November 15, 2005 - Introduced by Senators Kanavas, Plale, Harsdorf, Stepp and
Roessler, cosponsored by Representatives Nischke, Hahn, Sheridan,
Berceau, Fields, Gunderson, Hines, Travis
and Pope-Roberts. Referred to
Committee on Job Creation, Economic Development and Consumer Affairs.
SB435,1,7 1An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.21 (4), 71.26 (2) (a), 71.34
2(1) (g), 71.45 (2) (a) 10. and 77.92 (4); and to create 71.07 (5e), 71.10 (4) (ga),
371.28 (5e), 71.30 (3) (dq), 71.47 (5e) and 71.49 (1) (dq) of the statutes; relating
4to:
creating an income and franchise tax credit for the sales and use taxes paid
5for tangible personal property that is used in research or manufacturing by a
6biotechnology business, an institution of higher education, or a governmental
7unit.
Analysis by the Legislative Reference Bureau
Under this bill, a person may claim an income and franchise tax credit in an
amount that is equal to the sales and use taxes that the person paid in the taxable
year on the purchase of machines, equipment, animals, and certain other tangible
personal property that are sold to a biotechnology business for use exclusively in
research. Under the bill, a biotechnology business is a business that is primarily
engaged in the application of biotechnologies that use a living organism or parts of
an organism to produce or modify products to improve plants or animals, develop
microorganisms for specific uses, identify targets for small molecule pharmaceutical
development, or transform biological systems into useful processes and products.
Under the bill, a person may also claim an income and franchise tax credit in
an amount that is equal to the sales and use taxes that the person paid in the taxable

year on the purchase of machines, equipment, and certain other tangible personal
property that are used exclusively in raising animals that are sold primarily to a
biotechnology business, a public or private institution of higher education, or a
governmental unit for use by any such entity in research or manufacturing.
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:
SB435, s. 1 1Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
SB435,2,62 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b), and (5d), and (5e)
4and not passed through by a partnership, limited liability company, or tax-option
5corporation that has added that amount to the partnership's, company's, or
6tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).
SB435, s. 2 7Section 2. 71.07 (5e) of the statutes is created to read:
SB435,2,88 71.07 (5e) Biotechnology credit. (a) Definitions. In this subsection:
SB435,2,99 1. "Animals" include bacteria, viruses, and other microorganisms.
SB435,2,1210 2. "Biotechnologies" include recombinant deoxyribonucleic acid techniques,
11biochemistry, molecular and cellular biology, genetics, genetic engineering,
12biological cell fusion, and other bioprocesses.
SB435,2,1813 3. "Biotechnology business" means a business, as certified by the department
14in the manner prescribed by the department, that is primarily engaged in the
15application of biotechnologies that use a living organism or parts of an organism to
16produce or modify products to improve plants or animals, develop microorganisms
17for specific uses, identify targets for small molecule pharmaceutical development, or
18transform biological systems into useful processes and products.
SB435,2,1919 4. "Claimant" means a person who files a claim under this subsection.
SB435,3,1
15. "Manufacturing" has the meaning given in s. 77.54 (6m).
SB435,3,72 6. "Qualified research" means qualified research as defined under section 41
3(d) (1) of the Internal Revenue Code, except that research conducted by a public or
4private institution of higher education or by a governmental unit is "qualified
5research" if the research is intended to be useful in developing a new or improved
6product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the
7Internal Revenue Code.
SB435,3,128 (b) Filing claims. Subject to the limitations provided in this subsection, a
9claimant may claim as a credit against the taxes imposed under s. 71.02 or 71.08, up
10to the amount of the taxes, an amount that is equal to the amount of the taxes
11imposed under subchapter III of ch. 77 that the claimant paid in the taxable year on
12the purchase of any of the following:
SB435,3,1713 1. Machines and processing equipment, including accessories, attachments,
14and parts for the machines or equipment, that are used exclusively and directly by
15the claimant in raising animals that are sold primarily to a biotechnology business,
16a public or private institution of higher education, or a governmental unit for
17exclusive and direct use by any such entity in qualified research or manufacturing.
SB435,3,2218 2. The items listed in s. 77.54 (3m) (a) to (m), medicines, semen for artificial
19insemination, fuel, and electricity that are used exclusively and directly by the
20claimant in raising animals that are sold primarily to a biotechnology business, a
21public or private institution of higher education, or a governmental unit for exclusive
22and direct use by any such entity in qualified research or manufacturing.
SB435,4,223 3. Machines and processing equipment, including accessories, attachments,
24and parts for the machines or equipment, that are used exclusively and directly by

1the claimant in qualified research in biotechnology, if the claimant is a biotechnology
2business.
SB435,4,53 4. Tangible personal property that is consumed or destroyed or loses its identity
4while being used exclusively and directly by the claimant in qualified research in
5biotechnology, if the claimant is a biotechnology business.
SB435,4,76 5. Animals that are used exclusively and directly by the claimant in qualified
7research in biotechnology, if the claimant is a biotechnology business.
SB435,4,118 (c) Limitations. 1. A claimant who claims a credit under par. (b) 1. and 2. shall
9obtain written documentation from the claimant's customers related to each
10customer's use of animals, including the percentage of animals sold to the customer
11that are used exclusively and directly in qualified research.
SB435,4,1912 2. Partnerships, limited liability companies, and tax-option corporations may
13not claim the credit under this subsection, but the eligibility for, and the amount of,
14the credit are based on their payment of amounts under par. (b). A partnership,
15limited liability company, or tax-option corporation shall compute the amount of
16credit that each of its partners, members, or shareholders may claim and shall
17provide that information to each of them. Partners, members of limited liability
18companies, and shareholders of tax-option corporations may claim the credit in
19proportion to their ownership interests.
SB435,4,2120 (d) Administration. 1. The department shall publish on the department's
21Internet site a list of all biotechnology businesses certified by the department.
SB435,4,2322 2. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies
23to the credit under this subsection.
SB435, s. 3 24Section 3. 71.08 (1) (intro.) of the statutes, as affected by 2005 Wisconsin Act
2525
, is amended to read:
SB435,5,9
171.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married
2couple filing jointly, trust, or estate under s. 71.02, not considering the credits under
3ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3n), (3s),
4(3t), (5b), (5d), (5e), (6), (6e), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds),
5(1dx), (1fd), (2m), (3), (3n), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds),
6(1dx), (1fd), (2m), (3), (3n), and (3t) and subchs. VIII and IX and payments to other
7states under s. 71.07 (7), is less than the tax under this section, there is imposed on
8that natural person, married couple filing jointly, trust, or estate, instead of the tax
9under s. 71.02, an alternative minimum tax computed as follows:
SB435, s. 4 10Section 4. 71.10 (4) (ga) of the statutes is created to read:
SB435,5,1111 71.10 (4) (ga) Biotechnology credit under s. 71.07 (5e).
SB435, s. 5 12Section 5. 71.21 (4) of the statutes is amended to read:
SB435,5,1513 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
14(2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), and (5b), and (5e) and passed
15through to partners shall be added to the partnership's income.
SB435, s. 6 16Section 6. 71.26 (2) (a) of the statutes is amended to read:
SB435,6,917 71.26 (2) (a) Corporations in general. The "net income" of a corporation means
18the gross income as computed under the Internal Revenue Code as modified under
19sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
20computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
217., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
22under this paragraph at the time that the taxpayer first claimed the credit plus the
23amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
24(1ds), (1dx), (3g), (3n), (3t), and (5b), and (5e) and not passed through by a
25partnership, limited liability company, or tax-option corporation that has added that

1amount to the partnership's, limited liability company's, or tax-option corporation's
2income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or
3other disposition of assets the gain from which would be wholly exempt income, as
4defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and
5minus deductions, as computed under the Internal Revenue Code as modified under
6sub. (3), plus or minus, as appropriate, an amount equal to the difference between
7the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or
8otherwise disposed of in a taxable transaction during the taxable year, except as
9provided in par. (b) and s. 71.45 (2) and (5).
SB435, s. 7 10Section 7. 71.28 (5e) of the statutes is created to read:
SB435,6,1111 71.28 (5e) Biotechnology credit. (a) Definitions. In this subsection:
SB435,6,1212 1. "Animals" include bacteria, viruses, and other microorganisms.
SB435,6,1513 2. "Biotechnologies" include recombinant deoxyribonucleic acid techniques,
14biochemistry, molecular and cellular biology, genetics, genetic engineering,
15biological cell fusion, and other bioprocesses.
SB435,6,2116 3. "Biotechnology business" means a business, as certified by the department
17in the manner prescribed by the department, that is primarily engaged in the
18application of biotechnologies that use a living organism or parts of an organism to
19produce or modify products to improve plants or animals, develop microorganisms
20for specific uses, identify targets for small molecule pharmaceutical development, or
21transform biological systems into useful processes and products.
SB435,6,2222 4. "Claimant" means a person who files a claim under this subsection.
SB435,6,2323 5. "Manufacturing" has the meaning given in s. 77.54 (6m).
SB435,7,424 6. "Qualified research" means qualified research as defined under section 41
25(d) (1) of the Internal Revenue Code, except that research conducted by a public or

1private institution of higher education or by a governmental unit is "qualified
2research" if the research is intended to be useful in developing a new or improved
3product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the
4Internal Revenue Code.
SB435,7,95 (b) Filing claims. Subject to the limitations provided in this subsection, a
6claimant may claim as a credit against the taxes imposed under s. 71.23, up to the
7amount of the taxes, an amount that is equal to the amount of the taxes imposed
8under subchapter III of ch. 77 that the claimant paid in the taxable year on the
9purchase of any of the following:
SB435,7,1410 1. Machines and processing equipment, including accessories, attachments,
11and parts for the machines or equipment, that are used exclusively and directly by
12the claimant in raising animals that are sold primarily to a biotechnology business,
13a public or private institution of higher education, or a governmental unit for
14exclusive and direct use by any such entity in qualified research or manufacturing.
SB435,7,1915 2. The items listed in s. 77.54 (3m) (a) to (m), medicines, semen for artificial
16insemination, fuel, and electricity that are used exclusively and directly by the
17claimant in raising animals that are sold primarily to a biotechnology business, a
18public or private institution of higher education, or a governmental unit for exclusive
19and direct use by any such entity in qualified research or manufacturing.
SB435,7,2320 3. Machines and processing equipment, including accessories, attachments,
21and parts for the machines or equipment, that are used exclusively and directly by
22the claimant in qualified research in biotechnology, if the claimant is a biotechnology
23business.
SB435,8,3
14. Tangible personal property that is consumed or destroyed or loses its identity
2while being used exclusively and directly by the claimant in qualified research in
3biotechnology, if the claimant is a biotechnology business.
SB435,8,54 5. Animals that are used exclusively and directly by the claimant in qualified
5research in biotechnology, if the claimant is a biotechnology business.
SB435,8,96 (c) Limitations. 1. A claimant who claims a credit under par. (b) 1. and 2. shall
7obtain written documentation from the claimant's customers related to each
8customer's use of animals, including the percentage of animals sold to the customer
9that are used exclusively and directly in qualified research.
SB435,8,1710 2. Partnerships, limited liability companies, and tax-option corporations may
11not claim the credit under this subsection, but the eligibility for, and the amount of,
12the credit are based on their payment of amounts under par. (b). A partnership,
13limited liability company, or tax-option corporation shall compute the amount of
14credit that each of its partners, members, or shareholders may claim and shall
15provide that information to each of them. Partners, members of limited liability
16companies, and shareholders of tax-option corporations may claim the credit in
17proportion to their ownership interests.
SB435,8,1918 (d) Administration. 1. The department shall publish on the department's
19Internet site a list of all biotechnology businesses certified by the department.
SB435,8,2120 2. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to
21the credit under this subsection.
SB435, s. 8 22Section 8. 71.30 (3) (dq) of the statutes is created to read:
SB435,8,2323 71.30 (3) (dq) Biotechnology credit under s. 71.28 (5e).
SB435, s. 9 24Section 9. 71.34 (1) (g) of the statutes is amended to read:
SB435,9,3
171.34 (1) (g) An addition shall be made for credits computed by a tax-option
2corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g),
3(3n), (3t), and (5b), and (5e) and passed through to shareholders.
SB435, s. 10 4Section 10. 71.45 (2) (a) 10. of the statutes is amended to read:
SB435,9,105 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
6computed under s. 71.47 (1dd) to (1dx), (3n), and (5b), and (5e) and not passed
7through by a partnership, limited liability company, or tax-option corporation that
8has added that amount to the partnership's, limited liability company's, or
9tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of
10credit computed under s. 71.47 (1), (3), (3t), (4), and (5).
SB435, s. 11 11Section 11. 71.47 (5e) of the statutes is created to read:
SB435,9,1212 71.47 (5e) Biotechnology credit. (a) Definitions. In this subsection:
SB435,9,1313 1. "Animals" include bacteria, viruses, and other microorganisms.
SB435,9,1614 2. "Biotechnologies" include recombinant deoxyribonucleic acid techniques,
15biochemistry, molecular and cellular biology, genetics, genetic engineering,
16biological cell fusion, and other bioprocesses.
SB435,9,2217 3. "Biotechnology business" means a business, as certified by the department
18in the manner prescribed by the department, that is primarily engaged in the
19application of biotechnologies that use a living organism or parts of an organism to
20produce or modify products to improve plants or animals, develop microorganisms
21for specific uses, identify targets for small molecule pharmaceutical development, or
22transform biological systems into useful processes and products.
SB435,9,2323 4. "Claimant" means a person who files a claim under this subsection.
SB435,9,2424 5. "Manufacturing" has the meaning given in s. 77.54 (6m).
SB435,10,6
16. "Qualified research" means qualified research as defined under section 41
2(d) (1) of the Internal Revenue Code, except that research conducted by a public or
3private institution of higher education or by a governmental unit is "qualified
4research" if the research is intended to be useful in developing a new or improved
5product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the
6Internal Revenue Code.
SB435,10,117 (b) Filing claims. Subject to the limitations provided in this subsection, a
8claimant may claim as a credit against the taxes imposed under s. 71.43, up to the
9amount of the taxes, an amount that is equal to the amount of the taxes imposed
10under subchapter III of ch. 77 that the claimant paid in the taxable year on the
11purchase of any of the following:
SB435,10,1612 1. Machines and processing equipment, including accessories, attachments,
13and parts for the machines or equipment, that are used exclusively and directly by
14the claimant in raising animals that are sold primarily to a biotechnology business,
15a public or private institution of higher education, or a governmental unit for
16exclusive and direct use by any such entity in qualified research or manufacturing.
SB435,10,2117 2. The items listed in s. 77.54 (3m) (a) to (m), medicines, semen for artificial
18insemination, fuel, and electricity that are used exclusively and directly by the
19claimant in raising animals that are sold primarily to a biotechnology business, a
20public or private institution of higher education, or a governmental unit for exclusive
21and direct use by any such entity in qualified research or manufacturing.
SB435,10,2522 3. Machines and processing equipment, including accessories, attachments,
23and parts for the machines or equipment, that are used exclusively and directly by
24the claimant in qualified research in biotechnology, if the claimant is a biotechnology
25business.
SB435,11,3
14. Tangible personal property that is consumed or destroyed or loses its identity
2while being used exclusively and directly by the claimant in qualified research in
3biotechnology, if the claimant is a biotechnology business.
SB435,11,54 5. Animals that are used exclusively and directly by the claimant in qualified
5research in biotechnology, if the claimant is a biotechnology business.
SB435,11,96 (c) Limitations. 1. A claimant who claims a credit under par. (b) 1. and 2. shall
7obtain written documentation from the claimant's customers related to each
8customer's use of animals, including the percentage of animals sold to the customer
9that are used exclusively and directly in qualified research.
SB435,11,1710 2. Partnerships, limited liability companies, and tax-option corporations may
11not claim the credit under this subsection, but the eligibility for, and the amount of,
12the credit are based on their payment of amounts under par. (b). A partnership,
13limited liability company, or tax-option corporation shall compute the amount of
14credit that each of its partners, members, or shareholders may claim and shall
15provide that information to each of them. Partners, members of limited liability
16companies, and shareholders of tax-option corporations may claim the credit in
17proportion to their ownership interests.
SB435,11,1918 (d) Administration. 1. The department shall publish on the department's
19Internet site a list of all biotechnology businesses certified by the department.
SB435,11,2120 2. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies
21to the credit under this subsection.
SB435, s. 12 22Section 12. 71.49 (1) (dq) of the statutes is created to read:
SB435,11,2323 71.49 (1) (dq) Biotechnology credit under s. 71.47 (5e).
SB435, s. 13 24Section 13. 77.92 (4) of the statutes is amended to read:
SB435,12,15
177.92 (4) "Net business income," with respect to a partnership, means taxable
2income as calculated under section 703 of the Internal Revenue Code; plus the items
3of income and gain under section 702 of the Internal Revenue Code, including taxable
4state and municipal bond interest and excluding nontaxable interest income or
5dividend income from federal government obligations; minus the items of loss and
6deduction under section 702 of the Internal Revenue Code, except items that are not
7deductible under s. 71.21; plus guaranteed payments to partners under section 707
8(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
9(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s), (3n), (3t), and (5b), and (5e); and
10plus or minus, as appropriate, transitional adjustments, depreciation differences,
11and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding
12income, gain, loss, and deductions from farming. "Net business income," with respect
13to a natural person, estate, or trust, means profit from a trade or business for federal
14income tax purposes and includes net income derived as an employee as defined in
15section 3121 (d) (3) of the Internal Revenue Code.
SB435, s. 14 16Section 14. Initial applicability.
SB435,12,1717 (1) This act first applies to taxable years beginning on January 1, 2006.
SB435,12,1818 (End)
Loading...
Loading...