2005 - 2006 LEGISLATURE
August 19, 2005 - Introduced by Senators Kanavas and Olsen, cosponsored by
Representatives Nischke, Van Roy, Albers, Hahn, Lothian and McCormick.
Referred to Committee on Job Creation, Economic Development and
Consumer Affairs.
SB290,1,6
1An Act to repeal 71.07 (5d) (c) 3.;
to renumber and amend 71.07 (5b) (b), 71.28
2(5b) (b) and 71.47 (5b) (b);
to amend 71.07 (5d) (a) 1. a., 71.07 (5d) (a) 1. b., 71.07
3(5d) (b), 560.205 (3) (d), 560.275 (2) (b) and 560.275 (2) (c); and
to create 71.07
4(5b) (b) 2., 71.07 (5d) (a) 2m., 71.07 (5d) (c) 3m., 71.28 (5b) (b) 2. and 71.47 (5b)
5(b) 2. of the statutes;
relating to: claiming early stage seed and angel
6investment income and franchise tax credits.
Analysis by the Legislative Reference Bureau
Under current law, a person may claim an early stage seed investment income
and franchise tax credit in an amount equal to 25 percent of the person's initial
investment paid to a fund manager that the fund manager invests in a business that
is certified by the Department of Commerce (Commerce) to receive such investments.
This bill makes certain technical changes to the early stage seed investment credit
to simplify the administration of the credit. Under this bill, generally, the amount
of the credit that may be claimed by a partner, a member of a limited liability
company, or shareholder of a tax-option corporation is based on the total amount
invested by the entity to which the partner, member, or shareholder belongs and
determined by the entity's organizational documents.
Under current law, an individual may claim an income tax credit in each
taxable year for two years, beginning with the taxable year in which the individual's
initial investment is made, in an amount equal to 12.5 percent of the individual's
bona fide angel investment in a new business venture, as determined by Commerce.
This bill makes certain technical changes to the bona fide angel investment credit
to simplify the administration of the credit. Under this bill, an individual may claim
the bona fide angel investment credit in each taxable year for two years, beginning
with the taxable year certified by Commerce. In addition, partnerships and limited
liability companies may not claim the credit, but, instead, compute the amount of the
credit that each of the partners or members may claim, based on the total amount
invested by the partnership or company. Partners and members of limited liability
companies may claim the credit in proportion to their ownership interest or as
specially allocated in the organizational documents of the partnership or limited
liability company.
For further information see the state 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:
SB290, s. 1
1Section
1. 71.07 (5b) (b) of the statutes is renumbered 71.07 (5b) (b) 1. and
2amended to read:
SB290,2,83
71.07
(5b) (b) 1. For taxable years beginning after December 31, 2004, subject
4to the limitations provided under this subsection and s. 560.205,
and except as
5provided in subd. 2., a claimant may claim as a credit against the tax imposed under
6ss. 71.02 and 71.08, up to the amount of those taxes, 25 percent of the claimant's
7initial investment paid
in the taxable year to a fund manager that the fund manager
8invests in a business certified under s. 560.205 (1).
SB290, s. 2
9Section
2. 71.07 (5b) (b) 2. of the statutes is created to read:
SB290,3,210
71.07
(5b) (b) 2. In the case of a partnership, limited liability company, or
11tax-option corporation, the computation of the 25 percent limitation under subd. 1.
12shall be determined at the entity level rather than the claimant level and may be
13allocated among the claimants who make investments in the manner set forth in the
14entity's organizational documents. The entity shall provide to the department of
15revenue and to the department of commerce the names and tax identification
1numbers of the claimants, the amounts of the credits allocated to the claimants, and
2the computation of the allocations.
SB290, s. 3
3Section
3. 71.07 (5d) (a) 1. a. of the statutes is amended to read:
SB290,3,54
71.07
(5d) (a) 1. a.
An individual
A person who reviews new businesses or
5proposed new businesses for potential investment of the
individual's person's money.
SB290, s. 4
6Section
4. 71.07 (5d) (a) 1. b. of the statutes is amended to read:
SB290,3,77
71.07
(5d) (a) 1. b. A network of
individuals persons who satisfy subd. 1.
SB290, s. 5
8Section
5. 71.07 (5d) (a) 2m. of the statutes is created to read:
SB290,3,119
71.07
(5d) (a) 2m. "Person" means a partnership or limited liability company
10that is a nonoperating entity, as determined by the department of commerce, a
11natural person, or fiduciary.
SB290, s. 6
12Section
6. 71.07 (5d) (b) of the statutes is amended to read:
SB290,3,1913
71.07
(5d) (b)
Filing claims. Subject to the limitations provided in this
14subsection and in s. 560.205, a claimant may claim as a credit against the tax
15imposed under s. 71.02 or 71.08, up to the amount of those taxes, in each taxable year
16for 2 consecutive years, beginning with the taxable year
in which the claimant's 17initial investment is made as certified by the department of commerce, an amount
18equal to 12.5 percent of the claimant's bona fide angel investment made directly in
19a qualified new business venture
in the taxable year.
SB290, s. 7
20Section
7. 71.07 (5d) (c) 3. of the statutes is repealed.
SB290, s. 8
21Section
8. 71.07 (5d) (c) 3m. of the statutes is created to read:
SB290,4,322
71.07
(5d) (c) 3m. Partnerships and limited liability companies may not claim
23the credit under this subsection, but the eligibility for, and the amount of, the credit
24are based on their payment of amounts under par. (b). A partnership or limited
25liability company shall compute the amount of credit that each of its partners or
1members may claim and shall provide that information to each of them. Partners
2and members of limited liability companies may claim the credit in proportion to
3their ownership interest or as specially allocated in their organizational documents.
SB290, s. 9
4Section
9. 71.28 (5b) (b) of the statutes is renumbered 71.28 (5b) (b) 1. and
5amended to read:
SB290,4,116
71.28
(5b) (b) 1. For taxable years beginning after December 31, 2004, subject
7to the limitations provided under this subsection and s. 560.205,
and except as
8provided in subd. 2., a claimant may claim as a credit against the tax imposed under
9s. 71.23, up to the amount of those taxes, 25 percent of the claimant's
initial 10investment paid
in the taxable year to a fund manager that the fund manager invests
11in a business certified under s. 560.205 (1).
SB290, s. 10
12Section
10. 71.28 (5b) (b) 2. of the statutes is created to read:
SB290,4,2013
71.28
(5b) (b) 2. In the case of a partnership, limited liability company, or
14tax-option corporation, the computation of the 25 percent limitation under subd. 1.
15shall be determined at the entity level rather than the claimant level and may be
16allocated among the claimants who make investments in the manner set forth in the
17entity's organizational documents. The entity shall provide to the department of
18revenue and to the department of commerce the names and tax identification
19numbers of the claimants, the amounts of the credits allocated to the claimants, and
20the computation of the allocations.
SB290, s. 11
21Section
11. 71.47 (5b) (b) of the statutes is renumbered 71.47 (5b) (b) 1. and
22amended to read:
SB290,5,323
71.47
(5b) (b) 1. For taxable years beginning after December 31, 2004, subject
24to the limitations provided under this subsection and s. 560.205,
and except as
25provided in subd. 2., a claimant may claim as a credit against the tax imposed under
1s. 71.43, up to the amount of those taxes, 25 percent of the claimant's
initial 2investment paid
in the taxable year to a fund manager that the fund manager invests
3in a business certified under s. 560.205 (1).
SB290, s. 12
4Section
12. 71.47 (5b) (b) 2. of the statutes is created to read:
SB290,5,125
71.47
(5b) (b) 2. In the case of a partnership, limited liability company, or
6tax-option corporation, the computation of the 25 percent limitation under subd. 1.
7shall be determined at the entity level rather than the claimant level and may be
8allocated among the claimants who make investments in the manner set forth in the
9entity's organizational documents. The entity shall provide to the department of
10revenue and to the department of commerce the names and tax identification
11numbers of the claimants, the amounts of the credits allocated to the claimants, and
12the computation of the allocations.
SB290, s. 13
13Section
13. 560.205 (3) (d) of the statutes is amended to read:
SB290,5,2314
560.205
(3) (d)
Rules. The department of commerce, in consultation with the
15department of revenue, shall promulgate rules to administer this section. The rules
16shall further define "bona fide angel investment" for purposes of s. 71.07 (5d) (a) 1.
17The rules shall limit the aggregate amount of tax credits under s. 71.07 (5d) that may
18be claimed for investments in businesses certified under sub. (1) at $3,000,000 per
19taxable calendar year for
taxable calendar years beginning after December 31, 2004.
20The rules shall also limit the aggregate amount of the tax credits under ss. 71.07 (5b),
2171.28 (5b), and 71.47 (5b) that may be claimed for investments paid to fund managers
22certified under sub. (2) at $3,500,000 per
taxable
calendar year for
taxable calendar 23years beginning after December 31, 2004.
SB290,6,5
1560.275
(2) (b)
Matching grants and loans. 1. The department may make a
2grant or loan from the appropriation under s. 20.143 (1) (c) or (ie) for the purpose of
3funding professional
services activities related to developing a proposed
4technologically innovative product, process, or service, if the applicant has received
5a grant from the federal government for a substantially similar purpose.
SB290,6,116
2. The department may make a grant or loan from the appropriation under s.
720.143 (1) (c) or (ie) for the purpose of funding professional
services activities related
8to the accelerated commercialization of a technologically innovative product,
9process, or service, if the federal government has notified the applicant that the
10applicant will receive a grant from the federal government for a substantially similar
11purpose.
SB290,6,2314
560.275
(2) (c)
Bridge grants and loans. The department may make a grant
15or loan from the appropriation under s. 20.143 (1) (c) or (ie) to a person who has
16received early stage financing from 3rd parties or a grant from the federal
17government to fund early stage research and development and who has sought
18additional early stage financing from 3rd parties or applied for an additional grant
19from the federal government to fund early stage research and development. A grant
20or loan under this paragraph shall be for the purpose of funding professional
services 21activities necessary to maintain the project research and management team and
22funding basic operations until the applicant's additional 3rd party financing request
23or federal grant application is approved or denied.
SB290,7,6
1(1)
Early stage seed and angel vestment credits. The treatment of sections
271.07 (5d) (a) 1. a. and b. and 2m., (b), and (c) 3. and 3m. and 560.205 (3) (d) of the
3statutes, the renumbering and amendment of sections 71.07 (5b) (b), 71.28 (5b) (b),
4and 71.47 (5b) (b) of the statutes, and the creation of sections 71.07 (5b) (b) 2., 71.28
5(5b) (b) 2., and 71.47 (5b) (b) 2. of the statutes first apply to taxable years beginning
6on January 1, 2005.