71.44 Cross-referenceCross-reference: See also s. Tax 2.03, Wis. adm. code. 71.4571.45 Income computation. 71.45(1)(1) Exempt and excludable income. There shall be exempt from taxation under this subchapter income as follows: 71.45(1)(a)(a) 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 health 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 paragraph 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(1)(b)(b) For taxable years beginning after December 31, 2006 and ending before January 1, 2016, the amount of any incentive payment received by an individual under s. 23.33 (5r), 2013 stats., in the taxable year to which the claim relates. 71.45(1)(c)(c) An amount equal to the increase in the number of full-time equivalent employees employed by the taxpayer in this state during the taxable year, multiplied by $4,000 for a business with gross receipts of no greater than $5,000,000 in the taxable year or $2,000 for a business with gross receipts greater than $5,000,000 in the taxable year. For purposes of this paragraph, the increase in the number of full-time equivalent employees employed by the taxpayer in this state during the taxable year is determined by subtracting from the number of full-time equivalent employees employed by the taxpayer in this state during the taxable year, as determined by computing the average employee count from the taxpayer’s quarterly unemployment insurance reports or other information as required by the department for the taxable year, the number of full-time equivalent employees employed by the taxpayer in this state during the immediately preceding taxable year, as determined by computing the average employee count from the taxpayer’s quarterly unemployment insurance reports or other information as required by the department for the immediately preceding taxable year. No person may claim a deduction under this paragraph if the person may claim a credit under this subchapter based on the person relocating the person’s business from another state to this state and in an amount equal to the person’s tax liability. No person may claim a deduction under this paragraph for taxable years beginning after December 31, 2014. The department shall promulgate rules to administer this paragraph. 71.45 Cross-referenceCross-reference: See also s. Tax 3.05, Wis. adm. code. 71.45(1)(d)(d) 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: 71.45(1)(dm)(dm) 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. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. 71.45(1)(dn)(dn) 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. 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. 71.45(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)(em)(em) Those issued under s. 234.08 or 234.61, on or after January 1, 2004, if the obligations are issued to fund multifamily affordable housing projects or elderly housing projects. 71.45(1t)(g)(g) Those issued under s. 66.0621 by a local professional baseball park district, a local professional football stadium district, or a local cultural arts district. 71.45(1t)(i)(i) Those issued under s. 231.03 (6), on or after October 27, 2007, if the proceeds from the obligations 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. 71.45(1t)(k)1.1. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and the Wisconsin Housing and Economic Development Authority has the authority to issue its bonds or notes for the project being funded. 71.45(1t)(k)2.2. The bonds or notes are used by a health facility, as defined in s. 231.01 (5), to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded. 71.45(1t)(k)3.3. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s. 66.1201, 66.1333, or 66.1335. 71.45(1t)(L)(L) Those issued under s. 231.03 (6), if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued under s. 231.03 (6) and the interest income received from the other bonds or notes is exempt from taxation under this subchapter. 71.45(1t)(m)(m) Those issued by the Wisconsin Housing and Economic Development Authority to provide loans to a public affairs network under s. 234.75 (4). 71.45(1t)(n)(n) Those issued by the Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), if the bonds or notes are issued in an amount totaling $35,000,000 or less, and to the extent that the interest income received is not otherwise exempt under this subsection. 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. For taxable years beginning before January 1, 2014, 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 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10) 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 (1k) (g) and the amount of credit computed under s. 71.47 (3), (3t), (4), (4m), and (5). 71.45(2)(a)10b.10b. By subtracting from federal taxable income, as provided under s. 71.47 (3) (c) 7., the amount of the credit under s. 71.47 (3) that the taxpayer added to income under subd. 10. at the time that the taxpayer first claimed the credit. 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. For taxable years beginning before January 1, 2014, by adding or subtracting, as appropriate, the depreciation deduction under the federal Internal Revenue Code as amended to December 31, 2000, 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 who has a catastrophic or life-threatening illness or condition of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a life settlement contract, as defined in s. 632.69 (1) (k). In this subdivision, “catastrophic or life-threatening illness or condition” includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (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)(a)16.16. By adding to federal taxable income 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. 71.45(2)(a)17.17. By subtracting from federal taxable income the amount added to federal taxable income under subd. 16., to the extent that the conditions under s. 71.80 (23) are satisfied. 71.45(2)(a)18.18. A deduction shall be allowed for the amount added, pursuant to subd. 16. or s. 71.05 (6) (a) 24., 71.26 (2) (a) 7., or 71.34 (1k) (j), to the federal income of a related entity that paid interest expenses, rental expenses, intangible expenses, or management fees to the insurer, to the extent that the related entity could not offset such amount with the deduction allowable under subd. 17. or s. 71.05 (6) (b) 45., 71.26 (2) (a) 8., or 71.34 (1k) (k). 71.45(2)(a)19.a.a. Except as provided in subd. 19. b., starting with the first taxable year beginning after December 31, 2013, and for each of the next 4 taxable years, by subtracting 20 percent of the amount determined by subtracting the combined federal adjusted basis of all depreciated or amortized assets as of the last day of the taxable year beginning in 2013 that are also being depreciated or amortized for Wisconsin from the combined Wisconsin adjusted basis of those assets on the same day. 71.45(2)(a)19.b.b. If any taxable year for which the modification under subd. 19. a. is required is a fractional year under s. 71.44 (2) (c), the difference between the modification allowed for the fractional year and the modification allowed for the 12-month taxable year shall be a modification for the first taxable year beginning after December 31, 2018. 71.45(2)(a)20.20. By adding to federal taxable income any amount deducted under the Internal Revenue Code as moving expenses, as defined in s. 71.01 (8j), paid or incurred during the taxable year to move the taxpayer’s Wisconsin business operation, in whole or in part, to a location outside the state or to move the taxpayer’s business operations outside the United States. 71.45(2)(a)21.a.a. For taxable years beginning after December 31, 2019, by subtracting from federal taxable income an amount equal to the gain excluded from federal gross income in the taxable year due to the application of 26 USC 1400Z-2 (b) (2) (B) (iii) for an investment held in a Wisconsin qualified opportunity fund for at least 5 years or 26 USC 1400Z-2 (b) (2) (B) (iv) for an investment held in a Wisconsin qualified opportunity fund for at least 7 years. In this subdivision, “Wisconsin qualified opportunity fund” has the meaning given in s. 71.05 (25m) (a) 2. 71.45(2)(a)21.b.b. In the form and manner prescribed by the department, a fund shall annually certify to each investor and the department that it qualifies as a Wisconsin qualified opportunity fund for the fund’s taxable year. A fund shall make the annual certifications under this subd. 21. b. no later than the due date, including extensions, of the fund’s corresponding income or franchise tax return under this chapter. 71.45(2)(a)22.22. By subtracting from federal taxable income, to the extent included in federal taxable income, 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: 71.45(2)(a)23.23. By subtracting from federal taxable income, to the extent included in federal taxable income, 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. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. 71.45(2)(a)24.24. By subtracting from federal taxable income, to the extent included in federal taxable income, 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. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. Amounts excluded under this subdivision 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.
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