71.04(7)(dh)1.1. Gross receipts from services are in this state if the purchaser of the service received the benefit of the service in this state.
71.04(7)(dh)2.
2. The benefit of a service is received in this state if any of the following applies:
71.04(7)(dh)2.a.
a. The service relates to real property that is located in this state.
71.04(7)(dh)2.b.
b. The service relates to tangible personal property that is located in this state at the time that the service is received or tangible personal property that is delivered directly or indirectly to customers in this state.
71.04(7)(dh)2.c.
c. The service is provided to an individual who is physically present in this state at the time that the service is received.
71.04(7)(dh)2.d.
d. The service is provided to a person engaged in a trade or business in this state and relates to that person's business in this state.
71.04(7)(dh)3.
3. If the purchaser of a service receives the benefit of a service in more than one state, the gross receipts from the performance of the service are included in the numerator of the sales factor according to the portion of the service received in this state.
71.04(7)(dh)4.
4. If the taxpayer is not subject to income tax in the state in which the benefit of the service is received, the benefit of the service is received in this state to the extent that the taxpayer's employees or representatives performed services from a location in this state. Fifty percent of the taxpayer's receipts that are considered received in this state under this paragraph shall be included in the numerator of the sales factor.
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.
71.04 Cross-reference
Cross Reference: See also s.
Tax 2.39, Wis. adm. code.
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:
71.05(1)(a)
(a)
Retirement systems. All payments received from the U.S. civil service retirement system, the U.S. military employee retirement system, the employee's retirement system of the city of Milwaukee, Milwaukee County employees' retirement system, sheriff's annuity and benefit fund of Milwaukee County, police officer's annuity and benefit fund of Milwaukee, fire fighter's annuity and benefit fund of Milwaukee, or the public employee trust fund as successor to the Milwaukee public school teachers' annuity and retirement fund and to the Wisconsin state teachers retirement system, which are paid on the account of any person who was a member of the paying or predecessor system or fund as of December 31, 1963, or was retired from any of the systems or funds as of December 31, 1963, but such exemption shall not exclude from gross income tax sheltered annuity benefits.
71.05 Cross-reference
Cross Reference: See also s.
Tax 2.94, Wis. adm. code.
71.05(1)(ae)
(ae)
Pension, individual retirement income. Except for a payment that is exempt under
par. (a),
(am), or
(an), or that is exempt as a railroad retirement benefit, for taxable years beginning after December 31, 2008, up to $5,000 of payments or distributions received each year by an individual from a qualified retirement plan under the Internal Revenue Code or from an individual retirement account established under
26 USC 408, if all of the following conditions apply:
71.05(1)(ae)1.
1. The individual is at least 65 years of age before the close of the taxable year to which the exemption claim relates.
71.05(1)(ae)2.
2. If the individual is single or files as head of household, his or her federal adjusted gross income in the year to which the exemption claim relates is less than $15,000.
71.05(1)(ae)3.
3. If the individual is married and is a joint filer, the couple's federal adjusted gross income in the year to which the exemption claim relates is less than $30,000.
71.05(1)(ae)4.
4. If the individual is married and files a separate return, the sum of both spouses' federal adjusted gross income in the year to which the exemption claim relates is less than $30,000.
71.05(1)(am)
(am)
Military retirement systems. All retirement payments received from the U.S. military employee retirement system, to the extent that such payments are not exempt under
par. (a) or
(ae).
71.05(1)(an)
(an)
Uniformed services retirement benefits. All retirement payments received from the U.S. government that relate to service with the coast guard, the commissioned corps of the national oceanic and atmospheric administration, or the commissioned corps of the public health service, to the extent that such payments are not exempt under
par. (a),
(ae), or
(am).
71.05(1)(b)
(b)
State legislature allowance for expenses. All amounts received in accordance with
s. 13.123 (1) (a) which are spent for the purposes specified in
s. 13.123 (1) (a) if the person does not claim a deduction for travel expenses away from home on legislative days. In this chapter, the place of residence of a member of the state legislature within the legislative district which the member represents shall be considered the member's home.
71.05(1)(c)
(c)
Certain interest income. Interest received on bonds or notes issued by any of the following:
71.05(1)(c)1.
1. The Wisconsin Housing and Economic Development Authority under
s. 234.65, if the bonds are used to fund an economic development loan to finance construction, renovation, or development of property that would be exempt under
s. 70.11 (36).
71.05(1)(c)1m.
1m. The Wisconsin Housing and Economic Development Authority under
s. 234.08 or
234.61, on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects.
71.05(1)(c)8.
8. The Wisconsin Health and Educational Facilities Authority under
s. 231.03 (6), on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in
s. 231.01 (5), to fund the acquisition of information technology hardware or software.
71.05(1)(f)
(f)
Income from the sales of certain insurance policies. Income received by the original policyholder or original certificate holder from the sale 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).
71.05(2)
(2) Nonresident reciprocity. All payments received by natural persons domiciled outside Wisconsin who derive income from the performance of personal services in Wisconsin shall be excluded from Wisconsin gross income to the extent that it is subjected to an income tax imposed by the state of domicile; provided that the law of the state of domicile allows a similar exclusion of income from personal services earned in such state by natural persons domiciled in Wisconsin, or a credit against the tax imposed by such state on such income equal to the Wisconsin tax on such income.
71.05 Cross-reference
Cross Reference: See also s.
Tax 2.02, Wis. adm. code.
71.05(3)
(3) Menominee Indian tribe; distribution of assets. No distribution of assets from the United States to the members of the Menominee Indian tribe as defined in
s. 49.385 or their lawful distributees, or to any corporation, or organization, created by the tribe or at its direction pursuant to section 8,
P.L. 83-399, as amended, and no issuance of stocks, bonds, certificates of indebtedness, voting trust certificates or other securities by any such corporation or organization, or voting trust, to such members of the tribe or their lawful distributees shall be subject to income taxes under this chapter; provided, that so much of any cash distribution made under said
P.L. 83-399 as consists of a share of any interest earned on funds deposited in the treasury of the United States pursuant to the supplemental appropriation act, 1952, (65 Stat. 736, 754) shall not by virtue of this subsection be exempt from the individual income tax of this state in the hands of the recipients for the year in which paid. For the purpose of ascertaining the gain or loss resulting from the sale or other disposition of such assets and stocks, bonds, certificates of indebtedness and other securities under this chapter, the fair market value of such property, on termination date as defined in s.
70.057 (1), 1967 stats., shall be the basis for determining the amount of such gain or loss.
71.05(5)
(5) Fractional year. When an income tax return is required to be filed for a fractional part of a year under
s. 71.03 (3), the Wisconsin taxable income shall be placed on an annual basis using the method applicable for federal income taxes under section
443 (b) (1) of the internal revenue code.
71.05(6)
(6) Modifications and transitional adjustments. Some of the modifications referred to in
s. 71.01 (13) and
(14) are:
71.05(6)(a)
(a)
Additions. To federal adjusted gross income add:
71.05(6)(a)1.
1. The amount of any interest, except interest under
par. (b) 1., less related expenses, which is not included in federal adjusted gross income, and except the amount of any interest or original issue discount derived from bonds issued under
subch. IV of ch. 18.
71.05 Cross-reference
Cross Reference: See also s.
Tax 3.095, Wis. adm. code.
71.05(6)(a)3.
3. Any amount deducted as a capital loss carry-over from any taxable year prior to the 1965 taxable year.
71.05(6)(a)4.
4. The amount of any lump sum distribution taxable under section
402 (d) (1) of the internal revenue code (relating to distributions from employee benefit plans).
71.05(6)(a)5.
5. Any amount deducted as a capital loss carry-over from any taxable year prior to the 1975 taxable year if the capital asset which generated the loss had a situs outside of Wisconsin.
71.05(6)(a)6.
6. Any amount received in taxable year 1979 or thereafter by a Wisconsin resident shareholder as a proportionate share of the earnings and profits of a tax-option corporation which was accumulated prior to the beginning of its 1979 taxable year and not considered a dividend when received under section
1375 (d) (1) of the internal revenue code as amended to December 31, 1978.
71.05(6)(a)7.
7. Any amount deducted under section
170 (i) of the internal revenue code (relating to the deduction of charitable contributions by individuals who do not itemize deductions).
71.05(6)(a)9.
9. Any amount excluded from adjusted gross income under section
641 (c) (1) of the internal revenue code (relating to gain on the sale of any property by a trust within 2 years of acquisition).
71.05(6)(a)10.
10. For the taxable year, for a person who is not "actively engaged in farming," as that term is used in
7 CFR 1400.201, combined net losses, exclusive of net gains from the sale or exchange of capital or business assets and exclusive of net profits, from businesses, from rents, from partnerships, from limited liability companies, from S corporations, from estates, or from trusts, under section
165 of the Internal Revenue Code, except losses allowable under sections
1211 and
1231 of the Internal Revenue Code, otherwise includable in calculating Wisconsin income if those losses are incurred in the operation of a farming business, as defined in section
464 (e)
1. of the Internal Revenue Code to the extent that those combined net losses exceed $20,000 if nonfarm Wisconsin adjusted gross income exceeds $55,000 but does not exceed $75,000, exceed $17,500 if nonfarm Wisconsin adjusted gross income exceeds $75,000 but does not exceed $100,000, exceed $15,000 if nonfarm Wisconsin adjusted gross income exceeds $100,000 but does not exceed $150,000, exceed $12,500 if nonfarm Wisconsin adjusted gross income exceeds $150,000 but does not exceed $200,000, exceed $10,000 if nonfarm Wisconsin adjusted gross income exceeds $200,000 but does not exceed $250,000, exceed $7,500 if nonfarm Wisconsin adjusted gross income exceeds $250,000 but does not exceed $300,000, exceed $5,000 if nonfarm Wisconsin adjusted gross income exceeds $300,000 but does not exceed $600,000, and exceed $0 if nonfarm adjusted gross income exceeds $600,000, except that the amounts applicable to married persons filing separately are 50% of the amounts specified in this subdivision.
71.05(6)(a)12.
12. All penalties for early withdrawals from time savings accounts and deposits deducted for federal income tax purposes and paid while the individual charged with the penalty was a nonresident of this state; all reforestation expenses related to property not in this state, deducted for federal income tax purposes and paid while the individual paying the expense was not a resident of this state; all contributions to individual retirement accounts, simplified employee pension plans and self-employment retirement plans and all deductible employee contributions, deducted for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual's wages and net earnings from a trade or business taxable by this state and the denominator of which is the individual's total wages and net earnings from a trade or business; the contributions to a Keogh plan deducted for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual's net earnings from a trade or business, taxable by this state, and the denominator of which is the individual's total net earnings from a trade or business; the amount of health insurance costs of self-employed individuals deducted under section
162 (L) of the internal revenue code for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual's net earnings from a trade or business, taxable by this state, and the denominator of which is the individual's total net earnings from a trade or business; and the amount of self-employment taxes deducted under section
164 (f) of the internal revenue code for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual's net earnings from a trade or business, taxable by this state, and the denominator of which is the individual's total net earnings from a trade or a business.
71.05(6)(a)13.
13. The amount claimed by a fiduciary as an itemized deduction under section
164 or
216 (a) (1) of the internal revenue code on the federal fiduciary return.
