LRB-0936/1
MES:jld:ph
2011 - 2012 LEGISLATURE
January 21, 2011 - Introduced by Senators Hopper, Darling, Leibham, Vukmir,
Galloway, Zipperer, Wanggaard, Kedzie, Ellis, Moulton, Olsen, Lazich
and
Schultz, cosponsored by Representatives Kuglitsch, Thiesfeldt,
Ziegelbauer, Williams, Kaufert, Meyer, Bies, Nygren, Mursau, Spanbauer,
Brooks, Knodl, Ripp, Jacque, Rivard, Kapenga, Farrow
and Honadel.
Referred to Committee on Public Health, Human Services, and Revenue.
SB10,1,5 1An Act to repeal 71.05 (6) (b) 9m.; to amend 71.05 (6) (b) 9.; and to create 71.05
2(6) (b) 9e. and 71.05 (6) (b) 9h. of the statutes; relating to: restoring the
3treatment of the exclusion of capital gains for individuals and certain other
4persons that existed before the enactment of 2009 Wisconsin Act 28, and
5phasing out the taxation of capital gains.
Analysis by the Legislative Reference Bureau
Under current law, as affected by the 2009-11 biennial budget bill, there is an
income tax exclusion for individuals, fiduciaries, members of limited liability
companies and partnerships, and shareholders of tax-option corporations for 30
percent of the net long-term capital gains realized from the sale of assets held more
than one year and the sale of all assets acquired from a decedent, and an exclusion
for 60 percent of such gains realized from the sale of farm assets held more than one
year and the sale of all farm assets acquired from a decedent.
For taxable year 2012, this bill reverses the changes made to the taxation of
capital gains in the 2009-11 biennial budget bill and restores the income tax
exclusion for capital gains to 60 percent of the net long-term capital gains realized
from the sale of assets held more than one year and the sale of all assets acquired
from a decedent and repeals the separate 60 percent exclusion for farm assets.
For taxable year 2013, the bill increases this capital gains exclusion to 80
percent, and increases it to 100 percent for taxable year 2014 and beyond.

Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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:
SB10, s. 1 1Section 1. 71.05 (6) (b) 9. of the statutes is amended to read:
SB10,2,112 71.05 (6) (b) 9. On assets held more than one year and on all assets acquired
3from a decedent, 30 60 percent of the capital gain as computed under the internal
4revenue code
Internal Revenue Code, not including capital gains for which the
5federal tax treatment is determined under section 406 of P.L. 99-514; not including
6amounts treated as ordinary income for federal income tax purposes because of the
7recapture of depreciation or any other reason; and not including amounts treated as
8capital gain for federal income tax purposes from the sale or exchange of a lottery
9prize. For purposes of this subdivision, the capital gains and capital losses for all
10assets shall be netted before application of the percentage. This subdivision applies
11to taxable years beginning after December 31, 2011, and before January 1, 2013.
SB10, s. 2 12Section 2. 71.05 (6) (b) 9e. of the statutes is created to read:
SB10,3,313 71.05 (6) (b) 9e. On assets held more than one year and on all assets acquired
14from a decedent, 80 percent of the capital gain as computed under the Internal
15Revenue Code, not including capital gains for which the federal tax treatment is
16determined under section 406 of P.L. 99-514; not including amounts treated as
17ordinary income for federal income tax purposes because of the recapture of
18depreciation or any other reason; and not including amounts treated as capital gain
19for federal income tax purposes from the sale or exchange of a lottery prize. For

1purposes of this subdivision, the capital gains and capital losses for all assets shall
2be netted before application of the percentage. This subdivision applies to taxable
3years beginning after December 31, 2012, and before January 1, 2014.
SB10, s. 3 4Section 3. 71.05 (6) (b) 9h. of the statutes is created to read:
SB10,3,145 71.05 (6) (b) 9h. On assets held more than one year and on all assets acquired
6from a decedent, 100 percent of the capital gain as computed under the Internal
7Revenue Code, not including capital gains for which the federal tax treatment is
8determined under section 406 of P.L. 99-514; not including amounts treated as
9ordinary income for federal income tax purposes because of the recapture of
10depreciation or any other reason; and not including amounts treated as capital gain
11for federal income tax purposes from the sale or exchange of a lottery prize. For
12purposes of this subdivision, the capital gains and capital losses for all assets shall
13be netted before application of the percentage. This subdivision applies to taxable
14years beginning after December 31, 2013.
SB10, s. 4 15Section 4. 71.05 (6) (b) 9m. of the statutes is repealed.
SB10, s. 5 16Section 5. Initial applicability.
SB10,3,1717 (1) This act first applies to taxable years beginning on January 1, 2012.
SB10,3,1818 (End)
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