LRB-1346/2
JS&MES:jrd:kat
1995 - 1996 LEGISLATURE
March 7, 1996 - Introduced by Representatives Bell, R. Young, Baldwin,
Notestein, Springer, Baldus, Black, Boyle
and Turner, cosponsored by
Senator Burke. Referred to Committee on Ways and Means.
AB990,1,6 1An Act to renumber and amend 71.27 (1), 71.27 (2), 71.46 (1) and 71.46 (2); to
2amend
71.08 (1) (a), 71.23 (2), 71.29 (1) (b), 71.29 (2), 71.29 (7) (b), 71.35 and
371.43 (2); and to create 71.27 (1) (b), 71.27 (2) (b), 71.285, 71.30 (3) (g), 71.46
4(1) (b), 71.46 (2) (b), 71.475 and 71.49 (1) (g) of the statutes; relating to: corpo
5rate income and franchise tax rates, capital gains and a minimum corporate tax
6and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Corporate rate structure
Under current law, the rate for the income tax and franchise tax imposed on cor
porations, including tax-option corporations and insurers, is 7.9%. This bill esta
blishes a graduated rate structure, the highest rate of which is 7.9%.
Corporate minimum tax
This bill creates an alternative minimum tax that is based on the federal mini
mum tax; that is imposed on corporations, including tax-option corporations and in
surers; and that is due if it results in greater liability than the regular corporate in
come tax or franchise tax.
Capital gains
This bill also changes current law by including one-half of the 60% capital gains
exclusion and the net capital gains on certain small business stock as a tax prefer
ence item in the calculation of the alternative minimum tax that applies to individu
als. Generally, tax preference items are benefits received in the form of deductions,
lower tax rates and exclusions.

For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB990, s. 1 1Section 1. 71.08 (1) (a) of the statutes is amended to read:
AB990,2,92 71.08 (1) (a) Adjust the alternative minimum taxable income, as defined in sec
3tion 55 (b) (2) of the internal revenue code, by the amounts under s. 71.05 (6) to (21),
4except s. 71.05 (6) (a) 13. and (b) 5. and 6. and (8) and 50% of the amount calculated
5under s. 71.05 (6) (b) 9.
, by the amounts needed to modify federal alternative tax net
6operating loss deductions to reflect differences between Wisconsin net operating loss
7deductions and federal net operating loss deductions for minimum tax purposes. The
8department of revenue shall by rule define Wisconsin net operating loss deductions
9for minimum tax purposes.
AB990, s. 2 10Section 2. 71.23 (2) of the statutes is amended to read:
AB990,3,711 71.23 (2) Franchise tax. For the privilege of exercising its franchise or doing
12business in this state in a corporate capacity, except as provided under sub. (3), every
13domestic or foreign corporation, except corporations specified in s. 71.26 (1), and ev
14ery nuclear decommissioning trust or reserve fund shall annually pay a franchise tax
15according to or measured by its entire Wisconsin net income of the preceding taxable
16year at the rate set forth in rates under s. 71.27 (2). In addition, except as provided
17in sub. (3) and s. 71.26 (1), a corporation that ceases doing business in this state and
18a nuclear decommissioning trust or reserve fund that is terminated shall pay a spe
19cial franchise tax according to or measured by its entire Wisconsin net income for the
20taxable year during which the corporation ceases doing business in this state or the
21nuclear decommissioning trust or reserve fund is terminated at the rates under s.

171.27 (2). Every corporation organized under the laws of this state shall be deemed
2to be residing within this state for the purposes of this franchise tax. All provisions
3of this chapter and ch. 73 relating to income taxation of corporations shall apply to
4franchise taxes imposed under this subsection, unless the context requires other
5wise. The tax imposed by this subsection on national banking associations shall be
6in lieu of all taxes imposed by this state on national banking associations to the ex
7tent it is not permissible to tax such associations under federal law.
AB990, s. 3 8Section 3. 71.27 (1) of the statutes is renumbered 71.27 (1) (a) and amended
9to read:
AB990,3,1210 71.27 (1) (a) The For taxable years beginning before January 1, 1996, the taxes
11to be assessed, levied and collected upon Wisconsin net incomes of corporations shall
12be computed at the rate of 7.9%.
AB990, s. 4 13Section 4. 71.27 (1) (b) of the statutes is created to read:
AB990,3,1614 71.27 (1) (b) For taxable years beginning after December 31, 1995, the taxes
15to be assessed, levied and collected upon Wisconsin net incomes of corporations shall
16be computed at the following rates:
AB990,3,1717 1. On all net income from $0 to $99,999, 5.9%.
AB990,3,1818 2. On all net income exceeding $99,999 but not exceeding $249,999, 6.4%.
AB990,3,1919 3. On all net income exceeding $249,999 but not exceeding $499,999, 7.4%.
AB990,3,2020 4. On all net income exceeding $499,999, 7.9%.
AB990, s. 5 21Section 5. 71.27 (2) of the statutes is renumbered 71.27 (2) (a) and amended
22to read:
AB990,3,2523 71.27 (2) (a) The For taxable years beginning before January 1, 1996, the corpo
24ration franchise tax imposed under s. 71.23 (2) and measured by Wisconsin net in
25come shall be computed at the rate of 7.9%.
AB990, s. 6
1Section 6. 71.27 (2) (b) of the statutes is created to read:
AB990,4,42 71.27 (2) (b) For taxable years beginning after December 31, 1995, the corpora
3tion franchise tax imposed under s. 71.23 (2) and measured by Wisconsin net income
4shall be computed at the following rates:
AB990,4,55 1. For all net income from $0 to $99,999, 5.9%.
AB990,4,66 2. For all net income exceeding $99,999 but not exceeding $249,999, 6.4%.
AB990,4,77 3. For all net income exceeding $249,999 but not exceeding $499,999, 7.4%.
AB990,4,88 4. For all net income exceeding $499,999, 7.9%.
AB990, s. 7 9Section 7. 71.285 of the statutes is created to read:
AB990,4,14 1071.285 Corporate minimum tax. (1) Imposition. If the tax imposed on a
11corporation under s. 71.23 (1) or (2), not considering the credits under s. 71.28 (1di),
12(1dj), (1dL), (1ds) and (2m) and subch. IX is less than the tax under this section, there
13is imposed on a corporation, instead of the tax under s. 71.23 (1) or (2), an alternative
14minimum tax computed as follows:
AB990,4,1715 (a) Adjust net apportionable income of a corporation subject to apportionment
16and net Wisconsin income of a business subject to separate accounting in the manner
17under section 56, except section 56 (a) (4), and section 58 of the internal revenue code.
AB990,4,2018(b) Add to the amount under par. (a) the preferences under section 57 of the in
19ternal revenue code to the extent that those preferences reduce net income for pur
20poses of the tax imposed under s. 71.23 (1) or (2).
AB990,4,2321 (c) Multiply the amount under par. (b) by the apportionment percentage under
22s. 71.25 applicable to the corporation for purposes of the tax imposed under s. 71.23
23(1) or (2) if the corporation is subject to apportionment.
AB990,4,2524 (d) Add nonapportionable income that has a situs in this state to the amount
25under par. (c).
AB990,5,3
1(e) From the amount under par. (d), subtract Wisconsin minimum tax net busi
2ness losses. The department of revenue shall promulgate rules defining net business
3losses for minimum tax purposes.
AB990,5,64(f) Multiply the exemption amount under section 55 (d) (2) and (3) of the inter
5nal revenue code by the apportionment percentage under s. 71.25 applicable to the
6corporation for purposes of the tax imposed under s. 71.23 (1) or (2).
AB990,5,77 (g) Subtract the amount under par. (f) from the amount under par. (e).
AB990,5,118 (h) If the corporation is a tax-option corporation, subtract from the amount un
9der par. (g) the portion of that amount equal to the ownership percentage of share
10holders who are residents of this state and of nonresident shareholders who file indi
11vidual returns in this state for purposes of the tax imposed under s. 71.02 or 71.08.
AB990,5,1212 (i) Multiply the amount under par. (h) by 4.6%.
AB990,5,1313 (j) Subtract the credit under s. 71.28 (3) (b) from the amount under par. (i).
AB990,5,19 14(2) Administration. The department of revenue may impose, enforce and col
15lect the minimum tax provided in this section and may take any action, conduct any
16proceeding and in all respects proceed as it is authorized in respect to income or fran
17chise taxes imposed in this chapter. The income and franchise tax provisions in this
18chapter relating to assessments, refunds, appeals, collection, interest and penalties
19shall apply to the minimum tax.
AB990, s. 8 20Section 8. 71.29 (1) (b) of the statutes is amended to read:
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