Chapter 71

71.01(6)(m)4.b. b. Changes made by section 1201 of P.L. 108-173 and section 307 of P.L. 109-432 first apply for taxable years beginning after December 31, 2010.

71.01(6)(n) (n)

71.01(6)(n)1. 1. For taxable years beginning after December 31, 2022, for individuals and fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, “Internal Revenue Code” means the federal Internal Revenue Code as amended to December 31, 2022, except as provided in subds. 2. and 3. and s. 71.98, and subject to subd. 4.

71.01(6)(n)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, 2022: 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; section 104 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, 1251, 1501, and 1502 of division B of P.L. 111-5; sections 211, 212, 213, 214, and 216 of P.L. 111-226; section 2122 of P.L. 111-240; sections 754 and 760 of P.L. 111-312; sections 104, 318, 322, 323, 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, 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), (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; sections 111, 114, 115, 116, 118 (a) and (d), 133, 137, 138, and 210 of division EE of P.L. 116-260; sections 5003, 9041, 9673, 9675, and 9708 of P.L. 117-2; section 307 of division P of P.L. 117-103; section 13903 (b) of P.L. 117-169; and section 4151 of division FF of P.L. 117-328.

71.01(6)(n)3. 3. For purposes of this paragraph, “Internal Revenue Code” does not include amendments to the federal Internal Revenue Code, including provisions of federal public laws that directly or indirectly affect the Internal Revenue Code, enacted after December 31, 2022.

71.01(6)(n)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 as follows:

71.01(6)(n)4.a. a. Changes made by sections 5001, 5002, 5005, 9623, 9624, and 9672 of P.L. 117-2; section 2 of P.L. 117-6; and sections 80401, 80402, and 80601 of division H of P.L. 117-58 apply for taxable years beginning after December 31, 2022.

71.01(6)(n)4.b. b. Changes made by section 1201 of P.L. 108-173 and section 307 of P.L. 109-432 apply for taxable years beginning after December 31, 2010.

71.01(7) (7) Notwithstanding sub. (6), for natural persons, fiduciaries, trusts and estates, at the taxpayer’s option, “internal revenue code”, for taxable year 1986 and subsequent taxable years, includes any revisions to the federal internal revenue code adopted after January 1, 1986, that relate to the taxation of income derived from any source as a direct consequence of participation in the milk production termination program created by section 101 of P.L. 99-198.

71.01(7g) (7g) For purposes of s. 71.01 (6) (b), 2013 stats., “Internal Revenue Code” includes section 109 of division U of P.L. 115-141.

71.01(7m) (7m) Notwithstanding sub. (6), for natural persons, fiduciaries, trusts and estates, at the taxpayer’s option, “internal revenue code” for taxable years beginning after December 31, 1987, includes any revisions to section 67 (c) of the internal revenue code adopted after January 1, 1988, that relate to the indirect expenses of regulated investment companies.

71.01(7n) (7n) Notwithstanding sub. (6), a qualified retirement fund for a taxable year for federal income tax purposes is a qualified retirement fund for the taxable year for purposes of this subchapter.

71.01(7r) (7r) 

71.01(7r)(a) (a) Notwithstanding sub. (6), for taxable years beginning before January 1, 2014, for purposes of computing amortization or depreciation, “Internal Revenue Code” means the federal Internal Revenue Code as amended to December 31, 2000, except that property that, under s. 71.02 (2) (d) 12., 1985 stats., is required to be depreciated for taxable year 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.

71.01(7r)(c) (c) Notwithstanding sub. (6), section 101 of P.L. 109-222, related to extending the increased expense deduction under section 179 of the Internal Revenue Code, applies to property used in farming that is acquired and placed in service in taxable years beginning after December 31, 2007, and before January 1, 2010, and used by a person who is actively engaged in farming. For purposes of this paragraph, “actively engaged in farming” has the meaning given in 7 CFR 1400.201, and “farming” has the meaning given in section 464 (e) (1) of the Internal Revenue Code.

71.01(7u) (7u) “Last day prescribed by law” has the meaning given in s. 71.738, except that in s. 71.03 (2) (e) 1. and 2. “last day prescribed by law” includes extensions.

71.01(7v) (7v) For purposes of s. 71.05 (6) (a) 24. and (b) 46., “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.

71.01(8) (8) “Married person” or “spouse” means a person determined under section 7703 (a) of the internal revenue code to be married, unless the context requires otherwise. A decree of divorce, annulment or legal separation terminates the marriage and the application of ch. 766 to property of the spouses after the date of the decree, unless the decree provides otherwise.

71.01(8g) (8g) “Member” does not include a member of a limited liability company treated as a corporation under s. 71.22 (1k).

71.01(8j) (8j) For purposes of ss. 71.05 (6) (a) 29., 71.21 (7), 71.26 (3) (e) 4., 71.34 (1k) (o), and 71.45 (2) (a) 20., “moving expenses” means all of the following:

71.01(8j)(a) (a) Vehicle rentals.

71.01(8j)(b) (b) Storage rentals.

71.01(8j)(c) (c) Moving company expenses for packing, unpacking, and transportation.

71.01(8j)(d) (d) Consulting fees and surveys.

71.01(8j)(e) (e) Brokerage commissions or fees.

71.01(8j)(f) (f) Architecture, design, and remodeling expenses.

71.01(8j)(g) (g) Expenses paid or incurred to sell property in this state.

71.01(8j)(h) (h) Loss on the sale of property in this state.

71.01(8j)(i) (i) Lease cancellation fees.

71.01(8j)(j) (j) Expenses paid or incurred for professional services, including legal services.

71.01(8j)(k) (k) Utility fees.

71.01(8j)(L) (L) Employee wages.

71.01(8j)(m) (m) Reimbursement of an employee’s expenses.

71.01(8j)(n) (n) The cost of meals, lodging, and fuel.

71.01(8j)(o) (o) Mileage deductions for vehicle use.

71.01(8m) (8m) “Partner” does not include a partner of a publicly traded partnership treated as a corporation under s. 71.22 (1k).

71.01(8r) (8r) “Pay”, in regard to submissions to or for the department, means mail or deliver funds to the department or, if the department prescribes another method of submitting or another destination, use that other method or submit to that other destination.

71.01(9) (9) “Person” includes natural persons and fiduciaries, unless the context requires otherwise.

71.01(9ad) (9ad) “Qualified real estate investment trust” has the meaning given in s. 71.22 (9ad).

71.01(9am) (9am) “Related entity” means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer’s taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer’s taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

71.01(9an) (9an) For purposes of s. 71.05 (6) (a) 24. and (b) 46., “rental expenses” means the gross amounts that would otherwise be deductible in the computation of Wisconsin adjusted gross income for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

71.01(9c) (9c) “Sign” means write one’s signature or, if the department prescribes another method of authenticating, use that other method.

71.01(10) (10) “Small business stock” means an equity security, sold before January 1, 2014, that the taxpayer has held for at least 5 years and that is issued by a corporation that, on the December 31 before acquisition by the taxpayer, or, for a corporation which was incorporated during the calendar year in which the stock is issued, as of the date of the acquisition of the stock, fulfills all of the following requirements and so certifies to the taxpayer upon acquisitions:

71.01(10)(a) (a) Has at least 50 percent of its property and at least 50 percent of its payroll, both as computed under s. 71.25, in this state.

71.01(10)(b) (b) Has no more than 500 employees covered by Wisconsin unemployment insurance, including employees of any corporation that owns more than 50 percent of the stock of the issuing corporation.

71.01(10)(c) (c) Derives no more than 25 percent of its gross receipts from rents, interest, dividends and sales of intangible investment assets combined unless the corporation derives less than $3,000 of that income and has not been incorporated for more than 2 calendar years.

71.01(10)(d) (d) Has not issued stock that is listed on the New York stock exchange, the American stock exchange or the National Association of Securities Dealers automated quotation system.

71.01(10)(e) (e) Has not liquidated its assets in whole or in part for tax purposes only in order to fulfill the requirements under this subsection and then reorganized.

71.01(10g) (10g) For purposes of s. 71.04 (7) (df), (dh), (dj), and (dk), “state” means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States, unless the context requires that “state” means only the state of Wisconsin.

71.01(11) (11) “Taxable income” when not preceded by the word “federal” means Wisconsin taxable income unless otherwise defined or the context plainly requires otherwise.

71.01(12) (12) “Taxable year” means the taxable period upon the basis of which the taxable income of the taxpayer is computed for federal income tax purposes. The taxable year of a taxpayer who keeps his or her accounting records on the basis of a 52-53 week period ends on the last day of the month closest to the end of the 52-53 week period.

71.01(13) (13) “Wisconsin adjusted gross income” means federal adjusted gross income, with the modifications prescribed in s. 71.05 (6) to (12), (19), (20), (24), (25), (25m), and (26).

71.01(14) (14) “Wisconsin net operating loss” of persons other than corporations means “federal net operating loss” adjusted as prescribed in s. 71.05 (6) (a) and (b), (7) to (12) and (19) to (21), except s. 71.05 (6) (b) 9., except that no deductions allowable on schedule A for federal income tax purposes are allowable.

71.01(16) (16) “Wisconsin taxable income” of natural persons means Wisconsin adjusted gross income less the Wisconsin standard deduction, less the personal exemption described under s. 71.05 (23), with losses, depreciation, recapture of benefits, offsets, depletion, deductions, penalties, expenses and other negative income items determined according to the manner that income is or would be allocated, except that the negative income items on individual or separate returns for net rents and other net returns which are marital property attributable to the investment, rental, licensing or other use of nonmarital property shall be allocated to the owner of the property.

71.01 History History: 1987 a. 312; 1987 a. 411 ss. 6 to 8, 26, 27, 31; 1989 a. 31, 100, 336; 1991 a. 39, 269; 1993 a. 16, 112, 437; 1995 a. 27, 380, 428; 1997 a. 27, 37, 237; 1999 a. 9, 194; 2001 a. 109; 2003 a. 33; 2005 a. 25, 49, 362; 2007 a. 20, 226; 2009 a. 2, 28, 161, 183; 2011 a. 32; 2013 a. 20; 2015 a. 55, 216; 2017 a. 59, 231; 2019 a. 7, 136, 185; 2021 a. 1; 2023 a. 36; s. 35.17 correction in (6) (m) 2., (n) 2.

71.01 Annotation Wisconsin Tax Policy Within a Federal System. McGaffey. 88 MLR 93 (2004).

71.01 Annotation The Vulnerability of Using Tax Incentives in Wisconsin. Lindsey. 88 MLR 107 (2004).

71.02 71.02 Imposition of tax.

71.02(1) (1) For the purpose of raising revenue for the state and the counties, cities, villages and towns, there shall be assessed, levied, collected and paid a tax on all net incomes of individuals and fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds subject to the tax under s. 71.23 (2), by every natural person residing within the state or by his or her personal representative in case of death, and trusts resident within the state; by every nonresident natural person and trust of this state, upon such income as is derived from property located or business transacted within the state including, but not limited by enumeration, income derived from a limited partner’s distributive share of partnership income, income derived from a limited liability company member’s distributive share of limited liability company income, income derived from a covenant not to compete to the extent that the covenant was based on a Wisconsin-based activity, the state lottery under ch. 565, any multijurisdictional lottery under ch. 565 if the winning lottery ticket or lottery share was purchased from a retailer, as defined in s. 565.01 (6), located in this state or from the department, winnings from a casino or bingo hall that is located in this state and that is operated by a Native American tribe or band and pari-mutuel wager winnings or purses under ch. 562, and also by every nonresident natural person upon such income as is derived from the performance of personal services within the state, except as exempted under s. 71.05 (1) to (3). Every natural person domiciled in the state shall be deemed to be residing within the state for the purposes of determining liability for income taxes and surtaxes. A single-owner entity that is disregarded as a separate entity under section 7701 of the Internal Revenue Code is disregarded as a separate entity under this chapter, and its owner is subject to the tax on the entity’s income.

71.02(2) (2) In determining whether or not an individual resides within this state for purposes of this section, the following are not relevant:

71.02(2)(a) (a) Contributions made to charitable organizations in this state.

71.02(2)(b) (b) Directorships in corporations operating in this state.

71.02(2)(c) (c) Accounts, as defined in s. 710.05 (1) (a), held in financial institutions, as defined in s. 710.05 (1) (c), located in this state.

71.02(2)(d) (d) Corpuses of trusts, in which the individual is a trustee or a beneficiary, located in this state.

71.02(2)(e) (e) Retention of professional services of brokers, as defined in s. 408.102 (1) (c), and of attorneys and accountants located in this state.

71.02(3) (3) This section shall not be construed to prevent or affect the correction of errors or omissions in the assessments of income for former years under s. 71.74 (1) and (2).

71.02 History History: 1987 a. 312; 1989 a. 31; 1991 a. 39, 269; 1993 a. 112; 1995 a. 27; 1997 a. 27, 237, 297; 1999 a. 9; 2007 a. 20.

71.02 Annotation No act of Congress, treaty, state statute, or agreement with any Indian tribe impairs the state’s right to impose an income tax on enrolled members of one tribe who live and work on a reservation of a different tribe. Ethnicity does not confer any more rights within a tribe on an American Indian who is not a member of the tribe than a non-Indian has. LaRock v. DOR, 2001 WI 7, 241 Wis. 2d 87, 621 N.W.2d 907, 99-0951.

71.02 Annotation The Menominee tribe and tribal members residing and working in Menominee county are not subject to the state income tax. 66 Atty. Gen. 290.

71.03 71.03 Filing returns; certain claims.

71.03(1) (1) Definition. In this section, “gross income” means all income, from whatever source derived and in whatever form realized, whether in money, property or services, which is not exempt from Wisconsin income taxes. “Gross income” includes, but is not limited to, the following items: compensation for services, including salaries, wages and fees, commissions and similar items; gross income derived from business; interest; rents; royalties; dividends; alimony and separate maintenance payments; annuities; income from life insurance and endowment contracts; pensions; income from discharge of indebtedness; distributive shares of partnership gross income except distributive shares of the income of publicly traded partnerships treated as corporations under s. 71.22 (1k); distributive shares of limited liability company gross income except distributive shares of the income of limited liability companies treated as corporations under s. 71.22 (1k); income in respect of a decedent; and income from an interest in an estate or trust. “Gross income” from a business or farm consists of the total gross receipts without reduction for cost of goods sold, expenses or any other amounts. The gross rental amounts received from rental properties are included in gross income without reduction for expenses or any other amounts. “Gross income” from the sale of securities, property or other assets consists of the gross selling price without reduction for the cost of the assets, expenses of sale or any other amounts. “Gross income” from an annuity, retirement plan or profit sharing plan consists of the gross amount received without reduction for the employee’s contribution to the annuity or plan.

71.03(2) (2) Persons required to file; other requirements. The following shall report in accordance with this section:

71.03(2)(a) (a) Natural persons. Except as provided in sub. (6) (b):

71.03(2)(a)1. 1. Every individual domiciled in this state during the entire taxable year who has a gross income at or above a threshold amount which shall be determined annually by the department of revenue. The threshold amounts shall be determined for categories of individuals based on filing status and age, and shall include categories for single individuals; individuals who file as a head of household; married couples who file jointly; and married persons who file separately. The department of revenue shall establish a threshold amount for each category of individual at an amount at which no individual in that category whose gross income is below that amount has a state income tax liability.

71.03(2)(a)2. 2. Every nonresident person and every person who changes domicile into or out of this state during the taxable year shall file a return if the person is unmarried and has gross income of $2,000 or more, or if the person is married and the combined gross income of the person and his or her spouse is $2,000 or more, except that a return is not required to be filed if all the income is exempt from income tax under s. 71.05 (1) (g).

71.03(2)(a)5. 5. For taxable years beginning on or after January 1, 1994, every natural person for whom the taxpayer is entitled to an exemption for the taxable year under section 151 (c) of the Internal Revenue Code shall file a return if that natural person has any amount of unearned income and that person has gross income of at least $500 adjusted for inflation in the manner prescribed by sections 1 (f) (3) to (6) and 63 (c) (4) of the Internal Revenue Code. The department of revenue shall incorporate the changes in the income tax forms and instructions.

71.03(2)(b) (b) Deceased person. The personal representative or other person charged with the property of a decedent shall file the return of the decedent required under this section.

71.03(2)(c) (c) Person to make return for individual unable to file. The guardian, custodian or other person charged with the care of the person or property of an individual who is unable to make a return required under this section shall file a return for such individual.

71.03(2)(d) (d) Husband and wife joint filing.

71.03(2)(d)1. 1. Except as provided in subds. 2. and 3. and par. (e), a husband and a wife may file a joint return for income tax purposes even though one of the spouses has no gross income or no deductions.

71.03(2)(d)2. 2. No joint return may be filed if either the husband or wife at any time during the taxable year is a nonresident alien, unless an election is in effect for the taxable year under section 6013 (g) or (h) of the internal revenue code.

71.03(2)(d)3. 3. No joint return may be filed if the husband and wife have different taxable years, except that if their taxable years begin on the same day and end on different days because of the death of either or both the joint return may be filed with respect to the taxable year of each unless the surviving spouse remarries before the close of his or her taxable year or unless the taxable year of either spouse is a fractional part of a year under section 443 (a) (1) of the internal revenue code.

71.03(2)(e) (e) Death of a spouse; joint returns. For the taxable year in which the death of one spouse or both spouses occurs:

71.03(2)(e)1. 1. A joint return may be filed and shall be signed by both the decedent’s personal representative and the surviving spouse, if any, if a personal representative is appointed before the last day prescribed by law, including extensions, for filing the return of the surviving spouse.

71.03(2)(e)2. 2. A joint return may be filed by the surviving spouse with respect to both that spouse and the decedent if no return for the taxable year has been filed by the decedent and no personal representative is appointed at the time the joint return is filed or before the last day prescribed by law, including extensions, for filing the return of the surviving spouse.

71.03(2)(e)3. 3. If a personal representative of the decedent is appointed after the filing of the joint return by the surviving spouse, the personal representative may disaffirm the joint return by filing, within one year after the last day prescribed by law for filing the return of the surviving spouse, a separate return for the taxable year of the decedent with respect to which the joint return was filed. If the joint return is disaffirmed, the return filed by the survivor is the survivor’s separate return and the tax on the return shall be determined by excluding all items properly includable in the return of the decedent spouse.

71.03(2)(f) (f) Election by a spouse. The election under par. (d) may be made by a spouse if the requirements of section 6013 (f) of the internal revenue code are met.

71.03(2)(g) (g) Joint return following separate return. Except as provided in par. (i), if an individual has filed a separate return for a taxable year for which a joint return could have been filed by the individual and the individual’s spouse under par. (d) or (e) and the time prescribed by law for timely filing the return for that taxable year has expired, the individual and the individual’s spouse may file a joint return for that taxable year. A joint return filed by the husband and wife under this paragraph is their return for that taxable year, and all payments, credits, refunds or other repayments made or allowed with respect to the separate return of each spouse for that taxable year shall be taken into account in determining the extent to which the tax based upon the joint return has been paid. If a joint return is filed under this paragraph, any election, other than the election to file a separate return, made by either spouse in that spouse’s separate return for that taxable year with respect to the treatment of any income, deduction or credit of that spouse may not be changed in the filing of the joint return if that election would have been irrevocable if the joint return had not been filed.

71.03(2)(h) (h) Death of a spouse after separate return. In the taxable year in which the death of one or both spouses occurs, a joint return may be filed by the decedent’s personal representative and the surviving spouse, if any, under this paragraph if one or both spouses filed a separate return for a taxable year for which a joint return could have been filed. If any condition under par. (i) occurs before a personal representative is appointed, a joint return may not be filed under this paragraph.