December 21, 2007 - Introduced by Representatives Moulton, Murtha,
Strachota, Wood, Ballweg, Albers, Townsend, Nass, Van Roy
and
Hraychuck, cosponsored by Senators Kanavas, Harsdorf, Plale, Roessler,
Schultz, Kreitlow
and Leibham. Referred to Committee on Jobs and The
Economy.
AB635,1,6 1An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2)
2(a) 10. and 77.92 (4); and to create 71.07 (5m), 71.10 (4) (er), 71.28 (5m), 71.30
3(3) (er), 71.47 (5i), 71.49 (1) (er) and 560.207 of the statutes; relating to:
4creating an income and franchise tax credit for expenses related to
5nanotechnology and providing an exemption from emergency rule-making
6procedures.
Analysis by the Legislative Reference Bureau
This bill creates an income and franchise tax credit for certain expenses related
to nanotechnology. Under the bill, generally, a person may claim a credit that is equal
to the amount of state sales and use taxes the person paid in the taxable year on the
purchase of machines, equipment, and certain other tangible personal property that
are used by a nanotechnology business in this state for research, development, and
manufacturing. In addition, a person may claim as a credit the amount of any
payments to a public or private institution of higher education, or to a consortium
of such institutions, for research, equipment, or the use of research facilities, or other
qualified expenses as determined by the Department of Commerce (Commerce), that
are directly related to nanotechnology. The bill defines "nanotechnology" as the
science and technology that enables a person to understand, measure, manipulate,
and manufacture materials at the atomic, molecular, and supermolecular levels. A
"nanotechnology business" is a business that is primarily engaged in applying

nanotechnologies to create new applications or processes, or modify existing
applications or processes, in order to make useful processes and products related to
health care, energy, food production, manufacturing, biotechnology, information
technology, or the environment. A person who wishes to claim the credit must first
apply to Commerce.
Under the bill, if a person claims a credit in an amount that exceeds the person's
income and franchise tax liability, the person does not receive a tax refund for the
excess amount, but, instead, may carry forward the amount of any unused credit to
the ten subsequent taxable years. The maximum amount of the credits that
taxpayers may claim in any state fiscal year is $2,500,000, as allocated by Commerce.
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:
AB635, s. 1 1Section 1. 71.05 (6) (a) 15. of the statutes, as affected by 2007 Wisconsin Act
220
, is amended to read:
AB635,2,83 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
4(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3h), (3n), (3p), (3s), (3t), (3w), (5e),
5(5f), (5h), (5i), (5j), and (5k), and (5m) and not passed through by a partnership,
6limited liability company, or tax-option corporation that has added that amount to
7the partnership's, company's, or tax-option corporation's income under s. 71.21 (4)
8or 71.34 (1) (g).
AB635, s. 2 9Section 2. 71.07 (5m) of the statutes is created to read:
AB635,2,1010 71.07 (5m) Nanotechnology credit. (a) Definitions. In this subsection:
AB635,2,1111 1. "Claimant" means a person who files a claim under this subsection.
AB635,2,1412 2. "Consortium" means 2 or more public institutions of higher education that
13are conducting substantially similar qualified research or working on components
14of the same qualified research.
AB635,2,1515 3. "Manufacturing" has the meaning given in s. 77.54 (6m).
AB635,3,3
14. "Nanotechnology" means the science and technology that enables a person
2to understand, measure, manipulate, and manufacture materials at the atomic,
3molecular, and supermolecular levels.
AB635,3,94 5. "Nanotechnology business" means a business, as certified by the department
5of commerce in the manner prescribed by the department of commerce, that is
6primarily engaged in applying nanotechnologies to create new applications or
7processes, or modify existing applications or processes, in order to make useful
8processes and products related to health care, energy, food production,
9manufacturing, biotechnology, information technology, or the environment.
AB635,3,1510 6. "Qualified research" means qualified research as defined under section 41
11(d) (1) of the Internal Revenue Code, except that research conducted by a public or
12private institution of higher education or a consortium, or a combination thereof, is
13"qualified research" if the research is intended to be useful in developing a new or
14improved product or service and the research satisfies section 41 (d) (1) (B) (i) and
15(C) of the Internal Revenue Code.
AB635,3,1716 7. "Used exclusively" means used to the exclusion of all other uses except for
17use not exceeding 5 percent of total use.
AB635,3,2118 (b) Filing claims. Subject to the limitations provided in this subsection and s.
19560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim
20as a credit against the taxes imposed under s. 71.02, up to the amount of the taxes,
21any of the following amounts that the claimant paid in the taxable year:
AB635,4,222 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and
23processing equipment, including accessories, attachments, and parts for the
24machines or equipment, that are used exclusively and directly by the claimant in the

1claimant's nanotechnology business for qualified research and manufacturing, if the
2research and manufacturing occurs in this state.
AB635,4,63 2. Payments to a public or private institution of higher education, or to a
4consortium, for research, equipment, or the use of research facilities, or other
5qualified expenses as determined by the department of commerce, that are directly
6related to nanotechnology.
AB635,4,97 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the
8following that are used by the claimant's nanotechnology business for research and
9development that occurs in this state:
AB635,4,1010 a. Advanced computing devices, including computer hardware and software.
AB635,4,1111 b. Data communications.
AB635,4,1212 c. Information technology.
AB635,4,1413 d. Laboratory materials used exclusively for nanotechnology research and
14development.
AB635,4,1715 (c) Limitations. 1. The maximum amount of the credits that may be allocated
16to all claimants under this subsection and ss. 71.28 (5m) and 71.47 (5m) in each fiscal
17year is $2,500,000, as determined by the department of commerce under s. 560.207.
AB635,4,2018 2. No credit may be allowed under this subsection unless the claimant submits
19with the claimant's return a copy of the claimant's certification for and allocation of
20credits under s. 560.207.
AB635,5,321 3. Partnerships, limited liability companies, and tax-option corporations may
22not claim the credit under this subsection, but the eligibility for, and the amount of,
23the credit are based on their payment of amounts under par. (b). A partnership,
24limited liability company, or tax-option corporation shall compute the amount of
25credit that each of its partners, members, or shareholders may claim and shall

1provide that information to each of them. Partners, members of limited liability
2companies, and shareholders of tax-option corporations may claim the credit in
3proportion to their ownership interests.
AB635,5,54 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
5credit under s. 71.28 (4), applies to the credit under this subsection.
AB635,5,116 2. If a credit computed under this subsection is not entirely offset against
7Wisconsin income or franchise taxes otherwise due, the unused balance may be
8carried forward and credited against Wisconsin income or franchise taxes otherwise
9due for the following 10 taxable years to the extent not offset by these taxes otherwise
10due in all intervening years between the year in which the expense was incurred and
11the year in which the carry-forward credit is claimed.
AB635, s. 3 12Section 3. 71.10 (4) (er) of the statutes is created to read:
AB635,5,1313 71.10 (4) (er) Nanotechnology credit under s. 71.07 (5m).
AB635, s. 4 14Section 4. 71.21 (4) of the statutes, as affected by 2007 Wisconsin Act 20, is
15amended to read:
AB635,5,1916 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
17(2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3h), (3n), (3p), (3s), (3t), (3w), (5e), (5f), (5g),
18(5h), (5i), (5j), and (5k), and (5m) and passed through to partners shall be added to
19the partnership's income.
AB635, s. 5 20Section 5. 71.26 (2) (a) of the statutes, as affected by 2007 Wisconsin Act 20,
21is amended to read:
AB635,6,1422 71.26 (2) (a) Corporations in general. The "net income" of a corporation means
23the gross income as computed under the Internal Revenue Code as modified under
24sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
25computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)

17., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
2under this paragraph at the time that the taxpayer first claimed the credit plus the
3amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
4(1ds), (1dx), (3g), (3h), (3n), (3p), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and
5(5m)
and not passed through by a partnership, limited liability company, or
6tax-option corporation that has added that amount to the partnership's, limited
7liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1)
8(g) plus the amount of losses from the sale or other disposition of assets the gain from
9which would be wholly exempt income, as defined in sub. (3) (L), if the assets were
10sold or otherwise disposed of at a gain and minus deductions, as computed under the
11Internal Revenue Code as modified under sub. (3), plus or minus, as appropriate, an
12amount equal to the difference between the federal basis and Wisconsin basis of any
13asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction
14during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
AB635, s. 6 15Section 6. 71.28 (5m) of the statutes is created to read:
AB635,6,1616 71.28 (5m) Nanotechnology credit. (a) Definitions. In this subsection:
AB635,6,1717 1. "Claimant" means a person who files a claim under this subsection.
AB635,6,2018 2. "Consortium" means 2 or more public institutions of higher education that
19are conducting substantially similar qualified research or working on components
20of the same qualified research.
AB635,6,2121 3. "Manufacturing" has the meaning given in s. 77.54 (6m).
AB635,6,2422 4. "Nanotechnology" means the science and technology that enables a person
23to understand, measure, manipulate, and manufacture materials at the atomic,
24molecular, and supermolecular levels.
AB635,7,6
15. "Nanotechnology business" means a business, as certified by the department
2of commerce in the manner prescribed by the department of commerce, that is
3primarily engaged in applying nanotechnologies to create new applications or
4processes, or modify existing applications or processes, in order to make useful
5processes and products related to health care, energy, food production,
6manufacturing, biotechnology, information technology, or the environment.
AB635,7,127 6. "Qualified research" means qualified research as defined under section 41
8(d) (1) of the Internal Revenue Code, except that research conducted by a public or
9private institution of higher education or a consortium, or a combination thereof, is
10"qualified research" if the research is intended to be useful in developing a new or
11improved product or service and the research satisfies section 41 (d) (1) (B) (i) and
12(C) of the Internal Revenue Code.
AB635,7,1413 7. "Used exclusively" means used to the exclusion of all other uses except for
14use not exceeding 5 percent of total use.
AB635,7,1815 (b) Filing claims. Subject to the limitations provided in this subsection and s.
16560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim
17as a credit against the taxes imposed under s. 71.23, up to the amount of the taxes,
18any of the following amounts that the claimant paid in the taxable year:
AB635,7,2319 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and
20processing equipment, including accessories, attachments, and parts for the
21machines or equipment, that are used exclusively and directly by the claimant in the
22claimant's nanotechnology business for qualified research and manufacturing, if the
23research and manufacturing occurs in this state.
AB635,8,224 2. Payments to a public or private institution of higher education, or to a
25consortium, for research, equipment, or the use of research facilities, or other

1qualified expenses as determined by the department of commerce, that are directly
2related to nanotechnology.
AB635,8,53 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the
4following that are used by the claimant's nanotechnology business for research and
5development that occurs in this state:
AB635,8,66 a. Advanced computing devices, including computer hardware and software.
AB635,8,77 b. Data communications.
AB635,8,88 c. Information technology.
AB635,8,109 d. Laboratory materials used exclusively for nanotechnology research and
10development.
AB635,8,1311 (c) Limitations. 1. The maximum amount of the credits that may be allocated
12to all claimants under this subsection and ss. 71.07 (5m) and 71.47 (5m) in each fiscal
13year is $2,500,000, as determined by the department of commerce under s. 560.207.
AB635,8,1614 2. No credit may be allowed under this subsection unless the claimant submits
15with the claimant's return a copy of the claimant's certification for and allocation of
16credits under s. 560.207.
AB635,8,2417 3. Partnerships, limited liability companies, and tax-option corporations may
18not claim the credit under this subsection, but the eligibility for, and the amount of,
19the credit are based on their payment of amounts under par. (b). A partnership,
20limited liability company, or tax-option corporation shall compute the amount of
21credit that each of its partners, members, or shareholders may claim and shall
22provide that information to each of them. Partners, members of limited liability
23companies, and shareholders of tax-option corporations may claim the credit in
24proportion to their ownership interests.
AB635,9,2
1(d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
2under sub. (4), applies to the credit under this subsection.
AB635,9,83 2. If a credit computed under this subsection is not entirely offset against
4Wisconsin income or franchise taxes otherwise due, the unused balance may be
5carried forward and credited against Wisconsin income or franchise taxes otherwise
6due for the following 10 taxable years to the extent not offset by these taxes otherwise
7due in all intervening years between the year in which the expense was incurred and
8the year in which the carry-forward credit is claimed.
AB635, s. 7 9Section 7. 71.30 (3) (er) of the statutes is created to read:
AB635,9,1010 71.30 (3) (er) Nanotechnology credit under s. 71.28 (5m).
AB635, s. 8 11Section 8. 71.34 (1) (g) of the statutes, as affected by 2007 Wisconsin Act 20,
12is amended to read:
AB635,9,1613 71.34 (1) (g) An addition shall be made for credits computed by a tax-option
14corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g),
15(3h), (3n), (3p), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and (5m) and passed
16through to shareholders.
AB635, s. 9 17Section 9. 71.45 (2) (a) 10. of the statutes, as affected by 2007 Wisconsin Act
1820
, is amended to read:
AB635,9,2519 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
20computed under s. 71.47 (1dd) to (1dx), (3h), (3n), (3p), (3w), (5e), (5f), (5g), (5h), (5i),
21(5j), and (5k), and (5m) and not passed through by a partnership, limited liability
22company, or tax-option corporation that has added that amount to the partnership's,
23limited liability company's, or tax-option corporation's income under s. 71.21 (4) or
2471.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4), and
25(5).
AB635, s. 10
1Section 10. 71.47 (5i) of the statutes is created to read:
AB635,10,22 71.47 (5i) Nanotechnology credit. (a) Definitions. In this subsection:
AB635,10,33 1. "Claimant" means a person who files a claim under this subsection.
AB635,10,64 2. "Consortium" means 2 or more public institutions of higher education that
5are conducting substantially similar qualified research or working on components
6of the same qualified research.
AB635,10,77 3. "Manufacturing" has the meaning given in s. 77.54 (6m).
AB635,10,108 4. "Nanotechnology" means the science and technology that enables a person
9to understand, measure, manipulate, and manufacture materials at the atomic,
10molecular, and supermolecular levels.
AB635,10,1611 5. "Nanotechnology business" means a business, as certified by the department
12of commerce in the manner prescribed by the department of commerce, that is
13primarily engaged in applying nanotechnologies to create new applications or
14processes, or modify existing applications or processes, in order to make useful
15processes and products related to health care, energy, food production,
16manufacturing, biotechnology, information technology, or the environment.
AB635,10,2217 6. "Qualified research" means qualified research as defined under section 41
18(d) (1) of the Internal Revenue Code, except that research conducted by a public or
19private institution of higher education or a consortium, or a combination thereof, is
20"qualified research" if the research is intended to be useful in developing a new or
21improved product or service and the research satisfies section 41 (d) (1) (B) (i) and
22(C) of the Internal Revenue Code.
AB635,10,2423 7. "Used exclusively" means used to the exclusion of all other uses except for
24use not exceeding 5 percent of total use.
AB635,11,4
1(b) Filing claims. Subject to the limitations provided in this subsection and s.
2560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim
3as a credit against the taxes imposed under s. 71.43, up to the amount of the taxes,
4any of the following amounts that the claimant paid in the taxable year:
AB635,11,95 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and
6processing equipment, including accessories, attachments, and parts for the
7machines or equipment, that are used exclusively and directly by the claimant in the
8claimant's nanotechnology business for qualified research and manufacturing, if the
9research and manufacturing occurs in this state.
AB635,11,1310 2. Payments to a public or private institution of higher education, or to a
11consortium, for research, equipment, or the use of research facilities, or other
12qualified expenses as determined by the department of commerce, that are directly
13related to nanotechnology.
AB635,11,1614 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the
15following that are used by the claimant's nanotechnology business for research and
16development that occurs in this state:
AB635,11,1717 a. Advanced computing devices, including computer hardware and software.
AB635,11,1818 b. Data communications.
AB635,11,1919 c. Information technology.
AB635,11,2120 d. Laboratory materials used exclusively for nanotechnology research and
21development.
AB635,11,2422 (c) Limitations. 1. The maximum amount of the credits that may be allocated
23to all claimants under this subsection and ss. 71.07 (5m) and 71.28 (5m) in each fiscal
24year is $2,500,000, as determined by the department of commerce under s. 560.207.
AB635,12,3
12. No credit may be allowed under this subsection unless the claimant submits
2with the claimant's return a copy of the claimant's certification for and allocation of
3credits under s. 560.207.
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