71.04(3)(a)3.
3. Net the items of income, loss or deduction, after the calculation under
subd. 2., for all of the days during which the partner or member was a resident of this state.
71.04(3)(b)
(b)
Part-year residents, nonresidents. All partners or members who are residents of this state for less than a full taxable year or who are nonresidents shall compute taxes for that year on their share of partnership or limited liability company income or loss under this chapter for the part of the taxable year during which they are nonresidents by recognizing their proportionate share of all items of income, loss or deduction attributable to a business in, services performed in, or rental of property in, this state.
71.04(3)(c)
(c)
Disregarding agreements. In computing taxes under this chapter a partner or member shall disregard, for purposes of determining the situs of partnership income of partners, all provisions in partnership or limited liability company agreements that do any of the following:
71.04(3)(c)1.
1. Characterize the consideration for payments to the partner or member as services or the use of capital.
71.04(3)(c)2.
2. Allocate to the partner or member, as income from or gain from sources outside this state, a greater proportion of the partner's or member's distributive share of partnership or limited liability company income or gain than the ratio of partnership or company income or gain from sources outside this state to partnership or company income or gain from all sources.
71.04(3)(c)3.
3. Allocate to a partner or member a greater proportion of a partnership or limited liability company item of loss or deduction from sources in this state than the partner's or member's proportionate share of total partnership or company loss or deduction.
71.04(3)(c)4.
4. Determine a partner's or member's distributive share of an item of partnership or limited liability company income, gain, loss or deduction for federal income tax purposes if the principal purpose of that determination is to avoid or evade the tax under this chapter.
71.04(4)
(4) Nonresident allocation and apportionment formula. Nonresident individuals and nonresident estates and trusts engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such nonresident individual or nonresident estate or trust within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, railroads, sleeping car companies and car line companies there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The remaining net income shall be apportioned to this state by use of the following:
71.04(4)(a)
(a) For taxable years beginning before January 1, 2006, an apportionment fraction composed of a sales factor under
sub. (7) representing 50% of the fraction, a property factor under
sub. (5) representing 25% of the fraction, and a payroll factor under
sub. (6) representing 25% of the fraction.
71.04(4)(b)
(b) For taxable years beginning after December 31, 2005, and before January 1, 2007, an apportionment fraction composed of a sales factor under
sub. (7) representing 60% of the fraction, a property factor under
sub. (5) representing 20% of the fraction, and a payroll factor under
sub. (6) representing 20% of the fraction.
71.04(4)(c)
(c) For taxable years beginning after December 31, 2006, and before January 1, 2008, an apportionment fraction composed of a sales factor under
sub. (7) representing 80% of the fraction, a property factor under
sub. (5) representing 10% of the fraction, and a payroll factor under
sub. (6) representing 10% of the fraction.
71.04(4)(d)
(d) For taxable years beginning after December 31, 2007, an apportionment fraction composed of the sales factor under
sub. (7).
71.04(4)(e)
(e) For taxable years beginning after December 31, 2005, and before January 1, 2008, the apportionment fraction for the remaining net income of a financial organization shall include a sales factor that represents more than 50% of the apportionment fraction, as determined by rule by the department. For taxable years beginning after December 31, 2007, the apportionment fraction for the remaining net income of a financial organization is composed of a sales factor, as determined by rule by the department.
71.04(4m)
(4m) Apportionment formula computation. 71.04(4m)(a)1.1. For taxable years beginning before January 1, 2008, if both the numerator and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income are zero, the sales factor under
sub. (7) is eliminated from the apportionment formula to determine the taxpayer's remaining net income under
sub. (4).
71.04(4m)(a)2.
2. For taxable years beginning after December 31, 2007, if both the numerator and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income are zero, none of the taxpayer's remaining net income is apportioned to this state.
71.04(4m)(b)1.1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a positive number, a negative number, or zero, the sales factor under
sub. (7) is zero.
71.04(4m)(b)2.
2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a positive number, a negative number, or zero, none of the taxpayer's remaining net income is apportioned to this state.
71.04(4m)(c)1.1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is zero or a negative number, the sales factor under
sub. (7) is one.
71.04(4m)(c)2.
2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under
sub. (7) related to a taxpayer's remaining net income is zero or a negative number, all of the taxpayer's remaining net income is apportioned to this state.
71.04(5)
(5) Property factor. For purposes of
sub. (4) and for taxable years beginning before January 1, 2008:
71.04(5)(a)
(a) The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used during the tax period. Cash on hand or in the bank, shares of stock, notes, bonds, accounts receivable, or other evidence of indebtedness, special privileges, franchises, goodwill, or property the income of which is not taxable or is separately allocated, shall not be considered tangible property nor included in the apportionment.
71.04(5)(b)
(b) Property used in the production of nonapportionable income or losses shall be excluded from the numerator and denominator of the property factor. Property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the property factor so as to exclude, as near as possible, the portion of such property producing the nonapportionable income or loss.
71.04(5)(c)
(c) Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at 8 times the net annual rental. Net annual rental is the annual rental paid by the taxpayer less any annual rental received by the taxpayer from sub-rentals.
71.04(5)(d)
(d) The average value of property shall be determined by averaging the values at the beginning and ending of the tax period but the secretary of revenue may require the averaging of monthly values during the tax period if reasonably required to reflect properly the average value of the taxpayer's property.
71.04(6)
(6) Payroll factor. For purposes of
sub. (4) and for taxable years beginning before January 1, 2008:
71.04(6)(a)
(a) The payroll factor is a fraction, the numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period.
71.04(6)(b)1.
1. The individual's service is performed entirely within this state;
71.04(6)(b)2.
2. The individual's service is performed within and without this state, but the service performed without this state is incidental to the individual's service within this state;
71.04(6)(b)3.
3. A portion of the service is performed within this state and the base of operations of the individual is in this state;
71.04(6)(b)4.
4. A portion of the service is performed within this state and, if there is no base of operations, the place from which the individual's service is directed or controlled is in this state;
71.04(6)(b)5.
5. A portion of the service is performed within this state and neither the base of operations of the individual nor the place from which the service is directed or controlled is in any state in which some part of the service is performed, but the individual's residence is in this state; or
71.04(6)(b)6.
6. The individual is neither a resident of nor performs services in this state but is directed or controlled from an office in this state and returns to this state periodically for business purposes and the state in which the individual resides does not have jurisdiction to impose income or franchise taxes on the employer.
71.04(6)(c)
(c) Compensation related to the operation, maintenance, protection or supervision of property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the payroll factor so as to exclude, as near as possible, the portion of pay related to the operation, maintenance, protection and supervision of property used in the production of nonapportionable income.
71.04(6)(d)
(d) Payments made to an independent contractor or any person not properly classified as an employee are excluded from the payroll factor.
71.04(6)(e)
(e) If the taxpayer has no employees or the department determines that employees are not a substantial income-producing factor, the department may order or permit the elimination of the payroll factor.
71.04(7)(a)
(a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under
par. (b) 1. and
2. plus 50% of the sales of the taxpayer during the tax period under
pars. (b) 2m. and
3. and
(c).
71.04(7)(b)
(b) Sales of tangible personal property are in this state if any of the following occur:
71.04(7)(b)1.
1. The property is delivered or shipped to a purchaser, other than the federal government, within this state regardless of the f.o.b. point or other conditions of the sale.
71.04(7)(b)2.
2. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government within this state regardless of the f.o.b. point or other conditions of sale.
71.04(7)(b)2m.
2m. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government outside this state and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.
71.04(7)(b)3.
3. The property is shipped from an office, store, warehouse, factory or other place of storage in this state to a purchaser other than the federal government and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.
71.04(7)(c)
(c) Sales of tangible personal property by an office in this state to a purchaser in another state and not shipped or delivered from this state are in this state if the taxpayer is not within the jurisdiction for income tax purposes of either the state from which the property is delivered or shipped or of the destination state.
71.04(7)(d)
(d) Sales, other than sales of tangible personal property, are in this state if the income-producing activity is performed in this state. If the income-producing activity is performed both in and outside this state the sales shall be divided between those states having jurisdiction to tax such business in proportion to the direct costs of performance incurred in each such state in rendering this service. Services performed in states which do not have jurisdiction to tax the business shall be deemed to have been performed in the state to which compensation is allocated by s.
71.04 (6), 2001 stats.
71.04(7)(e)
(e) In this subsection, "sales" includes, but is not limited to, the following items related to the production of business income:
71.04(7)(e)2.
2. Gross receipts from the operation of farms, mines and quarries.
71.04(7)(e)3.
3. Gross receipts from the sale of scrap or by-products.
71.04(7)(e)5.
5. Gross receipts from personal and other services.
71.04(7)(e)6.
6. Gross rents from real property or tangible personal property.
71.04(7)(e)7.
7. Interest on trade accounts and trade notes receivable.
71.04(7)(e)8.
8. A partner's or member's share of the partnership's or limited liability company's gross receipts.
71.04(7)(e)11.
11. Gross franchise fees from income-producing activities.
71.04(7)(f)
(f) The following items are among those that are not included in "sales" in this subsection:
71.04(7)(f)1.
1. Gross receipts and gain or loss from the sale of tangible business assets, except those under
par. (e) 1.,
2. and
3.
71.04(7)(f)2.
2. Gross receipts and gain or loss from the sale of nonbusiness real or tangible personal property.
71.04(7)(f)3.
3. Gross rents and rental income or loss from real property or tangible personal property if that real property or tangible personal property is not used in the production of business income.
71.04(7)(f)4.
4. Royalties from nonbusiness real property or nonbusiness tangible personal property.
71.04(7)(f)5.
5. Proceeds and gain or loss from the redemption of securities.
71.04(7)(f)7.
7. Gross receipts and gain or loss from the sale of intangible assets, except those under
par. (e) 1.
71.04(7)(f)8.
8. Dividends deductible by corporations in determining net income.
71.04(7)(f)9.
9. Gross receipts and gain or loss from the sale of securities.
71.04(7)(f)10.
10. Proceeds and gain or loss from the sale of receivables.
71.04(7)(f)11.
11. Refunds, rebates and recoveries of amounts previously expended or deducted.
71.04(7)(f)12.
12. Other items not includable in apportionable income.
71.04(8)
(8) Railroads, financial organizations and public utilities. 71.04(8)(a)(a) "Financial organization", as used in this section, means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, credit union, cooperative bank, small loan company, sales finance company, investment company, brokerage house, underwriter or any type of insurance company.
71.04(8)(b)1.1. For taxable years beginning before January 1, 2006, "public utility", as used in this section, means any business entity described under
subd. 2. and any business entity which owns or operates any plant, equipment, property, franchise, or license for the transmission of communications or the production, transmission, sale, delivery, or furnishing of electricity, water or steam, the rates of charges for goods or services of which have been established or approved by a federal, state or local government or governmental agency.
71.04(8)(b)2.
2. In this section, for taxable years beginning after December 31, 2005, "public utility" means any business entity providing service to the public and engaged in the transportation of goods and persons for hire, as defined in
s. 194.01 (4), regardless of whether or not the entity's rates or charges for services have been established or approved by a federal, state or local government or governmental agency.
71.04(8)(c)
(c) The net business income of railroads, sleeping car companies, car line companies, pipeline companies, financial organizations, telecommunications companies, air carriers, and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state.
71.04(9)
(9) Nonresident income from multistate tax-option corporation. Nonresident individuals and nonresident estates and 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, except that all 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 shall be allocated to this state. 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, except that all 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 shall be allocated to this state.
71.04(10)
(10) Department may waive factor. Where, in the case of any nonresident individual or nonresident estate or trust engaged in business in and outside of this state and required to apportion its income as provided in this section, it shall be shown to the satisfaction of the department of revenue that the use of any one of the 3 factors provided under
sub. (4) gives an unreasonable or inequitable final average ratio because of the fact that such nonresident individual or nonresident estate or trust does not employ, to any appreciable extent in its trade or business in producing the income taxed, the factors made use of in obtaining such ratio, this factor may, with the approval of the department of revenue, be omitted in obtaining the final average ratio which is to be applied to the remaining net income. This subsection does not apply to taxable years beginning after December 31, 2007.
71.04(11)
(11) Department may apportion by rule. If the income of any such nonresident individual or nonresident estate or trust properly assignable to the state of Wisconsin cannot be ascertained with reasonable certainty by the methods under this section, then the same shall be apportioned and allocated under such rules as the department of revenue may prescribe.
71.05
71.05
Income computation. 71.05(1)(1)
Exempt and excludable income. There shall be exempt from taxation under this subchapter the following:
