AB524: Bill Text

AB524, s. 4 Section 4. 71.07 (2r) of the statutes is created to read:

AB524,3,12 71.07 (2r) Equity investment in venture capital fund credit. (a) In this subsection:

AB524,3,13 1. "Board" means the Wisconsin capital investment board.

AB524,3,16 2. "Claimant" means a sole proprietor, a partner, a member of a limited liability company, or a shareholder of a tax-option corporation who files a claim under this subsection.

AB524,3,17 3. "Equity investment" means the purchase of an ownership interest.

AB524,3,19 4. "Venture capital fund" means a venture capital fund certified under s. 560.20 (2).

AB524,3,23 (b) Subject to the limitations provided under this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 6% of the claimant's equity investment in a venture capital fund in the taxable year.

AB524,4,2 (c) 1. The maximum credit that a claimant may claim under this subsection may not exceed $60,000 in a taxable year and the total amount of the claims for all claimants under this subsection, s. 71.28 (2r), and s. 71.47 (2r) may not exceed $5,000,000 in any fiscal year.

AB524,4,6 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a notice issued by the board under s. 560.20 (3) indicating that the board has certified the venture capital fund as eligible to receive equity investments that qualify for the credit.

AB524,4,8 3. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

AB524,4,16 4. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under par. (b), but the eligibility for, and the amount of, the credit are based on their payment of an equity investment, as described in this subsection. A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest.

AB524, s. 5 Section 5. 71.07 (5d) of the statutes is created to read:

AB524,4,18 71.07 (5d) Equity investment credit. (a) Definitions. In this subsection:

AB524,4,19 1. "Claimant" means an individual who files a claim under this subsection.

AB524,4,21 2. "Community-based seed capital fund" means a fund certified under s. 560.20 (2) (b).

AB524,4,22 3. "Qualifying business" means a business certified under s. 560.20 (2) (c).

AB524,5,2 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 20% of the claimant's cash investment in the taxable year to which the claim relates in a qualifying business or in a community-based seed capital fund.

AB524,5,6 (c) Limitations. 1. The maximum credit that a claimant may claim under this subsection may not exceed $50,000 in a taxable year and the total amount of the claims for all claimants under this subsection may not exceed $3,000,000 in any fiscal year.

AB524,5,8 2. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB524,5,18 3. For a claimant who is a nonresident or part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant or the claimant's spouse, or both, are nonresidents or part-year residents of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.

AB524,5,24 (d) Administration. 1. If a credit computed under this subsection is not entirely offset against income taxes otherwise due, the unused balance may be carried forward and credited against income taxes otherwise due for the following 5 taxable years to the extent not offset by those taxes otherwise due in all intervening years between the year in which the investment under par. (b) was paid and the year in which the carry-forward credit is claimed.

AB524,6,2 2. Section 71.07 (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB524,6,5 3. Community-based seed capital funds and qualifying businesses shall submit to the department any information that the department considers necessary to administer this subsection.

AB524, s. 6 Section 6. 71.10 (4) (gc) of the statutes is created to read:

AB524,6,7 71.10 (4) (gc) Equity investment credit under s. 71.07 (5d).

AB524, s. 7 Section 7. 71.10 (4) (gx) of the statutes is created to read:

AB524,6,10 71.10 (4) (gx) Equity investment in venture capital fund credit under s. 71.07 (2r).

AB524, s. 8 Section 8. 71.21 (4) of the statutes is amended to read:

AB524,6,14 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (2r), (3g), and (3s) and passed through to partners shall be added to the partnership's income.

AB524, s. 9 Section 9. 71.26 (2) (a) of the statutes is amended to read:

AB524,7,5 71.26 (2) (a) Corporations in general. The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (2r), and (3g) 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) (g) 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 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).

AB524, s. 10 Section 10. 71.28 (2r) of the statutes is created to read:

AB524,7,8 71.28 (2r) Equity investment in venture capital fund credit. (a) In this subsection:

AB524,7,9 1. "Board" means the Wisconsin capital investment board.

AB524,7,10 2. "Claimant" means a person who files a claim under this subsection.

AB524,7,11 3. "Equity investment" means the purchase of an ownership interest.

AB524,7,13 4. "Venture capital fund" means a venture capital fund certified under s. 560.20 (2).

AB524,7,17 (b) Subject to the limitations provided under this subsection, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, an amount equal to 6% of the claimant's equity investment in a venture capital fund in the taxable year.

AB524,7,21 (c) 1. The maximum credit that a claimant may claim under this subsection may not exceed $60,000 in a taxable year and the total amount of the claims for all claimants under this subsection, s. 71.07 (2r), and s. 71.47 (2r) may not exceed $5,000,000 in any fiscal year.

AB524,7,25 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a notice issued by the board under s. 560.20 (3) indicating that the board has certified the venture capital fund as eligible to receive equity investments that qualify for the credit.

AB524,8,2 3. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

AB524,8,10 4. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under par. (b), but the eligibility for, and the amount of, the credit are based on their payment of an equity investment, as described in this subsection. A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest.

AB524, s. 11 Section 11. 71.30 (3) (eop) of the statutes is created to read:

AB524,8,13 71.30 (3) (eop) Equity investment in venture capital fund credit under s. 71.28 (2r).

AB524, s. 12 Section 12. 71.34 (1) (g) of the statutes is amended to read:

AB524,8,17 71.34 (1) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (2r), (3), and (3g) and passed through to shareholders.

AB524, s. 13 Section 13. 71.45 (2) (a) 10. of the statutes is amended to read:

AB524,8,24 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx) and (2r) 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) (g) and the amount of credit computed under s. 71.47 (1), (3), (4), and (5).

AB524, s. 14 Section 14. 71.47 (2r) of the statutes is created to read:

AB524,9,2 71.47 (2r) Equity investment in venture capital fund credit. (a) In this subsection:

AB524,9,3 1. "Board" means the Wisconsin capital investment board.

AB524,9,4 2. "Claimant" means a person who files a claim under this subsection.

AB524,9,5 3. "Equity investment" means the purchase of an ownership interest.

AB524,9,7 4. "Venture capital fund" means a venture capital fund certified under s. 560.20 (2).

AB524,9,11 (b) Subject to the limitations provided under this subsection, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, an amount equal to 6% of the claimant's equity investment in a venture capital fund in the taxable year.

AB524,9,15 (c) 1. The maximum credit that a claimant may claim under this subsection may not exceed $60,000 in a taxable year and the total amount of the claims for all claimants under this subsection, s. 71.07 (2r), and s. 71.28 (2r) may not exceed $5,000,000 in any fiscal year.

AB524,9,19 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a notice issued by the board under s. 560.20 (3) indicating that the board has certified the venture capital fund as eligible to receive equity investments that qualify for the credit.

AB524,9,21 3. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

AB524,9,25 4. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under par. (b), but the eligibility for, and the amount of, the credit are based on their payment of an equity investment, as described in this subsection. A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest.

AB524, s. 15 Section 15. 71.49 (1) (eop) of the statutes is created to read:

AB524,10,7 71.49 (1) (eop) Equity investment in venture capital fund credit under s. 71.47 (2r).

AB524, s. 16 Section 16. 73.03 (35p) of the statutes is created to read:

AB524,10,12 73.03 (35p) To deny a portion of a credit claimed under s. 71.07 (2r), 71.28 (2r), or 71.47 (2r), if granting the full amount claimed would violate a requirement under s. 71.07 (2r) (c) 1. by bringing the total of the credits claimed under ss. 71.07 (2r), 71.28 (2r), and 71.47 (2r) over $5,000,000 in any fiscal year.

AB524, s. 17 Section 17. 73.03 (35r) of the statutes is created to read:

AB524,10,17 73.03 (35r) To deny a portion of a credit claimed under s. 71.07 (5d) if granting the full amount claimed would violate a requirement under s. 71.07 (5d) (c) 1. by bringing the total of the credits claimed under s. 71.07 (5d) over $3,000,000 in any fiscal year.

AB524, s. 18 Section 18. 77.92 (4) of the statutes is amended to read:

AB524,11,8 77.92 (4) "Net business income", with respect to a partnership, means taxable income as calculated under section 703 of the Internal Revenue Code; plus the items of income and gain under section 702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section 702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section 707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), and (2r), (3g), and (3s); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain, loss, and deductions from farming. "Net business income", with respect to a natural person, estate, or trust, means profit from a trade or business for federal income tax purposes and includes net income derived as an employee as defined in section 3121 (d) (3) of the Internal Revenue Code.

AB524, s. 19 Section 19. 560.20 of the statutes is created to read:

AB524,11,11 560.20 Venture capital and seed capital investment program. (1) Definitions. In this section, "board" means the Wisconsin capital investment board.

AB524,11,15 (2) Certification. (a) The board, in consultation with the department, shall promulgate rules establishing a procedure for the board to certify venture capital funds as eligible to receive equity investments that qualify for the tax credits under ss. 71.07 (2r), 71.28 (2r), and 71.47 (2r). The rules shall do all of the following:

AB524,11,17 1. Require a venture capital fund that desires to obtain a certification to file an application with the board.

AB524,11,22 2. Permit a venture capital fund to obtain a certification only if the venture capital fund is a private seed and venture capital partnership or entity fund, the venture capital fund maintains a physical presence in Wisconsin, and the venture capital fund makes a commitment to consider making equity investments in businesses located in Wisconsin.

AB524,12,2 3. Require an applicant for certification or a certified venture capital fund to provide the board with any information the board determines is necessary to ensure eligibility for certification and compliance with this paragraph and rules promulgated under this paragraph.

AB524,12,6 (b) The board, in consultation with the department, shall promulgate rules establishing a procedure for the board to certify community-based seed capital funds as eligible to receive investments that qualify for the applicable tax credit under s. 71.07 (5d). The rules shall do all of the following:

AB524,12,8 1. Require a community-based seed capital fund that desires to obtain a certification to file an application with the board.

AB524,12,12 2. Permit a community-based seed capital fund to obtain a certification only if the fund is a partnership or limited liability company with a total of both capital commitments from investors and investments in businesses certified under par. (c) of at least $500,000 but not more than $3,000,000.

AB524,12,19 3. Permit a community-based seed capital fund to obtain a certification only if the fund has at least 10 individual investors who are not affiliates with each other and no investor and his or her affiliates own more than 25% of the ownership interests outstanding in the fund. In this subdivision, "affiliate" means a spouse, child, or sibling of an investor or a corporation, partnership, limited liability company, tax-option corporation, or trust in which an investor has a controlling equity interest or in which an investor exercises management control.

AB524,12,23 4. Require an applicant for certification or a certified community-based seed capital fund to provide the board with any information the board determines is necessary to ensure eligibility for certification and compliance with this paragraph and rules promulgated under this paragraph.

AB524,13,2 (c) The board, in consultation with the department, shall promulgate rules establishing a procedure for the board to certify businesses as eligible to receive investments that qualify for the applicable tax credit under s. 71.07 (5d). The rules shall do all of the following:

AB524,13,4 1. Require a business that desires to obtain a certification to file an application with the board.

AB524,13,7 2. Permit a business to obtain a certification only if the business has been in operation for no more than 3 years and if its principal business operations are located in this state.

AB524,13,14 3. Permit a business to obtain a certification only if the owner of the business has at least 3 years of relevant business experience, or any other experience that the board determines is sufficient to increase the likelihood of the success of the business, or has successfully completed an entrepreneurial venture development curriculum; has a degree in business management, business administration, or a related field; or has any other training that the board determines is sufficient to increase the likelihood of the success of the business.

AB524,13,17 4. Permit a business to obtain a certification only if the business is not engaged primarily in retail sales, real estate, or providing health care or other professional services.

AB524,13,19 5. Permit a business to obtain a certification only if the net worth of the business does not exceed $3,000,000.

AB524,13,23 6. Require an applicant for certification or a certified community-based seed capital fund to provide the board with any information the board determines is necessary to ensure eligibility for certification and compliance with this paragraph and rules promulgated under this paragraph.

AB524,14,8 (3) Notice of certification. Upon request of any person, the board shall issue a written notice indicating whether a venture capital fund, community-based seed capital fund, or business is certified under this section. Each notice under this subsection that indicates a venture capital fund, community-based seed capital fund, or business is certified and shall include the following statement: "The Wisconsin Capital Investment Board has not recommended or approved an investment in this entity or assessed the merits or risks of such an investment. Investors should rely solely on their own investigation and analysis and seek investment, financial, legal, and tax advice before making their own decision regarding investment in this entity."

AB524,14,11 (4) Notice of decertification. Upon the issuance or discontinuance of a certification, the board shall notify the department of revenue and provide the department of revenue a copy of the certification or discontinuance.

AB524,14,14 (5) Staff. The board may employ an executive director outside the classified service who may employ staff within the classified service with appropriate expertise to carry out this section.

AB524, s. 20 Section 20 . Nonstatutory provisions.