AB1177: Bill Text

AB1177,15,8 3. The maximum amount of the credit that may be awarded under this subsection and ss. 71.07 (2s) and 71.47 (2s) for all claimants in each taxable year may not exceed $100,000,000.

AB1177,15,16 4. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). 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 interests.

AB1177,15,18 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

AB1177, s. 15 Section 15. 71.30 (3) (eor) of the statutes is created to read:

AB1177,15,20 71.30 (3) (eor) Venture capital investment credits under s. 71.28 (2r).

AB1177, s. 16 Section 16. 71.30 (3) (eos) of the statutes is created to read:

AB1177,15,22 71.30 (3) (eos) Tribal gaming compact credit under s. 71.28 (2s).

AB1177, s. 17 Section 17. 71.34 (1) (g) of the statutes is amended to read:

AB1177,16,3 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), (2s), (3), (3g), (3n), (3t), and (5b) and passed through to shareholders.

AB1177, s. 18 Section 18. 71.45 (2) (a) 10. of the statutes is amended to read:

AB1177,16,10 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (2r), (2s), (3n), and (5b) 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), (3t), (4), and (5).

AB1177, s. 19 Section 19. 71.47 (2r) of the statutes is created to read:

AB1177,16,13 71.47 (2r) Venture capital investment credits. (a) Definitions. In this subsection:

AB1177,16,14 1. "Broker-dealer" has the meaning given in s. 551.02 (3).

AB1177,16,15 2. "Claimant" means a person who files a claim under this subsection.

AB1177,16,16 3. "Fund manager" has the meaning given in s. 560.20 (1) (e).

AB1177,16,22 (b) Filing claims. For taxable years beginning on or after January 1, 2006, for amounts claimed under subd. 2., and beginning on or after January 1, 2007, for amounts claimed under subds. 1., 3., and 4., subject to the limitations provided under this subsection and ss. 73.03 (35p) and 560.20, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, any of the following amounts:

AB1177,17,2 1. In each taxable year for 6 years, beginning with the taxable year in which the claimant's initial investment is made, 10 percent of the claimant's initial investment paid to a fund manager that the fund manager invests, as an early stage seed investment, in a business certified under s. 560.20 (2) (b).

AB1177,17,6 2. In each taxable year for 4 years, beginning with the taxable year in which the claimant's initial investment is made, 15 percent of the claimant's initial investment that the claimant invests, as an angel investment, in a business certified under s. 560.20 (2) (e).

AB1177,17,10 3. In each taxable year for 6 years, beginning with the taxable year in which the claimant's initial investment is made, 7 percent of the claimant's initial investment paid to a fund manager that the fund manager invests, as a venture growth investment, in a business certified under s. 560.20 (2) (c).

AB1177,17,15 4. In each taxable year for 6 years, beginning with the taxable year in which the claimant's initial investment is made, 10 percent of the claimant's initial investment paid to a fund manager that the fund manager invests, as a women-, minority-, and community-based investment, in a business certified under s. 560.20 (2) (d).

AB1177,17,21 (bm) Filing claims; broker-dealer and finder. For taxable years beginning on or after January 1, 2006, subject to the limitations provided under this subsection and s. 560.20, a claimant who is a broker-dealer or a finder may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, an amount equal to 10 percent of the first $500,000 raised in the taxable year in an offering of a business certified under s. 560.20 (2) (b).

AB1177,17,24 (c) Limitations. 1. a. The maximum amount of the credits that may be claimed under par. (b) 1. and ss. 71.07 (2r) (b) 1. and 71.28 (2r) (b) 1. for all taxable years combined is $70,000,000.

AB1177,18,3 b. The maximum amount of the credits that may be claimed under par. (b) 2. and ss. 71.07 (2r) (b) 2. and 71.28 (2r) (b) 2. for all taxable years combined is $25,000,000.

AB1177,18,6 c. The maximum amount of the credits that may be claimed under par. (b) 3. and ss. 71.07 (2r) (b) 3. and 71.28 (2r) (b) 3. for all taxable years combined is $42,000,000.

AB1177,18,9 d. The maximum amount of the credits that may be claimed under par. (b) 4. and ss. 71.07 (2r) (b) 4. and 71.28 (2r) (b) 4. for all taxable years combined is $10,000,000.

AB1177,18,11 e. The maximum amount of the credit that may be claimed under par. (bm) and ss. 71.07 (2r) (bm) and 71.28 (2r) (bm) for all taxable years combined is $3,000,000.

AB1177,18,19 2. 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 amounts under par. (b). 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 or as specially allocated in their organizational documents.

AB1177,18,21 (d) Administration. 1. 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.

AB1177,18,25 2. A claimant may sell a credit under this subsection to another person who is subject to the taxes imposed under this subchapter, if the claimant notifies the department of the sale and includes with the notification a copy of the transfer documents.

AB1177, s. 20 Section 20. 71.47 (2s) of the statutes is created to read:

AB1177,19,4 71.47 (2s) Tribal gaming compact credit. (a) Definition. In this subsection, "claimant" means a Native American tribe that is located in this state, has entered into a gaming compact with this state, and files a claim under this subsection.

AB1177,19,9 (b) Filing claims. Subject to the limitations provided in this subsection, for taxable years beginning after December 31, 2005, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of the taxes, an amount equal to the amount the claimant paid in the taxable year to the state pursuant to a gaming compact, not to exceed $10,000,000 in any taxable year.

AB1177,19,12 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant, in the taxable year, invests in a business this is certified to receive investments under s. 560.20 (2).

AB1177,19,14 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return proof of the investment described under subd. 1.

AB1177,19,17 3. The maximum amount of the credit that may be awarded under this subsection and ss. 71.07 (2s) and 71.28 (2s) for all claimants in each taxable year may not exceed $100,000,000.

AB1177,19,25 4. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). 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 interests.

AB1177,20,2 (d) Administration. 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.

AB1177, s. 21 Section 21. 71.49 (1) (eor) of the statutes is created to read:

AB1177,20,4 71.49 (1) (eor) Venture capital investment credits under s. 71.47 (2r).

AB1177, s. 22 Section 22. 71.49 (1) (eos) of the statutes is created to read:

AB1177,20,6 71.49 (1) (eos) Tribal gaming compact credit under s. 71.47 (2s).

AB1177, s. 23 Section 23. 73.03 (35p) of the statutes is created to read:

AB1177,20,11 73.03 (35p) To deny a portion of any credit claimed under s. 71.07 (2r) (b) or (2s) (b), 71.28 (2r) (b) or (2s) (b), or 71.47 (2r) (b) or (2s) (b), if granting the full amount claimed would violate a limitation specified under s. 71.07 (2r) (c) 1. or (2s) (b) or (c) 3., 71.28 (2r) (c) 1. or (2s) (b) or (c) 3., or 71.47 (2r) (c) 1. or (2s) (b) or (c) 3.

AB1177, s. 24 Section 24. 77.92 (4) of the statutes is amended to read:

AB1177,21,2 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), (2r), (2s), (3g), (3s), (3n), (3t), and (5b); 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.

AB1177, s. 25 Section 25. 560.20 of the statutes is created to read:

AB1177,21,5 560.20 Venture capital investment program. (1) Definitions. In this section:

AB1177,21,6 (a) "Angel investor" means any of the following:

AB1177,21,8 1. An individual who reviews new businesses or proposed new businesses for potential investment of the individual's money.

AB1177,21,9 2. A network of individuals who satisfy subd. 1.

AB1177,21,10 (b) "Board" means the Wisconsin economic leadership board.

AB1177,21,12 (c) "Capital investment corporation or partnership" means the corporation or partnership selected under sub. (1m).

AB1177,21,15 (e) "Fund manager" means a person who is selected by and under contract with the capital investment corporation or partnership to manage investment funds established by the capital investment corporation or partnership.

AB1177,21,19 (f) "Native American business" means a business that is owned or operated by a member of a federally recognized American Indian tribe or band in this state or that is located within the boundaries of a federally recognized American Indian reservation in this state.

AB1177,22,2 (1m) Selection of capital investment corporation or partnership. No later than the first day of the 2nd month beginning after the effective date of this subsection .... [revisor inserts date], the board shall select a corporation organized under ch. 180 or a partnership organized under ch. 179 to perform the duties of a capital investment corporation or partnership as specified under this section. The board shall select a corporation or partnership that satisfies, or, if applicable, makes a commitment to satisfy, all of the following:

AB1177,22,9 (a) The corporation or partnership establishes investment funds that are managed by fund managers, whose fees do not exceed an amount equal to 2.5 percent of the total assets in the applicable fund, annually. The funds shall include at least one fund that makes early stage seed investments in Native American businesses that are certified by the board under sub. (2) (b) and at least one fund that makes venture growth investments in Native American businesses that are certified by the board under sub. (2) (c).

AB1177,22,12 (b) The purposes of the corporation or partnership include coordinating and facilitating investments in investment funds described in par. (a) and investments by fund managers in businesses as described in sub. (2) (b) to (d).

AB1177,22,16 (c) The corporation or partnership is required, under its articles of incorporation, to monitor, analyze, and report to the board information requested by the board concerning the performance of fund managers and the economic impact, if any, the investments made by those fund managers have had on this state.

AB1177,22,18 (d) The corporation or partnership, either directly or through a subsidiary, seeks out and provides assistance to businesses described in sub. (2) (b).

AB1177,22,20 (e) The corporation or partnership works with businesses certified under sub. (2) and fund managers to assist in expanding the businesses.

AB1177,22,23 (f) The corporation or partnership establishes measurable standards for its fund managers and holds the fund managers accountable for meeting those standards.

AB1177,23,3 (g) The corporation or partnership coordinates and oversees a group of economic advisors to measure the economic impact, if any, that investments made by fund managers have had on this state.

AB1177,23,6 (h) The corporation or partnership coordinates and disseminates an economic media message to promote the purposes of this paragraph under this section, as determined by the board.

AB1177,23,9 (i) The corporation or partnership utilizes information technology to administer a management information system that tracks the business activities of the corporation or partnership and the investments made by fund managers.

AB1177,23,13 (j) No owner of the corporation or partnership has made a certified capital investment, as defined under s. 560.30 (4), is a manager of a certified capital company, as defined in s. 560.30 (2), or is a fund manager of the corporation or partnership.

AB1177,23,15 (k) The corporation or partnership does not assess a fee against any investment fund described in par. (a).

AB1177,23,19 (L) The corporation or partnership and applicable fund manager do not receive any of the profits and gains on assets in any investment fund described in par. (a), unless the total amount distributed to all investors in the fund is at least equal to the total amount invested, plus 80 percent of the profits and gains.

AB1177,24,5 (2) Certification for tax credits. (a) Generally. The board, in consultation with the capital investment corporation or partnership, shall promulgate rules establishing a procedure for the board to certify businesses as eligible to receive from fund managers investments that qualify an investor for tax credits under s. 71.07 (2r) or (2s), 71.28 (2r) or (2s), or 71.47 (2r) or (2s). The rules shall require a business that desires to obtain a certification to file an application with the board. The rules shall require an applicant for certification to provide the board with any information the board determines is necessary to ensure eligibility for certification and compliance with this section and rules promulgated under this section. The board shall consult with the capital investment corporation or partnership in determining whether to certify any applicant.

AB1177,24,9 (b) Early stage seed investments. The board may certify a business, including a Native American business, as eligible to receive from fund managers investments that qualify the investors for tax credits under s. 71.07 (2r) (b) 1. or (2s), 71.28 (2r) (b) 1. or (2s), or 71.47 (2r) (b) 1. or (2s) only if the business satisfies all of the following:

AB1177,24,11 1. The business is headquartered in this state and its principal business operations are located in this state.

AB1177,24,13 2. The business is in need of seed capital and is unable to obtain conventional financing, as defined by the department by rule.

AB1177,24,15 3. The business has no more than 100 employees, at least 75 percent of whom are employed in this state.

AB1177,24,18 4. During its 2 most recent fiscal years, if any, the business had an average annual net income, after federal income taxes, of not more than $2,000,000, as determined in accordance with generally accepted accounting principles.

AB1177,24,20 5. The business has a net worth of not more than $5,000,000, except that this subdivision does not apply if the business is a Native American business.

AB1177,24,22 6. The business is not predominantly engaged in professional services provided by accountants, lawyers, or physicians.

AB1177,24,23 7. The business is not engaged in the development of real estate for resale.

AB1177,24,24 8. The business is not engaged in commercial banking or lending.

AB1177,25,4 (c) Venture growth investments. The board may certify a business, including a Native American business, as eligible to receive from fund managers investments that qualify the investors for tax credits under s. 71.07 (2r) (b) 3. or (2s), 71.28 (2r) (b) 3. or (2s), or 71.47 (2r) (b) 3. or (2s) only if the business satisfies all of the following:

AB1177,25,6 1. The business is headquartered in this state and has significant business operations in this state.

AB1177,25,8 2. At least 51 percent of the business's employees are employed in this state or the business employs more than 500 employees in this state.

AB1177,25,12 3. During its 2 most recent fiscal years, the business had an average annual net income, after federal income taxes and excluding any carry-over losses, of less than $20,000,000, as determined in accordance with generally accepted accounting principles.

AB1177,25,14 4. The business has a net worth of less than $75,000,000, except that this subdivision does not apply if the business is a Native American business.

AB1177,25,16 5. The business is not predominantly engaged in professional services provided by accountants, lawyers, or physicians.

AB1177,25,18 6. The business has been in existence for at least one year, but less than 10 years.

AB1177,25,22 (d) Women-, minority-, and community-based investments. The board may certify a business as eligible to receive from fund managers investments that qualify the investors for tax credits under s. 71.07 (2r) (b) 4. or (2s), 71.28 (2r) (b) 4. or (2s), or 71.47 (2r) (b) 4. or (2s) only if any of the following apply:

AB1177,26,2 1. The business is headquartered in this state, has significant business operations in this state, and is at least 51 percent owned, controlled, and actively managed by one or more women or minority group members, as defined in s. 560.036 (1) (f).

AB1177,26,5 2. The business is headquartered in this state, has significant business operations in this state, and facilitates access to savings and credit by low-income consumers.

AB1177,26,8 3. The investments are made as part of a community-based investment strategy implemented by the fund manager and the business satisfies all of the requirements under par. (b) 1. to 8.