71.29(10)(c)
(c) If 22.5% for the first instalment, 45% for the 2nd instalment, 67.5% for the 3rd instalment and 90% for the 4th instalment of the tax for the taxable year computed by annualizing, under methods prescribed by the department of revenue, the corporation's income, or the virtually exempt entity's unrelated business taxable income, for the months in the taxable year ending before the instalment's due date is less than the instalment required under
par. (a), the corporation or virtually exempt entity may pay the amount under this paragraph rather than the amount under
par. (a). For purposes of computing annualized income under this paragraph, the apportionment percentage computed under
s. 71.25 (6) and
(10) to
(12) from the return filed for the previous taxable year may be used if that return is filed with the department of revenue on or before the due date of the instalment for which the income is being annualized and the apportionment percentage on that previous year's return is greater than zero or may be used if that return is filed with the department of revenue on or before the due date of the 3rd instalment, the apportionment percentage on that previous year's return is greater than zero and the apportionment percentage used in the computation of the first 2 instalments is not less than the apportionment percentage on that previous year's return. For purposes of computing annualized income of corporations that are subject to a tax under this chapter on unrelated business taxable income, as defined under section
512 of the internal revenue code, and virtually exempt entities, the taxpayer's income for the months in the taxable year ending before the date one month before the due date for the instalment shall be used. Any corporation or virtually exempt entity that pays an amount calculated under this paragraph shall increase the next instalment computed under
par. (a) by an amount equal to the difference between the amount paid under this paragraph and the amount that would have been paid under
par. (a).
71.29(11)
(11) Exception to final instalment. If a corporation or virtually exempt entity files a return for a calendar year on or before January 31 of the succeeding calendar year (or if a corporation or virtually exempt entity on a fiscal year basis files a return on or before the last day of the first month immediately succeeding the close of such fiscal year) and pays in full at the time of such filing the amount computed on the return as payable, then, if estimated taxes are not required to be paid on or before the 15th day of the 9th month of the taxable year but are required to be paid on or before the 15th day of the 12th month of the taxable year, such return shall be considered as payment.
71.30
71.30
General provisions. 71.30(1)(a)(a) A corporation shall use a method of accounting authorized under the internal revenue code and shall use the same method used for federal income tax purposes if that method is authorized under the internal revenue code.
71.30(1)(b)
(b) A corporation that changes its method of accounting while subject to taxation under this chapter shall make the adjustments required under the internal revenue code, except that in the last year that a corporation is subject to taxation under this chapter it shall take into account all of the remaining adjustments required by this chapter because of a change in method of accounting.
71.30(2)
(2) Allocation of gross income, deductions, credits between 2 or more businesses. In any case of 2 or more organizations, trades or businesses (whether or not incorporated, whether or not organized in the United States and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the secretary or his or her delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if he or she determines that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses.
71.30(3)
(3) Computations order. Notwithstanding any other provisions in this chapter, corporations computing liability for the tax under
s. 71.23 (1) or
(2) shall make computations in the following order:
71.30(3)(f)
(f) The total of farmers' drought property tax credit under
s. 71.28 (1fd), farmland preservation credit under
subch. IX, farmland tax relief credit under
s. 71.28 (2m) and estimated tax payments under
s. 71.29.
71.30(4)
(4) Defense contract renegotiation. If the renegotiation or price redetermination of any corporation defense contract or subcontract by the government of the United States or any agency thereof or the voluntary adjustment of prices, costs or profits on any such contract or subcontract results in a reduction of income, the amount of any repayment or credit pursuant to such renegotiation, price redetermination or adjustment, including any federal income taxes credited as a part thereof, shall be allowed as a deduction from the corporate taxable income of the year in which said income was reported for taxation. Any federal income tax previously paid upon any income so repaid or credited shall be disallowed as a deduction from income of the year in which such tax was originally deducted, to the extent that such tax constituted an allowable deduction for said year. Any corporate taxpayer affected by such renegotiation, price redetermination or voluntary adjustment may within one year after the final determination thereof file a claim for refund and secure the same without interest, and the department of revenue shall make appropriate adjustments on account of said tax deductions without interest, notwithstanding the limitations of
s. 71.75 or other applicable statutes.
71.30(5)
(5) Disc income combining. In the case of a parent corporation, its DISC or affiliate, the net income of a DISC derived from business transacted with its parent shall be combined with the income of the parent corporation and the net income of a DISC derived from business transacted with the parent's affiliated corporation shall be combined with the net income of the affiliated corporation to determine the amount of income subject to taxation under this chapter for the DISC, the parent corporation or the affiliate of the parent corporation as separate taxable entities. The net income of the parent corporation shall not include dividends received from the DISC paid from income previously combined for taxation under this subsection. "DISC" (domestic international sales corporation) has the meaning specified in section
992 of the internal revenue code as amended to December 31, 1979. For purposes of this subsection, a corporation is affiliated if at least 50% of its total combined voting stock is owned directly or indirectly by its parent corporation.
71.30(6)
(6) Instalment method; distributions and final year. A corporation entitled to use the instalment method of accounting shall take the unreported balance of gain on all instalment obligations into income in the taxable year of their distribution, transfer or acquisition by another person or for the final taxable year for which it files or is required to file a return under this chapter, whichever year occurs first.
71.30(7)
(7) Penalties. Unless specifically provided in this subchapter, the penalties under
subch. XIII apply for failure to comply with the provisions of this subchapter unless the context requires otherwise.
71.30(8)
(8) Pricing effect on taxable income. 71.30(8)(a)(a) When any corporation liable to taxation under this chapter conducts its business in such a manner as either directly or indirectly to benefit the members or stockholders thereof or any person interested in such business, by selling its products or the goods or commodities in which it deals at less than the fair price which might be obtained therefor, or where a corporation, a substantial portion of whose capital stock is owned either directly or indirectly by another corporation, acquires and disposes of the products of the corporation so owning a substantial portion of its stock in such a manner as to create a loss or improper net income, the department may determine the amount of taxable income to such corporation for the calendar or fiscal year, having due regard to the reasonable profits which but for such arrangement or understanding might or could have been obtained from dealing in such products, goods or commodities.
71.30(8)(b)
(b) For the purpose of this chapter, if a corporation which is required to file an income or franchise tax return is affiliated with or related to any other corporation through stock ownership by the same interests or as parent or subsidiary corporations or has income that is regulated through contract or other arrangement, the department of revenue may require such consolidated statements as in its opinion are necessary in order to determine the taxable income received by any one of the affiliated or related corporations.
71.30(9)
(9) Reserve account transfer to surplus. If any transfer of a reserve or other account or portion thereof is in effect a transfer to surplus, so much of such transfer as had been accumulated through deductions from the gross or taxable income of the years open to audit under
s. 71.74 (1) and
(2) shall be included in the gross or taxable income of such years, and so much of such transfer as has been accumulated through deductions from the gross or taxable income of the years following January 1, 1911, and not open to audit under
s. 71.74 (1) and
(2) shall be included in the gross or taxable income of the year in which such transfer was effected.
TAX-OPTION CORPORATIONS
71.32
71.32
Conformity. Unless specifically provided in this subchapter, tax-option corporations shall be subject to all of the provisions, requirements and liabilities of this chapter, so far as applicable, unless the context requires otherwise.
71.32 History
History: 1987 a. 312.
71.33
71.33
Intent. It is the intent of this subchapter and other subchapters relating to the treatment of tax-option corporations and their shareholders to prevent the double inclusion or omission of any item of income, deduction or basis.
71.33 History
History: 1987 a. 312.
71.34
71.34
Definitions. In this subchapter:
71.34(1)
(1) "Net income or loss" of a tax-option corporation means net income or loss computed under the internal revenue code, as defined under
sub. (1g), except that:
71.34(1)(ag)
(ag) Section
164 (a) (3) of the internal revenue code is modified so that state taxes and taxes of the District of Columbia that are value-added taxes, single business taxes or taxes on or measured by all or a portion of net income, gross income, gross receipts or capital stock are not deductible.
71.34(1)(b)
(b) The items referred to in section
1366 (a) (1) (A) of the internal revenue code shall be included.
71.34(1)(c)
(c) The deduction referred to in sections
212 and
703 (a) (2) (E) of the internal revenue code shall be allowed.
71.34(1)(d)
(d) An addition or subtraction, as appropriate, shall be made for the net amount of state and federal differences including differences arising from the different basis of assets disposed of in a transaction in which gain or loss is recognized for state tax purposes, different depreciation methods or difference in basis of depreciable assets, different elections, or transitional adjustments due to differences in the statutes for taxable years 1986 and 1987 pertaining to the computation of net income of a tax-option corporation.
71.34(1)(e)
(e) An addition shall be made for the amount of credit computed under
s. 71.28 (3) and used by the corporation in the current year.
71.34(1)(f)
(f) An addition shall be made for the amount of interest, less related expenses, excluded by reason of section
103 of the internal revenue code (relating to interest received on state and municipal obligations and on volunteer fire department and mass transit obligations) or any other federal law.
71.34(1)(h)
(h) Section
162 of the internal revenue code (relating to trade or business expenses) is modified so that payments for wages, salaries, bonuses, interest or other expenses paid to an entertainer or entertainment corporation may be deducted only if the corporation complies with
ss. 71.63 (3) (b),
71.64 (4) and
(5) and
71.80 (15) (e).
71.34(1g)(d)(d) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1988, and before January 1, 1990, means the federal internal revenue code as amended to December 31, 1988, and as amended by
P.L. 101-73,
P.L. 101-140,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66, except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. Amendments to the federal internal revenue code enacted after December 31, 1988, do not apply to this paragraph with respect to taxable years beginning after December 31, 1988, and before January 1, 1990, except that changes to the internal revenue code made by
P.L. 101-73,
P.L. 101-140,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 and changes that indirectly affect provisions applicable to this subchapter made by
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(e)
(e) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1989, and before January 1, 1991, means the federal internal revenue code as amended to December 31, 1989, and as amended by
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66, except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1989, do not apply to this paragraph with respect to taxable years beginning after December 31, 1989, and before January 1, 1991, except that changes to the internal revenue code made by
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 and changes that indirectly affect provisions applicable to this subchapter made by
P.L. 101-508,
P.L. 102-227 and
P.L. 103-66 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(f)
(f) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1990, and before January 1, 1992, means the federal internal revenue code as amended to December 31, 1990, and as amended by
P.L. 102-227,
P.L. 102-486 and
P.L. 103-66 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227,
P.L. 102-486 and
P.L. 103-66, except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1990, do not apply to this paragraph with respect to taxable years beginning after December 31, 1990, and before January 1, 1992, except that changes to the internal revenue code made by
P.L. 102-227,
P.L. 102-486 and
P.L. 103-66 and changes that indirectly affect provisions applicable to this subchapter made by
P.L. 102-227,
P.L. 102-486 and
P.L. 103-66 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(g)
(g) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1991, and before January 1, 1993, means the federal internal revenue code as amended to December 31, 1991, excluding sections 103, 104 and 110 of
P.L. 102-227, and as amended by
P.L. 102-318,
P.L. 102-486 and
P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13171 and 13174 of
P.L. 103-66, and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227, excluding sections 103, 104 and 110 of
P.L. 102-227,
P.L. 102-318,
P.L. 102-486 and
P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13171 and 13174 of
P.L. 103-66, except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1991, do not apply to this paragraph with respect to taxable years beginning after December 31, 1991, and before January 1, 1993, except that changes to the internal revenue code made by
P.L. 102-318,
P.L. 102-486 and
P.L. 103-66 and changes that indirectly affect the provisions applicable to this subchapter made by
P.L. 102-318,
P.L. 102-486 and
P.L. 103-66 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(h)
(h) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1992, and before January 1, 1994, means the federal internal revenue code as amended to December 31, 1992, excluding sections 103, 104 and 110 of
P.L. 102-227, and as amended by
P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13113, 13150, 13171, 13174 and 13203 of
P.L. 103-66, and
P.L. 103-465 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227, excluding sections 103, 104 and 110 of
P.L. 102-227,
P.L. 102-318,
P.L. 102-486,
P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13113, 13150, 13171, 13174 and 13203 of
P.L. 103-66, and
P.L. 103-465 except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1992, do not apply to this paragraph with respect to taxable years beginning after December 31, 1992, and before January 1, 1994, except that changes to the internal revenue code made by
P.L. 103-66 and
P.L. 103-465 and changes that indirectly affect the provisions applicable to this subchapter made by
P.L. 103-66 and
P.L. 103-465 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(i)
(i) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1993, and before January 1, 1995, means the federal internal revenue code as amended to December 31, 1993, excluding sections 103, 104 and 110 of
P.L. 102-227 and sections 13113, 13150 (d), 13171 (d), 13174, 13203 (d) and 13215 of
P.L. 103-66, and as amended by
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227, excluding sections 103, 104 and 110 of
P.L. 102-227,
P.L. 102-318,
P.L. 102-486,
P.L. 103-66, excluding sections 13113, 13150 (d), 13171 (d), 13174, 13203 (d) and 13215 of
P.L. 103-66,
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7 except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1993, do not apply to this paragraph with respect to taxable years beginning after December 31, 1993, and before January 1, 1995, except that changes to the internal revenue code made by
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7, excluding section 1 of
P.L. 104-7, and changes that indirectly affect the provisions applicable to this subchapter made by
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7, excluding section 1 of
P.L. 104-7, apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(j)
(j) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1994, and before January 1, 1996, means the federal internal revenue code as amended to December 31, 1994, excluding sections 103, 104 and 110 of
P.L. 102-227 and sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of
P.L. 103-66, and as amended by
P.L. 104-7 and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227, excluding sections 103, 104 and 110 of
P.L. 102-227,
P.L. 102-318,
P.L. 102-486,
P.L. 103-66, excluding sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of
P.L. 103-66,
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7 except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1994, do not apply to this paragraph with respect to taxable years beginning after December 31, 1994, and before January 1, 1996, except changes to the internal revenue code made by
P.L. 104-7 and changes that indirectly affect the provisions applicable to this subchapter made by
P.L. 104-7 apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(k)
(k) "Internal revenue code" for tax-option corporations, for taxable years that begin after December 31, 1995, means the federal internal revenue code as amended to December 31, 1995, excluding sections 103, 104 and 110 of
P.L. 102-227 and sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of
P.L. 103-66, and as indirectly affected in the provisions applicable to this subchapter by
P.L. 99-514,
P.L. 100-203,
P.L. 100-647 excluding sections 803 (d) (2) (B), 805 (d) (2), 812 (c) (2), 821 (b) (2) and 823 (c) (2) of
P.L. 99-514 and section 1008 (g) (5) of
P.L. 100-647,
P.L. 101-73,
P.L. 101-140,
P.L. 101-179,
P.L. 101-239,
P.L. 101-508,
P.L. 102-227, excluding sections 103, 104 and 110 of
P.L. 102-227,
P.L. 102-318,
P.L. 102-486,
P.L. 103-66, excluding sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of
P.L. 103-66,
P.L. 103-296,
P.L. 103-337,
P.L. 103-465 and
P.L. 104-7, except that section 1366 (f) (relating to pass-through of items to shareholders) is modified by substituting the tax under
s. 71.35 for the taxes under sections 1374 and 1375. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1995, do not apply to this paragraph with respect to taxable years beginning after December 31, 1995.
71.34(2)
(2) "Tax-option corporation" means a corporation which is treated as an S corporation under subchapter S of the internal revenue code and has not elected out of tax-option corporation status under
s. 71.365 (4) (a) for the current taxable year.
71.34(3)
(3) "Tax-option item" means an item of income, loss or deduction.
71.34(4)
(4) "Wisconsin net income", for tax-option corporations engaged in business wholly within this state, means net income and, for tax-option corporations engaged in business both within and outside this state, means the amount assigned to this state under
s. 71.25.
71.35
71.35
Imposition of additional tax on tax-option corporations. In addition to the other taxes imposed under this chapter, there is imposed on every tax-option corporation, except a corporation that qualifies for the exception under section
1374 (c) (1) of the internal revenue code and that has not elected to change from tax-option status under
s. 71.365 (4) (a) for that taxable year, that has a net recognized built-in gain, as defined in section
1374 (d) (2) of the internal revenue code, during a recognition period, as defined in section
1374 (d) (7) of the internal revenue code as modified by this section, a tax computed under section
1374 of the internal revenue code except that the rate is that under
s. 71.27 (2), the net recognized built-in gain is computed using the Wisconsin basis of the assets and the Wisconsin apportionment percentage for the current taxable year, the taxable income is the Wisconsin taxable income and the credit and net operating losses are those under this chapter rather than the federal credits and net operating losses. The tax under this section does not apply if the return is filed pursuant to a federal S corporation election made before January 1, 1987, and the corporation has not elected to change its status under
s. 71.365 (4) (a) for any intervening year. If a corporation that elected to change from tax-option status under
s. 71.365 (4) (a) subsequently elects to become a tax-option corporation, its recognition period begins with the first day of the first taxable year affected by the subsequent election.
71.35 History
History: 1987 a. 312;
1989 a. 31.
71.36
71.36
Tax-option items. 71.36(1)(1) It is the intent of this section that shareholders of tax-option corporations include in their Wisconsin adjusted gross income their proportionate share of the corporation's tax-option items unless the corporation elects under
s. 71.365 (4) (a) not to be a tax-option corporation.
71.36(1m)
(1m) A tax-option corporation may deduct from its net income all amounts included in the Wisconsin adjusted gross income of its shareholders, the capital gain deduction under
s. 71.05 (6) (b) 9. and all amounts not taxable to nonresident shareholders under
ss. 71.04 (1) and
(4) to
(9) and
71.362. For purposes of this subsection, interest on federal obligations, obligations issued under
s. 66.066 by a local professional baseball park district, obligations issued under
ss. 66.40,
66.431 and
66.4325, obligations issued under
s. 234.65 to fund an economic development loan to finance construction, renovation or development of property that would be exempt under
s. 70.11 (36) and obligations issued under
subch. II of ch. 229 is not included in shareholders' income. The proportionate share of the net loss of a tax-option corporation shall be attributed and made available to shareholders on a Wisconsin basis but subject to the limitation and carry-over rules as prescribed by section
1366 (d) of the internal revenue code. Net operating losses of the corporation to the extent attributed or made available to a shareholder may not be used by the corporation for further tax benefit. For purposes of computing the Wisconsin adjusted gross income of shareholders, tax-option items shall be reported by the shareholders and those tax-option items, including capital gains and losses, shall retain the character they would have if attributed to the corporation, including their character as business income. In computing the tax liability of a shareholder, no credit against gross tax that would be available to the tax-option corporation if it were a nontax-option corporation may be claimed.
71.36(2)
(2) A tax-option corporation shall separately state all tax-option items the separate treatment of which may affect the liability of any shareholder for tax under this chapter.
71.36(3)(a)(a) The tax treatment of all tax-option items shall be determined at the corporate level.
71.36(3)(b)
(b) All shareholders of tax-option corporations shall treat tax-option items on their returns under this chapter in a manner consistent with the manner in which those tax-option items are treated on the corporation's Wisconsin income or franchise tax return or shall notify the department of revenue of any inconsistency and the reason for it.
71.36 History
History: 1987 a. 312;
1995 a. 27,
56.
71.362
71.362
Situs of income. 71.362(1)(1) All tax-option items of nonresident individuals, nonresident estates and nonresident trusts derived from a tax-option corporation not requiring apportionment under
sub. (2) shall follow the situs of the business of the corporation from which they are derived.
71.362(2)
(2) Nonresident individuals, nonresident estates and nonresident trusts deriving income from a tax-option corporation which is engaged in business within and without this state shall be taxed only on the income of the corporation derived from business transacted and property located in this state and losses and other items of the corporation deductible by such shareholders shall be limited to their proportionate share of the Wisconsin loss or other item. For purposes of this subsection, all intangible income of tax-option corporations passed through to shareholders is business income that follows the situs of the business.
71.362 History
History: 1987 a. 312.
71.365
71.365
General provisions. 71.365(1)(1)
Adjusted basis of shareholders' stock in tax-option corporation. For purposes of this chapter, the adjusted basis of a shareholder in the stock and indebtedness of a tax-option corporation shall be determined in the manner prescribed by the internal revenue code for a shareholder of an S corporation, except that the nature and amount of items affecting that basis shall be determined under this chapter. This subsection does not apply to 1978 and earlier taxable years of corporations which were S corporations for federal income tax purposes or to taxable years of corporations for which an election has been made under
sub. (4) (a).
71.365(1m)
(1m) Tax-option corporations; depreciation. A tax-option corporation may compute amortization and depreciation under either the federal internal revenue code as amended to December 31, 1995, or the federal internal revenue code in effect for the taxable year for which the return is filed, except that property first placed in service by the taxpayer on or after January 1, 1983, but before January 1, 1987, that, under s.
71.04 (15) (b) and
(br), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, and property first placed in service in taxable year 1981 or thereafter but before January 1, 1987, that, under s.
71.04 (15) (bm), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, shall continue to be depreciated under the internal revenue code as amended to December 31, 1980. Any difference between the adjusted basis for federal income tax purposes and the adjusted basis under this chapter shall be taken into account in determining net income or loss in the year or years for which the gain or loss is reportable under this chapter. If that property was placed in service by the taxpayer during taxable year 1986 and thereafter but before the property is used in the production of income subject to taxation under this chapter, the property's adjusted basis and the depreciation or other deduction schedule are not required to be changed from the amount allowable on the owner's federal income tax returns for any year because the property is used in the production of income subject to taxation under this chapter. If that property was acquired in a transaction in taxable year 1986 or thereafter in which the adjusted basis of the property in the hands of the transferee is the same as the adjusted basis of the property in the hands of the transferor, the Wisconsin adjusted basis of that property on the date of transfer is the adjusted basis allowable under the internal revenue code as defined for Wisconsin purposes for the property in the hands of the transferor.
71.365(2)
(2) Corporation business loss carry-forward prohibition. The corporation net business loss carry-forward provided by
s. 71.26 (4) may not be claimed by a tax-option corporation.
71.365(3)(a)(a) The credits under
s. 71.28 (4) and
(5) may not be claimed by a tax-option corporation or shareholders of a tax-option corporation.
71.365(3)(b)
(b) The shareholders of a tax-option corporation may not claim the credit attributable to that corporation under
s. 71.28 (3).
71.365(4)
(4) Election to change from tax-option status. 71.365(4)(a)(a) If persons who hold more than 50% of the shares on the day on which this election is made consent, a corporation that is an S corporation for federal income tax purposes may elect, on or before the due date or extended due date of its return under this chapter, not to be a tax-option corporation for that taxable year and for later taxable years until its status is again changed.
71.365(4)(b)
(b) If persons who, on the day on which the election occurs, hold more than 50% of the shares of a corporation that has elected out under
par. (a) consent, a corporation that is an S corporation for federal income tax purposes may elect, on or before the due date or extended due date of its return under this chapter, to be a tax-option corporation for that taxable year, except that no corporation electing under
par. (a) and no successor of such a corporation may be a tax-option corporation for any of the next 4 taxable years after the taxable year to which its election under
par. (a) first applies.
71.365(5)
(5) Federal return copy. A tax-option corporation shall file with its state franchise or income tax return an exact copy of its federal income tax return for the same year and shall file any other return or statement filed with or made to, or any document received from, the U.S. internal revenue service, and any form required of that corporation and prescribed by the department of revenue, affecting the taxation of its shareholders.
71.365(6)
(6) Notice to shareholders of appeals and other proceedings. Any notice of determination by the department of any tax-option item may be contested by a tax-option corporation under
subch. XIV. A tax-option corporation shall timely notify all shareholders of any administrative or judicial proceeding about the determination of any tax-option item. Each shareholder may participate in any such proceeding and shall be bound by the final determination in that proceeding.
71.365(9)
(9) Adjustment under rules. A corporation that elects under
sub. (4) (a) not to be a tax-option corporation and a corporation that elects to become a tax-option corporation shall adjust its income, under rules promulgated by the department of revenue, for the taxable year for which that election is first effective to avoid the omission or double inclusion of any item of income, loss or deduction.
