71.45
71.45
Income computation. 71.45(1)(1)
Exempt and excludable income. There shall be exempt from taxation under this subchapter income of insurers exempt from federal income taxation pursuant to section
501 (c) (15) of the internal revenue code, town mutuals organized under or subject to
ch. 612, foreign insurers, and domestic insurers engaged exclusively in life insurance business, domestic insurers insuring against financial loss by reason of nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real estate and corporations organized under
ch. 185, but not including income of cooperative sickness care associations organized under
s. 185.981, or of a service insurance corporation organized under
ch. 613, that is derived from a health maintenance organization as defined in
s. 609.01 (2) or a limited service health organization as defined in
s. 609.01 (3), or operating under
subch. I of ch. 616 which are bona fide cooperatives operated without pecuniary profit to any shareholder or member, or operated on a cooperative plan pursuant to which they determine and distribute their proceeds in substantial compliance with
s. 185.45. This subsection does not apply to income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state.
71.45(1t)
(1t) Exemption from the income tax. The interest and income from the following obligations are exempt from the tax imposed under
s. 71.43 (1):
71.45(1t)(e)
(e) Those 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).
71.45(1t)(g)
(g) Those issued under
s. 66.0621 by a local professional baseball park district or a local professional football stadium district or a local cultural arts district.
71.45 Note
NOTE: Par. (g) is shown as affected by two acts of the 1999 legislature and as merged by the revisor under s. 13.93 (2) (c).
71.45(2)
(2) Determination of net income. 71.45(2)(a)(a) Insurers subject to taxation under this chapter shall pay a tax according to or measured by net income. Such tax is payable under
s. 71.44 (1). Except as provided in
sub. (5), "net income" of an insurer subject to taxation under this chapter means federal taxable income as determined in accordance with the provisions of the internal revenue code adjusted as follows:
71.45(2)(a)1.
1. By adding to federal taxable income the amount of any loss carry-forward or carry-back, including any capital loss carry-forward or carry-back, deducted in the calculation of federal taxable income.
71.45(2)(a)2.
2. By adding to federal taxable income, if not already included therein, the amount of any federal tax refund or portion thereof previously applied to reduce the amount of tax payable under this chapter.
71.45(2)(a)3.
3. For insurers subject to taxation under
s. 71.43 (1), by adding to federal taxable income the amount of any interest income, except interest under
sub. (1t), that is not included in federal taxable income except the amount of any interest income which is by federal law exempt from taxation by this state and, for insurers subject to taxation under
s. 71.43 (2), by adding to federal taxable income the amount of any interest income which is not included in federal taxable income.
71.45(2)(a)4.
4. By adding to federal taxable income an amount equal to dividend income received during the taxable year to the extent such dividend income was used as a deduction in determining federal taxable income.
71.45(2)(a)5.
5. By adding to federal taxable income the amount of taxes imposed by this or any other state, or the District of Columbia, that are value-added taxes, single business taxes or taxes on or measured by net income, gross income, gross receipts or capital stock, if any, that are deducted in the calculation of federal taxable income except that gross receipts taxes assessed in lieu of property taxes are deductible from gross income.
71.45(2)(a)5m.
5m. By adding to federal taxable income the amount of the environmental tax that is imposed under section
59A of the internal revenue code and that is deducted in calculating federal taxable income.
71.45(2)(a)6.
6. By adding or subtracting, as appropriate, the difference between the federal basis and the Wisconsin basis of any asset sold, exchanged, abandoned or otherwise disposed of in a taxable transaction during the taxable year.
71.45(2)(a)7.
7. By adding or subtracting, as appropriate, the amount required to reflect the fact that property that, under s.
71.01 (4) (g) 7. to
10., 1985 stats., is required to be depreciated for taxable years 1983 to 1986 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.
71.45(2)(a)8.
8. By subtracting from federal taxable income dividends received that are deductible under
s. 71.26 (3) (j) and are included in federal taxable income.
71.45(2)(a)9.
9. By subtracting from federal taxable income any net capital losses not offset against capital gains to the extent that subtraction is allowed to other corporations in computing net income under
s. 71.26 (2).
71.45(2)(a)10.
10. By adding to federal taxable income the amount of credit computed under
s. 71.47 (1dd) to
(1dx) and not passed through by a partnership, limited liability company or tax-option corporation that has added that amount to the partnership's, limited liability company's or tax-option corporation's income under
s. 71.21 (4) or
71.34 (1) (g) and the amount of credit computed under
s. 71.47 (1),
(3),
(4) and
(5).
71.45(2)(a)10m.
10m. By adding to federal taxable income the amount deducted under section
847 of the Internal Revenue Code.
71.45(2)(a)13.
13. By adding or subtracting, as appropriate, the difference between the depreciation deduction under the federal Internal Revenue Code as amended to December 31, 1999 and the depreciation deduction under the federal Internal Revenue Code in effect for the taxable year for which the return is filed, so as to reflect the fact that the insurer may choose between these 2 deductions, 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.
71.45(2)(a)14.
14. By subtracting from federal taxable income the amount that is included in that income from the sale by the original policyholder or original certificate holder of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a viatical settlement contract, as defined in
s. 632.68 (1) (d).
71.45(2)(a)15.
15. By subtracting from federal taxable income all income that is realized from the purchase and subsequent sale or redemption of lottery prizes that is treated as nonapportionable income under
sub. (3r).
71.45(2)(b)1.1. With respect to any domestic insurer engaged in the sale of life insurance and also other insurance, the net income figure derived by application of
par. (a) shall be multiplied by a fraction, the numerator of which is the net gain from operations on insurance, other than life insurance, and the denominator of which is the total net gain from operations; except that the multiplier is zero if the numerator is zero or the numerator is negative and the adjusted federal taxable income is positive or the numerator is positive and the adjusted federal taxable income is negative, and except that the multiplier is one if the numerator is positive and the denominator is zero or negative and the adjusted federal taxable income is positive or the numerator is negative and the denominator is zero or positive and the adjusted federal taxable income is negative or the numerator, the denominator and the adjusted federal taxable income are positive and the numerator is greater than the denominator, and except that if the numerator and denominator are both negative and the adjusted federal taxable income is negative the multiplier is positive but may not be more than one.
71.45(2)(b)2.
2. For purposes of the numerator, "net gain from operations on insurance, other than life insurance" includes net income, after dividends to policyholders, but before federal income taxes and foreign income or franchise taxes, from fire and casualty insurance; net gain from operations, after dividends to policyholders and before federal income taxes, from accident and health insurance; and net realized capital gains or losses on investments from accident and health insurance operations, said net realized capital gains or losses to be apportioned among life and accident and health insurance lines in the same manner as net investment income is required to be apportioned by the commissioner of insurance. "Net gain from operations", "net income", "net realized capital gains or losses", and "net investment income" shall be calculated and reported as required under rules adopted by the commissioner of insurance.
71.45(2)(b)3.
3. For purposes of the denominator, "total net gain from operations" includes net income, after dividends to policyholders, but before federal income taxes and foreign income or franchise taxes, from fire and casualty insurance; net gain from operations after dividends to policyholders and before federal income taxes, from accident and health and life insurance; and net realized capital gains or losses on investments from accident and health and life insurance operations. "Net income", "net gain from operations", and "net realized capital gains or losses" shall be calculated and reported as required under rules adopted by the commissioner of insurance.
71.45(2)(b)4.
4. The resultant figure shall constitute Wisconsin net income for purposes of the Wisconsin franchise tax measured by net income except with respect to such of said insurers as had, in the taxable year, premiums written on insurance other than life insurance where the subject of such insurance was resident, located or to be performed outside this state.
71.45(3)
(3) Apportionment. With respect to domestic insurers not engaged in the sale of life insurance but which, in the taxable year, have collected premiums written on subjects of insurance resident, located or to be performed outside this state, there shall be subtracted from the net income figure derived by application of
sub. (2) (a) to arrive at Wisconsin income constituting the measure of the franchise tax an amount calculated by multiplying such adjusted federal taxable income by the arithmetic average of the following 2 percentages:
71.45(3)(a)
(a) The percentage of total premiums written on all property and risks other than life insurance, wherever located during the taxable year, as reflects premiums written on insurance, other than life insurance, where the subject of insurance was resident, located or to be performed outside this state.
71.45(3)(b)
(b) The percentage of total payroll, exclusive of life insurance payroll, paid everywhere in the taxable year as reflects such compensation paid outside this state. Compensation is paid outside this state if the individual's service is performed entirely outside this state; or the individual's service is performed both within and without this state, but the service performed within is incidental to the individual's service without this state; or some service is performed without this state and the base of operations, or if there is no base of operations, the place from which the service is directed or controlled is without this state, or the base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is outside this state.
71.45(3m)
(3m) Arithmetic average. The arithmetic average of the 2 percentages referred to in
sub. (3) shall be applied to the net income figure arrived at by the successive application of
sub. (2) (a) and
(b) with respect to Wisconsin insurers to which
sub. (2) (a) and
(b) applies and which have collected premiums written upon insurance, other than life insurance, where the subject of such insurance was resident, located or to be performed outside this state, to arrive at Wisconsin income constituting the measure of the franchise tax.
71.45(3r)
(3r) Allocation of certain proceeds. All income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state.
71.45(4)
(4) Net business loss carry-forward. Insurers computing tax under this subchapter may subtract from Wisconsin net income any Wisconsin net business loss sustained in any of the next 15 preceding taxable years to the extent not offset by Wisconsin net business income of any year between the loss year and the taxable year for which an offset is claimed and computed without regard to
sub. (2) (a) 8. and
9. and this subsection and limited to the amount of net income, but no loss incurred for a taxable year before taxable year 1987 by a nonprofit service plan of sickness care under
ch. 148, dental care under
s. 447.13 or prepaid optometric service plans under
s. 449.15 may be treated as a net business loss of the successor service insurer under
ch. 613 operating by virtue of
s. 148.03,
447.13 or
449.15.
71.45(5)
(5) Exceptions. The net income of a cooperative sickness care association organized under
s. 185.981, or of a service insurance corporation organized under
ch. 613, that is derived from a health maintenance organization, as defined in
s. 609.01 (2), or a limited service health organization, as defined in
s. 609.01 (3), is the net income that would be determined if the cooperative sickness care association or service insurance corporation were subject to federal income taxation and as if that income were that of an insurance company.
71.45 History
History: 1987 a. 312;
1989 a. 31,
336,
359;
1991 a. 37,
39,
269;
1993 a. 16,
112,
263,
437;
1995 a. 27,
56,
371,
380;
1997 a. 27,
37,
237;
1999 a. 9,
65;
1999 a. 150 s.
672;
1999 a. 167,
194; s. 13.93 (2) (c).
71.46
71.46
Rates of taxation. 71.46(1)(1) The taxes to be assessed, levied and collected upon Wisconsin net incomes of corporations shall be computed at the rate of 7.9%.
71.46(2)
(2) The corporation franchise tax imposed under
s. 71.43 (2) and measured by Wisconsin net income shall be computed at the rate of 7.9%.
71.46(3)
(3) The tax imposed under this subchapter on each domestic insurer on or measured by its entire net income attributable to lines of insurance in this state may not exceed 2% of the gross premiums, as defined in
s. 76.62, received during the taxable year by the insurer on all policies on those lines of insurance if the subject of that insurance was resident, located or to be performed in this state plus 7.9% of the income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state.
71.46 History
History: 1987 a. 312;
1999 a. 9.
71.47(1)(1)
Community development finance credit. 71.47(1)(a)(a) Any corporation which contributes an amount to the community development finance authority under s.
233.03, 1985 stats., or to the housing and economic development authority under s.
234.03 (32) and in the same year purchases common stock or partnership interests of the community development finance company issued under s.
233.05 (2), 1985 stats., or
s. 234.95 (2) in an amount no greater than the contribution to the authority, may credit against taxes otherwise due an amount equal to 75% of the purchase price of the stock or partnership interests. The credit received under this paragraph may not exceed 75% of the contribution to the community development finance authority.
71.47(1)(b)
(b) Any corporation receiving a credit under this subsection may carry forward to the next succeeding 15 taxable years the amount of the credit not offset against taxes for the year of purchase to the extent not offset by those taxes otherwise due in all intervening years between the year for which the credit was computed and the year for which the carry-forward is claimed.
71.47(1)(c)
(c) A claimant who has filed a timely claim under this subsection may file an amended claim with the department of revenue within 4 years of the last day prescribed by law for filing the original claim.
71.47(1dd)
(1dd) Development zones day care credit. 71.47(1dd)(a)1.
1. "Day care center benefits" means benefits provided at a day care facility that is licensed under
s. 48.65 or
48.69 and that for compensation provides care for at least 6 children or benefits provided at a facility for persons who are physically incapable of caring for themselves.
71.47(1dd)(a)2.
2. "Employment-related day care expenses" means amounts paid or incurred by a claimant, during the 2-year period beginning with the day that the member of the targeted group begins work for the claimants for providing or making day care center benefits available to a qualifying individual in order to enable a member of a targeted group to be employed by the claimant.
71.47(1dd)(a)5.
5. "Qualifying individual" means a dependent of a member of a targeted group who is employed by a claimant and with respect to whom the member is entitled to a deduction under section
151 (c) of the internal revenue code for federal income tax purposes, a dependent of a member of a targeted group who is employed by a claimant if the dependent is physically or mentally incapable of caring for himself or herself or the spouse of a member of a targeted group who is employed by the claimant if the spouse is physically or mentally incapable of caring for himself or herself.
71.47(1dd)(b)
(b) Except as provided in
s. 73.03 (35), for any taxable year for which that person is certified under
s. 560.765 (3) and begins business operations in a zone under
s. 560.71 after July 29, 1995, or certified under
s. 560.797 (4) (a), for each zone for which the person is certified or entitled a person may credit against taxes otherwise due under this subchapter employment-related day care expenses, up to $1,200 for each qualifying individual.
71.47(1dd)(dm)
(dm) No credit may be allowed under this subsection unless the claimant includes with the claimant's return a statement from the department of commerce verifying the amount of qualifying employment-related day care expenses.
71.47(1dd)(e)
(e) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
71.47(1de)
(1de) Development zones environmental remediation credit. 71.47(1de)(a)(a) Except as provided in
s. 73.03 (35), for any taxable year for which a person is certified under
s. 560.765 (3) and begins business operations in a zone under
s. 560.71 after July 29, 1995, or certified under
s. 560.797 (4) (a), for each zone for which the person is certified or entitled the person may claim as a credit against taxes otherwise due under this subchapter an amount equal to 7.5% of the amount that the person expends to remove or contain environmental pollution, as defined in
s. 299.01 (4), in the zone or to restore soil or groundwater that is affected by environmental pollution, as defined in
s. 299.01 (4), in the zone if the person fulfills all of the following requirements:
71.47(1de)(a)1.
1. Begins the work, other than planning and investigating, for which the credit is claimed after the area that includes the site where the work is done is designated a development zone under
s. 560.71 or an enterprise development zone under
s. 560.797 and after the claimant is certified under
s. 560.765 (3) or certified under
s. 560.797 (4) (a).
71.47(1de)(d)
(d) No credit may be claimed under this subsection for taxable years that begin on January 1, 1998, or thereafter. Credits under this subsection for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.
71.47(1di)
(1di) Development zones investment credit. 71.47(1di)(a)(a) Except as provided in
pars. (dm) and
(f) and
s. 73.03 (35), for any taxable year for which the person is entitled under
s. 560.795 (3) to claim tax benefits, any person may claim as a credit against taxes otherwise due under this chapter 2.5% of the purchase price of depreciable, tangible personal property, or 1.75% of the purchase price of depreciable, tangible personal property that is expensed under section
179 of the internal revenue code for purposes of the taxes under this chapter, except that:
71.47(1di)(a)1.
1. The investment must be in property that is purchased after the person is entitled under
s. 560.795 (3) to claim tax benefits and that is used for at least 50% of its use in the conduct of the person's business operations at a location in a development zone under
subch. VI of ch. 560 or, if the property is mobile, the base of operations of the property for at least 50% of its use must be a location in a development zone.
71.47(1di)(a)2.
2. The credit under this subsection may be claimed only by the person who purchased the property the investment in which is the basis for the credit, except that only partners may claim the credit based on purchases by a partnership, only members may claim the credit based on purchases by a limited liability company and except that only shareholders may claim the credit based on purchases by a tax-option corporation.
71.47(1di)(a)3.
3. If the credit is claimed for used property, the claimant may not have used the property for business purposes at a location outside the development zone. If the credit is attributable to a partnership, limited liability company or tax-option corporation, that entity may not have used the property for business purposes at a location outside the development zone.
71.47(1di)(a)4.
4. No credit is allowed under this subsection for property which is the basis for a credit under
sub. (1dL).
71.47(1di)(b)1.1. Except as provided in
subd. 2., the credit, including any credits carried over, may be offset only against the amount of the tax otherwise due under this chapter attributable to income from the business operations of the claimant in the development zone and against the tax attributable to income from directly related business operations of the claimant.
71.47(1di)(b)2.
2. If the claimant is located on an Indian reservation, as defined in
s. 560.86 (5), and is an American Indian, as defined in
s. 560.86 (1), an Indian business, as defined in
s. 560.86 (4), or a tribal enterprise, as defined in
s. 71.07 (2di) (b) 2., and if the allowable amount of the credit under this subsection exceeds the taxes otherwise due under this chapter on or measured by the claimant's income, the amount of the credit not used as an offset against those taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft.
71.47(1di)(b)3.
3. Partnerships, limited liability companies and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and amount of, that credit shall be determined on the basis of their economic activity, not that of their shareholders, partners or members. The corporation, partnership or limited liability company shall compute the amount of the credit that may be claimed by each of its shareholders, partners or members and shall provide that information to each of its shareholders, partners or members. Partners, members of limited liability companies and shareholders of tax-option corporations may claim the credit based on the partnership's, company's or corporation's activities in proportion to their ownership interest and may offset it against the tax attributable to their income from the partnership's, company's or corporation's business operations in the development zone and against the tax attributable to their income from the partnership's, company's or corporation's directly related business operations.
71.47(1di)(c)
(c) Except as provided in
par. (b) 2., the carry-over provisions of
sub. (4) (e) and
(f) as they relate to the credit under that subsection relate to the credit under this subsection and apply as if the development zone continued to exist.
71.47(1di)(d)
(d) No credit may be allowed under this subsection unless the claimant includes with the claimant's return:
71.47(1di)(d)1.
1. A copy of a verification from the department of commerce that the claimant may claim tax benefits under
s. 560.795 (3).
71.47(1di)(d)2.
2. A statement from the department of commerce verifying the purchase price of the investment and verifying that the investment fulfills the requirements under
par. (a).
71.47(1di)(dm)
(dm) In calculating the credit under
par. (a), a claimant shall reduce the purchase price of the property by a percentage equal to the percentage of use of the property during the taxable year the property is first placed into service that is for a purpose not specified under
par. (a) 1.
71.47(1di)(e)
(e) The recapture provisions under section
47 (a) (5) of the internal revenue code as amended to December 31, 1985, as they apply to the credit under section
46 of the internal revenue code, apply to the credit under this subsection, except that those provisions also apply if the property for which the credit is claimed is moved out of the development zone or, for mobile property, if the base of operations is moved out of the zone and except that the determination of whether or not property is 3-year property shall be made under section
168 of the internal revenue code.
71.47(1di)(f)
(f) If a person who is entitled under
s. 560.795 (3) to claim tax benefits becomes ineligible for such tax benefits, that person may claim no credits under this subsection for the taxable year that includes the day on which the person becomes ineligible for tax benefits or succeeding taxable years and that person may carry over no unused credits from previous years to offset tax under this chapter for the taxable year that includes the day on which the person becomes ineligible for tax benefits or succeeding taxable years.
71.47(1di)(g)
(g) If a person who is entitled under
s. 560.795 (3) to claim tax benefits ceases business operations in the development zone during any of the taxable years that that zone exists, that person may not carry over to any taxable year following the year during which operations cease any unused credits from the taxable year during which operations cease or from previous taxable years.
71.47(1di)(h)
(h) Subsection (4) (g) and
(h) as it applies to the credit under that subsection applies to the credit under this subsection.
