Amendment AA7-ASA1-AB40

AB40-ASA1-AA7,7,9 71.22 (1t) For purposes of s. 71.25 (9) (df), and (dh), (dj), and (dk), "domicile" means an individual's true, fixed, and permanent home where the individual intends to remain permanently and indefinitely and to which, whenever absent, the individual intends to return, except that no individual may have more than one domicile at any time.

AB40-ASA1-AA7, s. 1889nm Section 1889nm. 71.22 (3g) of the statutes is repealed.

AB40-ASA1-AA7, s. 1889nn Section 1889nn. 71.22 (3h) of the statutes is repealed.

AB40-ASA1-AA7, s. 1889np Section 1889np. 71.22 (3m) of the statutes is amended to read:

AB40-ASA1-AA7,7,15 71.22 (3m) For purposes of ss. s. 71.26 (2) (a) 7. and 9. and 71.255 (2) (d) 1., "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code, as modified under s. 71.26 (3).".

AB40-ASA1-AA7,7,17 19. Page 751, line 14: delete the material beginning with that line and ending with page 753, line 5, and substitute:

AB40-ASA1-AA7,7,18 " Section 1891e. 71.22 (6d) of the statutes is repealed.

AB40-ASA1-AA7, s. 1891f Section 1891f. 71.22 (9g) of the statutes is amended to read:

AB40-ASA1-AA7,7,23 71.22 (9g) For purposes of s. 71.25 (9) (df), and (dh), (dj), and (dk), "state" means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States, unless the context requires that "state" means only the state of Wisconsin.

AB40-ASA1-AA7, s. 1891g Section 1891g. 71.25 (intro.) of the statutes is amended to read:

AB40-ASA1-AA7,8,3 71.25 Situs of income; allocation and apportionment. (intro.) For purposes of determining the situs of income under this section and s. 71.255 (5) (a) 1. and 2.:

AB40-ASA1-AA7, s. 1891h Section 1891h. 71.25 (5) (b) of the statutes is renumbered 71.25 (5) (b) 1.

AB40-ASA1-AA7, s. 1891i Section 1891i. 71.25 (5) (b) 2. of the statutes is created to read:

AB40-ASA1-AA7,8,11 71.25 (5) (b) 2. All income, gain, or loss from intangible property that is earned by a personal holding company, as defined in section 542 of the Internal Revenue Code, as amended to December 31, 1974, shall be allocated to the residence of the taxpayer, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state.

AB40-ASA1-AA7, s. 1891j Section 1891j. 71.25 (9) (a) of the statutes is amended to read:

AB40-ASA1-AA7,8,22 71.25 (9) (a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under par. (b) 1. and 2. plus 100 50 percent of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of applying pars. (b) 2m. and 3. and (c), if a taxpayer is within another state's jurisdiction for income or franchise tax purposes for any part of the taxable year, it is considered to be within that state's jurisdiction for income or franchise tax purposes for the entire taxable year.

AB40-ASA1-AA7, s. 1891k Section 1891k. 71.25 (9) (d) of the statutes is created to read:

AB40-ASA1-AA7,9,4 71.25 (9) (d) Except as provided in pars. (df) and (dh), sales, other than sales of tangible personal property, are in this state if the income-producing activity is performed in this state. If the income-producing activity is performed both in and outside this state the sales shall be divided between those states having jurisdiction to tax such business in proportion to the direct costs of performance incurred in each such state in rendering this service.

AB40-ASA1-AA7, s. 1891L Section 1891L. 71.25 (9) (df) 3. of the statutes is created to read:

AB40-ASA1-AA7,9,9 71.25 (9) (df) 3. If the taxpayer is not subject to income tax in the state in which the gross receipts are considered received under this paragraph, but the taxpayer's commercial domicile is in this state, 50 percent of those gross receipts shall be included in the numerator of the sales factor.

AB40-ASA1-AA7, s. 1891m Section 1891m. 71.25 (9) (dh) 4. of the statutes is created to read:

AB40-ASA1-AA7,9,16 71.25 (9) (dh) 4. If the taxpayer is not subject to income tax in the state in which the benefit of the service is received, the benefit of the service is received in this state to the extent that the taxpayer's employees or representatives performed services from a location in this state. Fifty percent of the taxpayer's receipts that are considered received in this state under this paragraph shall be included in the numerator of the sales factor.

AB40-ASA1-AA7, s. 1891n Section 1891n. 71.25 (9) (dj) of the statutes is repealed.

AB40-ASA1-AA7, s. 1891p Section 1891p. 71.25 (9) (dk) of the statutes is repealed.

AB40-ASA1-AA7, s. 1891q Section 1891q. 71.25 (10) (a) 1. of the statutes is renumbered 71.25 (10) (a).

AB40-ASA1-AA7, s. 1891r Section 1891r. 71.25 (10) (a) 2. of the statutes is repealed.

AB40-ASA1-AA7, s. 1891s Section 1891s. 71.255 of the statutes is repealed.".

AB40-ASA1-AA7,9,22 20. Page 753, line 17: delete lines 17 to 25.

AB40-ASA1-AA7,9,23 21. Page 753, line 25: after that line insert:

AB40-ASA1-AA7,9,24 " Section 1896h. 71.26 (2) (a) 7. of the statutes is amended to read:

AB40-ASA1-AA7,10,5 71.26 (2) (a) 7. Plus the amount deducted or excluded under the Internal Revenue Code for interest expenses, and rental expenses, intangible expenses, and management fees 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.

AB40-ASA1-AA7, s. 1896k Section 1896k. 71.26 (2) (a) 9. of the statutes is amended to read:

AB40-ASA1-AA7,10,12 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, intangible expenses, or management fees 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.".

AB40-ASA1-AA7,10,13 22. Page 755, line 14: after that line insert:

AB40-ASA1-AA7,10,14 " Section 1897m. 71.26 (3) (x) of the statutes is amended to read:

AB40-ASA1-AA7,10,18 71.26 (3) (x) Sections 1501 to 1505, 1551, 1552, 1563 and 1564 (relating to consolidated returns) are excluded, except that U.S. Treasury Regulation 1.1502-13, relating to deferred gain or loss from an intercompany transaction, applies to transactions between combined group members under s. 71.255 (4) (g).".

AB40-ASA1-AA7,10,20 23. Page 775, line 15: delete the material beginning with that line and ending with page 776, line 13.

AB40-ASA1-AA7,10,21 24. Page 804, line 16: after that line insert:

AB40-ASA1-AA7,10,22 " Section 1997d. 71.28 (4) (ad) 1. of the statutes is amended to read:

AB40-ASA1-AA7,11,13 71.28 (4) (ad) 1. Except as provided in subds. 2. and 3., any corporation may credit against taxes otherwise due under this chapter an amount equal to 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (d), (df) 1., and 2., (dh) 1., 2., and 3., (dj), and (dk). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

AB40-ASA1-AA7, s. 1997e Section 1997e. 71.28 (4) (ad) 2. of the statutes is amended to read:

AB40-ASA1-AA7,12,7 71.28 (4) (ad) 2. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk) (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

AB40-ASA1-AA7, s. 1987ec Section 1987ec. 71.28 (4) (ad) 3. of the statutes is amended to read:

AB40-ASA1-AA7,13,2 71.28 (4) (ad) 3. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to the design and manufacturing of energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid-electric vehicles, that reduce the demand for natural gas or electricity or improve the efficiency of its use, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk) (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.".

AB40-ASA1-AA7,13,4 25. Page 805, line 7: delete that line and substitute "Wisconsin under s. 71.25 (9) (b) 1. and 2., (d), (df) 1. and 2., and (dh) 1., 2., and 3., (dj), and".

AB40-ASA1-AA7,13,5 26. Page 805, line 8: delete "(dk)" and substitute "(dk)".

AB40-ASA1-AA7,13,7 27. Page 809, line 16: delete the material beginning with that line and ending with page 811, line 1.

AB40-ASA1-AA7,13,8 28. Page 811, line 1: after that line insert:

AB40-ASA1-AA7,13,9 " Section 2011e. 71.30 (2) of the statutes is amended to read:

AB40-ASA1-AA7,13,21 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, and whether or not unitary) 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).

AB40-ASA1-AA7, s. 2011f Section 2011f. 71.30 (2m) of the statutes is repealed.

AB40-ASA1-AA7, s. 2012e Section 2012e. 71.34 (1c) of the statutes is repealed.

AB40-ASA1-AA7, s. 2012f Section 2012f. 71.34 (1d) of the statutes is repealed.".

AB40-ASA1-AA7,14,1 29. Page 819, line 11: after that line insert:

AB40-ASA1-AA7,14,2 " Section 2013e. 71.34 (1h) of the statutes is repealed.".

AB40-ASA1-AA7,14,3 30. Page 819, line 12: delete lines 12 to 16.

AB40-ASA1-AA7,14,4 31. Page 819, line 16: after that line insert:

AB40-ASA1-AA7,14,5 " Section 2013g. 71.34 (1k) (j) of the statutes is amended to read:

AB40-ASA1-AA7,14,10 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, intangible expenses, and management fees 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.

AB40-ASA1-AA7, s. 2013h Section 2013h. 71.34 (1k) (L) of the statutes is amended to read:

AB40-ASA1-AA7,14,17 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, intangible expenses, or management fees 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.

AB40-ASA1-AA7, s. 2013i Section 2013i. 71.42 (1sg) of the statutes is repealed.

AB40-ASA1-AA7, s. 2013j Section 2013j. 71.42 (1sh) of the statutes is repealed.

AB40-ASA1-AA7, s. 2013k Section 2013k. 71.42 (1t) of the statutes is amended to read:

AB40-ASA1-AA7,14,23 71.42 (1t) For purposes of ss. s. 71.45 (2) (a) 16. and 18. and 71.255 (2) (d) 1., "interest expenses" means interest that would otherwise be deductible under section 163 of the Internal Revenue Code, as adjusted under s. 71.45 (2).".

AB40-ASA1-AA7,14,24 32. Page 827, line 16: after that line insert:

AB40-ASA1-AA7,15,1 " Section 2014e. 71.42 (3c) of the statutes is repealed.

AB40-ASA1-AA7, s. 2014f Section 2014f. 71.43 (2) of the statutes is amended to read:

AB40-ASA1-AA7,15,23 71.43 (2) Franchise tax on corporations. For the privilege of exercising its franchise, buying or selling lottery prizes if the winning tickets were originally bought in this state or doing business in this state in a corporate capacity, except as provided under s. 71.23 (3), every domestic or foreign corporation, except corporations specified in ss. 71.26 (1) and 71.45 (1) (a), shall annually pay a franchise tax according to or measured by its entire Wisconsin net income of the preceding taxable year at the rates set forth in s. 71.46 (2). In addition, except as provided in ss. 71.23 (3), 71.26 (1) and 71.45 (1) (a), a corporation that ceases doing business in this state shall pay a special franchise tax according to or measured by its entire Wisconsin net income for the taxable year during which the corporation ceases doing business in this state at the rate under s. 71.46 (2). Every corporation organized under the laws of this state shall be deemed to be residing within this state for the purposes of this franchise tax. All provisions of this chapter and ch. 73 relating to income taxation of corporations shall apply to franchise taxes imposed under this subsection, unless the context requires otherwise. The tax imposed by this subsection on insurance companies subject to taxation under this chapter shall be based on Wisconsin net income computed under s. 71.45, and no other provision of this chapter relating to computation of taxable income for other corporations shall apply to such insurance companies, except for s. 71.255. All other provisions of this chapter shall apply to insurance companies subject to taxation under this chapter unless the context clearly requires otherwise.".

AB40-ASA1-AA7,16,2 33. Page 827, line 22: delete the material beginning with that line and ending with page 828, line 5.

AB40-ASA1-AA7,16,3 34. Page 828, line 6: delete lines 6 to 22 and substitute:

AB40-ASA1-AA7,16,4 " Section 2015eb. 71.45 (2) (a) 16. of the statutes is amended to read:

AB40-ASA1-AA7,16,9 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, intangible expenses, and management fees 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.

AB40-ASA1-AA7, s. 2015ed Section 2015ed. 71.45 (2) (a) 18. of the statutes is amended to read:

AB40-ASA1-AA7,16,16 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, intangible expenses, or management fees 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).".

AB40-ASA1-AA7,16,17 35. Page 854, line 16: after that line insert:

AB40-ASA1-AA7,16,18 " Section 2109d. 71.47 (4) (ad) 1. of the statutes is amended to read:

AB40-ASA1-AA7,17,9 71.47 (4) (ad) 1. Except as provided in subds. 2. and 3., any corporation may credit against taxes otherwise due under this chapter an amount equal to 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (d), (df) 1., and 2., (dh) 1., 2., and 3., (dj), and (dk). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

AB40-ASA1-AA7, s. 2109e Section 2109e. 71.47 (4) (ad) 2. of the statutes is amended to read:

AB40-ASA1-AA7,18,3 71.47 (4) (ad) 2. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk) (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

AB40-ASA1-AA7, s. 2109f Section 2109f. 71.47 (4) (ad) 3. of the statutes is amended to read:

AB40-ASA1-AA7,18,23 71.47 (4) (ad) 3. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to the design and manufacturing of energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid-electric vehicles, that reduce the demand for natural gas or electricity or improve the efficiency of its use, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk) (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.".

AB40-ASA1-AA7,18,24 36. Page 855, line 7: delete "2., (df) 1." and substitute "2., (d), (df) 1.".

AB40-ASA1-AA7,19,2 37. Page 855, line 8: delete "and 2., (dh) 1., 2., and 3., (dj), and (dk)" and substitute "and 2., and (dh) 1., 2., and 3., (dj), and (dk)".

AB40-ASA1-AA7,19,4 38. Page 859, line 9: delete the material beginning with that line and ending with page 860, line 19.

AB40-ASA1-AA7,19,6 39. Page 860, line 20: delete the material beginning with that line and ending with page 862, line 17.

AB40-ASA1-AA7,19,7 40. Page 862, line 22: after that line insert:

AB40-ASA1-AA7,19,8 " Section 2129d. 71.80 (1) (b) of the statutes is amended to read:

AB40-ASA1-AA7,19,20 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, and whether or not unitary) 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.