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(1am)
(1am) “Aggregate effective tax rate" means the sum of the effective tax rates imposed by a state, U.S. possession, foreign country, or any combination thereof, on the person or entity.
71.34(1b)
(1b) “Effective tax rate" means the maximum tax rate imposed by the state, U.S. possession, or foreign country, multiplied by the apportionment percentage, if any, applicable to the person or entity under the laws of that state, U.S. possession, or foreign country.
71.34(1c)
(1c) For purposes of sub.
(1k) (j) and
(L), “intangible expenses" include the following, to the extent that the amounts would otherwise be deductible in computing Wisconsin adjusted gross income:
71.34(1c)(a)
(a) Expenses, losses, and costs for, related to, or directly or indirectly in connection with the acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property.
71.34(1c)(b)
(b) Losses related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions.
71.34(1c)(c)
(c) Royalty, patent, technical, and copyright fees.
71.34(1d)
(1d) “Intangible property" includes stocks, bonds, financial instruments, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
71.34(1e)
(1e) For purposes of sub.
(1k) (j) and
(L), “interest expenses" means interest that would otherwise be deductible under section
163 of the Internal Revenue Code and deductible in the computation of Wisconsin adjusted gross income.
71.34(1g)(j)1.1. For taxable years beginning after December 31, 2013, and before January 1, 2017, for tax option corporations, “Internal Revenue Code" means the federal Internal Revenue Code as amended to December 31, 2013, except as provided in subds.
2.,
3., and
5. and subject to subd.
4. 71.34(1g)(j)2.
2. For purposes of this paragraph, “Internal Revenue Code" does not include the following provisions of federal public laws for taxable years beginning after December 31, 2013: section 13113 of P.L
103-66; sections 1, 3, 4, and 5 of P.L.
106-519; sections 101, 102, and 422 of P.L
108-357; sections 1310 and 1351 of P.L.
109-58; section 11146 of P.L.
109-59; section 403 (q) of P.L.
109-135; section 513 of P.L.
109-222; sections 104 and 307 of P.L.
109-432; sections 8233 and 8235 of P.L.
110-28; section 11 (e) and (g) of P.L.
110-172; section 301 of P.L.
110-245; sections 15303 and 15351 of P.L.
110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L.
110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L.
111-5; sections 211, 212, 213, 214, and 216 of P.L.
111-226; sections 2011 and 2122 of P.L.
111-240' sections 753, 754, and 760 of P.L.
111-312; section 1106 of P.L.
112-95; and sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L.
112-240.
71.34(1g)(j)3.
3. For purposes of this paragraph, “Internal Revenue Code" does not include amendments to the federal Internal Revenue Code enacted after December 31, 2013, except that “Internal Revenue Code" includes the provisions of the following federal public laws:
71.34(1g)(j)3.k.
k. Sections 103, 104, 124, 168, 184, 185, 190, 204, 303, 306, 336, and 341 of division Q of P.L.
114-113.
71.34(1g)(j)3.n.
n. Section 102 of division M and sections 110, 111, and 116 (b) of division O of P.L.
116-94.
71.34(1g)(j)4.
4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes.
71.34(1g)(j)5.
5. For purposes of this paragraph, section
1366 (f) of the Internal Revenue Code (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 of the Internal Revenue Code.
71.34(1g)(k)1.1. For taxable years beginning after December 31, 2016, and before January 1, 2018, for tax option corporations, “Internal Revenue Code" means the federal Internal Revenue Code as amended to December 31, 2016, except as provided in subds.
2.,
3., and
5. and s.
71.98 and subject to subd.
4. 71.34(1g)(k)2.
2. For purposes of this paragraph, “Internal Revenue Code" does not include the following provisions of federal public laws for taxable years beginning after December 31, 2016: section 13113 of P.L
103-66; sections 1, 3, 4, and 5 of P.L.
106-519; sections 101, 102, and 422 of P.L
108-357; sections 1310 and 1351 of P.L.
109-58; section 11146 of P.L.
109-59; section 403 (q) of P.L.
109-135; section 513 of P.L.
109-222; sections 104 and 307 of P.L.
109-432; sections 8233 and 8235 of P.L.
110-28; section 11 (e) and (g) of P.L.
110-172; section 301 of P.L.
110-245; section 15351 of P.L.
110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L.
110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L.
111-5; sections 211, 212, 213, 214, and 216 of P.L.
111-226; sections 2011 and 2122 of P.L.
111-240; sections 753, 754, and 760 of P.L.
111-312; section 1106 of P.L.
112-95; sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L.
112-240; P.L.
114-7; section 1101 of P.L.
114-74; section 305 of division P of P.L.
114-113; and sections 112, 123, 125 to 128, 143, 144, 151 to 153, 165 to 167, 169 to 171, 189, 191, 307, 326, and 411 of division Q of P.L.
114-113.
71.34(1g)(k)3.
3. For purposes of this paragraph, “Internal Revenue Code" does not include amendments to the federal Internal Revenue Code enacted after December 31, 2016, except that “Internal Revenue Code” includes sections 11024, 11025, and 13543 of P.L.
115-97; sections 40307 and 40413 of P.L.
115-123; sections 101 (m), (n), (o), (p), and (q), 104 (a), and 109 of division U of P.L.
115-141; and section 102 of division M and sections 110, 111, and 116 (b) of division O of P.L.
116-94.
71.34(1g)(k)4.
4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes, except that changes made by section 4007 (b) of P.L.
114-41, section 1102 of P.L.
114-74, sections 105, 111, 113 to 115, 133, 301, 302, 304, 305, 308, 311, 313 to 323, 325, 331, and 343 to 345 of division Q of P.L.
114-113 first apply for taxable years beginning after December 31, 2016.
71.34(1g)(k)5.
5. For purposes of this paragraph, section
1366 (f) of the Internal Revenue Code (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 of the Internal Revenue Code.
71.34(1g)(L)1.1. For taxable years beginning after December 31, 2017, and before January 1, 2021, for tax option corporations, “Internal Revenue Code" means the federal Internal Revenue Code as amended to December 31, 2017, except as provided in subds.
2.,
3., and
5. and s.
71.98 and subject to subd.
4. 71.34(1g)(L)2.
2. For purposes of this paragraph, “Internal Revenue Code" does not include the following provisions of federal public laws for taxable years beginning after December 31, 2017: section 13113 of P.L.
103-66; sections 1, 3, 4, and 5 of P.L.
106-519; sections 101, 102, and 422 of P.L.
108-357; sections 1310 and 1351 of P.L.
109-58; section 11146 of P.L.
109-59; section 403 (q) of P.L.
109-135; section 513 of P.L.
109-222; sections 104 and 307 of P.L.
109-432; sections 8233 and 8235 of P.L.
110-28; section 11 (e) and (g) of P.L.
110-172; section 301 of P.L.
110-245; section 15351 of P.L.
110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L.
110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L.
111-5; sections 211, 212, 213, 214, and 216 of P.L.
111-226; sections 2011 and 2122 of P.L.
111-240; sections 753, 754, and 760 of P.L.
111-312; section 1106 of P.L.
112-95; sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L.
112-240; P.L.
114-7; section 1101 of P.L.
114-74; section 305 of division P of P.L.
114-113; sections 123, 125 to 128, 143, 144, 151 to 153, 165 to 167, 169 to 171, 189, 191, 307, 326, and 411 of division Q of P.L.
114-113; and sections 11011, 11012, 13201 (a) to (e) and (g), 13206, 13221, 13301, 13304 (a), (b), and (d), 13531, 13601, 13801, 14101, 14102, 14103, 14201, 14202, 14211, 14212, 14213, 14214, 14215, 14221, 14222, 14301, 14302, 14304, and 14401 of P.L.
115-97.
71.34(1g)(L)3.
3. For purposes of this paragraph, “Internal Revenue Code" does not include amendments to the federal Internal Revenue Code enacted after December 31, 2017, except that “Internal Revenue Code” includes sections 40307, 40413, and 41113 of P.L.
115-123; sections 101 (m), (n), (o), (p), and (q), 104 (a), 109, 401 (a) (54) and (b) (15) (A), (B), and (C), 19, 20, 23, 26, 27, and 28 of division U of P.L.
115-141; sections 102 and 104 of division M, sections 102, 103, 106, 107, 108, 109, 110, 111, 113, 114, 115, 116, 201, 204, 205, 206, 302, 401, and 601 of division O, section 1302 of division P, and sections 131, 202 (d), and 205 of division Q of P.L.
116-94; sections 1106, 2202, 2203, 2204, 2205, 2206, 2307, 3608, 3609, 3701, and 3702 of division A of P.L.
116-136; and sections 202, 208, 209, 211, and 214 of division EE and sections 276 (a) and (b), 277, 278 (a), (b), (c), and (d), 280, and 285 of division N of P.L.
116-260.
71.34(1g)(L)4.
4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes, except that changes made by P.L.
115-63 and sections 11026, 11027, 11028, 13207, 13306, 13307, 13308, 13311, 13312, 13501, 13705, 13821, and 13823 of P.L.
115-97 first apply for taxable years beginning after December 31, 2017.
71.34(1g)(L)5.
5. For purposes of this paragraph, section
1366 (f) of the Internal Revenue Code (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 of the Internal Revenue Code.
71.34(1g)(m)1.1. For taxable years beginning after December 31, 2020, for tax option corporations, “Internal Revenue Code" means the federal Internal Revenue Code as amended to December 31, 2020, except as provided in subds.
2.,
3., and
5. and s.
71.98 and subject to subd.
4. 71.34(1g)(m)2.
2. For purposes of this paragraph, “Internal Revenue Code" does not include the following provisions of federal public laws for taxable years beginning after December 31, 2020: section 13113 of P.L.
103-66; sections 1, 3, 4, and 5 of P.L.
106-519; sections 101, 102, and 422 of P.L.
108-357; sections 1310 and 1351 of P.L.
109-58; section 11146 of P.L.
109-59; section 403 (q) of P.L.
109-135; section 513 of P.L.
109-222; sections 104 and 307 of P.L.
109-432; sections 8233 and 8235 of P.L.
110-28; section 11 (e) and (g) of P.L.
110-172; section 301 of P.L.
110-245; section 15351 of P.L.
110-246; section 302 of division A, section 401 of division B, and sections 312, 322, 502 (c), 707, and 801 of division C of P.L.
110-343; sections 1232, 1241, 1251, 1501, and 1502 of division B of P.L.
111-5; sections 211, 212, 213, 214, and 216 of P.L.
111-226; sections 2011 and 2122 of P.L.
111-240; sections 753, 754, and 760 of P.L.
111-312; section 1106 of P.L.
112-95; sections 104, 318, 322, 323, 324, 326, 327, and 411 of P.L.
112-240; P.L.
114-7; section 1101 of P.L.
114-74; section 305 of division P of P.L.
114-113; sections 123, 125 to 128, 143, 144, 151 to 153, 165 to 167, 169 to 171, 189, 191, 307, 326, and 411 of division Q of P.L.
114-113; sections 11011, 11012, 13201 (a) to (e) and (g), 13206, 13221, 13301, 13304 (a), (b), and (d), 13531, 13601, 13801, 14101, 14102, 14103, 14201, 14202, 14211, 14212, 14213, 14214, 14215, 14221, 14222, 14301, 14302, 14304, and 14401 of P.L.
115-97; sections 40304, 40305, 40306, and 40412 of P.L.
115-123; section 101 (c) of division T of P.L.
115-141; sections 101 (d) and (e), 102, 201 to 207, 301, 302, and 401 (a) (47) and (195), (b) (13), (17), (22) and (30), and (d) (1) (D) (v), (vi), and (xiii) and (xvii) (II) of division U of P.L.
115-141; sections 104, 114, 115, 116, 130, and 145 of division Q of P.L.
116-94; sections 2304 and 2306 of P.L.
116-136; and sections 111, 114, 115, 116, 118 (a) and (d), 133, 137, 138, and 210 of division EE of P.L.
116-260.
71.34(1g)(m)3.
3. For purposes of this paragraph, “Internal Revenue Code" does not include amendments to the federal Internal Revenue Code enacted after December 31, 2020.
71.34(1g)(m)4.
4. For purposes of this paragraph, the provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, as defined in this paragraph, apply for Wisconsin purposes at the same time as for federal purposes, except that changes made by sections 20101, 20102, 20104, 20201, 40201, 40202, 40203, 40308, 40309, 40311, 40414, 41101, 41107, 41114, 41115, and 41116 of P.L.
115-123; section 101 (a), (b), and (h) of division U of P.L.
115-141; section 1203 of P.L.
116-25; section 1122 of P.L.
116-92; section 301 of division O, section 1302 of division P, and sections 101, 102, 103, 117, 118, 132, 201, 202 (a), (b), and (c), 204 (a), (b), and (c), 301, and 302 of division Q of P.L.
116-94; section 2 of P.L.
116-98; and sections 301, 302, and 304 of division EE of P.L.
116-260 apply for taxable years beginning after December 31, 2020.
71.34(1g)(m)5.
5. For purposes of this paragraph, section
1366 (f) of the Internal Revenue Code (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 of the Internal Revenue Code.
71.34(1h)
(1h) For purposes of sub.
(1k) (j) and
(L), “management fees" include expenses and costs, not including interest expenses, pertaining to accounts receivable, accounts payable, employee benefit plans, insurance, legal matters, payroll, data processing, purchasing, taxation, financial matters, securities, accounting, or reporting and compliance matters or similar activities, to the extent that the amounts would otherwise be deductible in the computation of Wisconsin adjusted gross income.
71.34(1k)
(1k) “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) and s.
71.98 (3) and
(4), except that:
71.34(1k)(af)
(af) Section
61 of the Internal Revenue Code is modified so that income received in the form of allocations issued by this state with moneys received from the coronavirus relief fund authorized under
42 USC 801 to be used for any of the following purposes is not taxable income:
71.34(1k)(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(1k)(ah)
(ah) Section
61 of the Internal Revenue Code is modified so that income received in the form of a grant issued by the Wisconsin Economic Development Corporation during and related to the COVID-19 pandemic under the ethnic minority emergency grant program is not taxable income. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible.
71.34(1k)(ai)
(ai) Section
61 of the Internal Revenue Code is modified so that income received in the form of a grant from the restaurant revitalization fund, under section 5003 of the federal American Rescue Plan Act of 2021, P.L.
117-2, is not taxable income. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. Amounts excluded under this paragraph by a tax-option corporation or partnership shall be treated as tax-exempt income for purposes of sections
705 and
1366 of the Internal Revenue Code.
71.34(1k)(b)
(b) The items referred to in section
1366 (a) (1) (A) of the internal revenue code shall be included.
71.34(1k)(c)
(c) The deduction referred to in sections
212 and
703 (a) (2) (E) of the internal revenue code shall be allowed.
71.34(1k)(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(1k)(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(1k)(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(1k)(g)
(g) An addition shall be made for credits computed by a tax-option corporation under s.
71.28 (1dm),
(1dx),
(1dy),
(3),
(3g),
(3h),
(3n),
(3q),
(3t),
(3w),
(3wm),
(3y),
(4),
(5),
(5e),
(5g),
(5i),
(5j),
(5k),
(5r),
(5rm),
(6n), and
(10) and passed through to shareholders.
71.34(1k)(h)
(h) Section
162 of the Internal Revenue Code (relating to trade or business expenses) is modified as follows:
71.34(1k)(h)1.
1. So that payments for wages, salaries, commissions, and bonuses of employees and officers may be deducted only if the name, address, and amount paid to each resident of this state to whom compensation of $600 or more has been paid during the taxable year is reported or if the department of revenue is satisfied that failure to report has resulted in no revenue loss to this state.
71.34(1k)(h)2.
2. So that payments for rent may be deducted only if the amount paid, together with the names and addresses of the parties to whom rent has been paid, is reported as provided under s.
71.70 (2).
71.34(1k)(i)
(i) In section
1366 (f) of the Internal Revenue Code, the tax under s.
71.35 is substituted for the taxes under sections
1374 and
1375 of the Internal Revenue Code.
71.34(1k)(j)
(j) An addition shall be made for any amount deducted or excluded under the Internal Revenue Code for interest expenses, rental expenses, intangible expenses, and management fees that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.
