1-CSA1,36,17 71.80 (23) Related entity addbacks. (a) The deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall be allowed for any interest expenses or rental expenses described in ss. 71.05 (6) (a) 24., 71.26 (2) (a) 7., 71.34 (1k) (j), or 71.45 (2) (a) 16. if any of the following applies to the interest expenses or rental expenses:

AB1-CSA1,37,6 1. The related entity to which the taxpayer paid, accrued, or incurred the interest expenses or rental expenses during the taxable year directly or indirectly paid, accrued, or incurred such amounts in the same taxable year to a person who is not a related entity or the related entity to which the taxpayer paid, accrued, or incurred such expenses is a holding company or a direct or indirect subsidiary of a holding company, as defined in 12 USC 1841 (a) or (l) or 12 USC 1467a (a) (1) (D), not including any entity that is organized under the laws of another jurisdiction and that primarily holds and manages investments of a bank, subsidiary, or affiliate. For purposes of this subdivision, "interest" does not include interest that is paid in connection with any debt that is incurred to acquire the taxpayer's assets or stock under section 368 of the Internal Revenue Code. If a portion of such an interest expense or rental expense is paid, accrued, or incurred in the same taxable year to a person who is not a related entity, that portion shall be allowed as a deduction to the taxpayer.

AB1-CSA1,37,22 2. The related entity was subject to tax on, or measured by, its net income or receipts in this state or any state, U.S. possession, or foreign country; the related entity's tax base in such state, U.S. possession, or foreign country included the income received from the taxpayer for the interest expenses or rental expenses; the related entity's aggregate effective tax rate applied to such income or receipts was at least 80 percent of the taxpayer's aggregate effective tax rate; and the related entity is not a real estate investment trust under section 856 of the Internal Revenue Code, other than a qualified real estate investment trust. For purposes of this subdivision, "any state, U.S. possession, or foreign country" does not include any state, U.S. possession, or foreign country under the laws of which the taxpayer files with the related entity, or the related entity files with another entity, a combined income tax report or return, a consolidated income tax report or return, or any other report or return that is due because of the imposition of a tax that is measured on or by income or receipts, if the report or return results in eliminating the tax effects of transactions, directly or indirectly, between either the taxpayer and the related entity or between the related entity and another entity.

AB1-CSA1,38,4 3. The taxpayer establishes that the transaction satisfies any other conditions that the department considers relevant, based on the facts and circumstances, to determine that the primary motivation for the transaction was one or more business purposes other than the avoidance or reduction of state income or franchise taxes; that the transaction changed the economic position of the taxpayer in a meaningful way apart from tax effects; and that the interest expenses or rental expenses were paid, accrued, or incurred using terms that reflect an arm's-length relationship.

AB1-CSA1,38,12 (b) Notwithstanding par. (a), the deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall not be allowed for any interest expenses or 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, if the aggregate amount paid, accrued, or incurred for those related entity transactions is not disclosed on a separate form prescribed by the department in the manner prescribed by the department.

AB1-CSA1, s. 97 Section 97. 79.04 (4m) of the statutes, as created by 2007 Wisconsin Act 20, is renumbered 79.04 (4m) (a) and amended to read:

AB1-CSA1,38,22 79.04 (4m) (a) Beginning Except as provided in par. (b), beginning with distributions in 2009, for production plants described under subs. (1) and (2), if in any year the payments to the municipality and county in which the production plant is located would be greater under subs. (6) and (7) (c) 1. based on the production plant's name-plate capacity than under sub. (1) or (2) based on the depreciated net book value of the production plant, the municipality and county shall receive payments under subs. (6) and (7) (c) 1., rather than under sub. (1) or (2), beginning in that year and in each year thereafter.

AB1-CSA1, s. 98 Section 98. 79.04 (4m) (b) of the statutes is created to read:

AB1-CSA1,39,7 79.04 (4m) (b) For municipalities where production plants are located, if the combination of amounts determined for production plants under sub. (1) or under subs. (6) and (7) (c) 1. and the amounts determined for substations and general structures under sub. (1) are less for a municipality than the amount determined under sub. (1) based on the value of the property used to calculate the municipality's payment in 1990, reduced to reflect the value of property that is no longer in use, the municipality's payment shall be calculated under sub. (1) using the value of the property used to calculate the municipality's payment in 1990, reduced to reflect the value of property no longer in use.

AB1-CSA1, s. 99 Section 99. 86.30 (2) (e) of the statutes is amended to read:

AB1-CSA1,39,19 86.30 (2) (e) Aid payments. General transportation aids under this section shall be calculated and distributed on the basis of a calendar year. General transportation aids to municipalities shall be paid in 4 equal installments on the first Monday in January, April, July and October. General transportation aids to counties shall be paid in 3 installments consisting of 25 percent of the amount under sub. (9) (b) on the first Monday in January, 50 percent of the amount under sub. (9) (b) on the first Monday in July, and 25 percent of the amount under sub. (9) (b) on the first Monday in October. If adjustments are necessary, the department may adjust any of the scheduled aid payments in a calendar year. The payments shall be made from the appropriation under s. 20.395 (1) (as) or (at) for the fiscal year in which the payments are made.

AB1-CSA1, s. 100 Section 100. 100.52 (1) (bm) of the statutes is created to read:

AB1-CSA1,39,22 100.52 (1) (bm) "Commercial mobile service" has the meaning given in s. 196.01 (2i).

AB1-CSA1, s. 101 Section 101. 100.52 (1) (f) of the statutes is amended to read: