LRBs0240/2
JK/RJM:wj/kf/cs:rs
2003 - 2004 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 2,
TO 2003 ASSEMBLY BILL 507
November 4, 2003 - Offered by Representatives Wieckert and Kaufert.
AB507-ASA2,1,8 1An Act to amend 71.05 (6) (a) 15., 71.07 (3s) (c) 1., 71.08 (1) (intro.), 71.21 (4),
271.26 (2) (a), 71.28 (3) (c) 1., 71.34 (1) (g), 71.45 (2) (a) 10., 71.47 (3) (c) 1., 77.54
3(2) and 77.92 (4); and to create 71.05 (6) (b) 3m., 71.07 (3s) (c) 7., 71.07 (3t),
471.10 (4) (gbb), 71.28 (3) (c) 7., 71.28 (3t), 71.30 (3) (bb), 71.45 (2) (a) 10b., 71.47
5(3) (c) 7., 71.47 (3t), 71.49 (1) (bb), 77.54 (30) (a) 6. and 560.28 of the statutes;
6relating to: the income and franchise tax credit for sales tax and use tax paid
7on fuel and electricity consumed in manufacturing and granting rule-making
8authority.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB507-ASA2, s. 1 9Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB507-ASA2,2,310 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
11(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), and (3s), and (3t) and not passed

1through by a partnership, limited liability company, or tax-option corporation that
2has added that amount to the partnership's, company's, or tax-option corporation's
3income under s. 71.21 (4) or 71.34 (1) (g).
AB507-ASA2, s. 2 4Section 2. 71.05 (6) (b) 3m. of the statutes is created to read:
AB507-ASA2,2,75 71.05 (6) (b) 3m. As provided under s. 71.07 (3s) (c) 7., the amount of the credit
6under s. 71.07 (3s) that the taxpayer added back to income under s. 71.05 (6) (a) at
7the time that the taxpayer first claimed the credit.
AB507-ASA2, s. 3 8Section 3. 71.07 (3s) (c) 1. of the statutes is amended to read:
AB507-ASA2,2,169 71.07 (3s) (c) 1. The credit under par. (b), including any credits carried over,
10may be offset only against the amount of the tax imposed upon or measured by the
11business operations of the claimant in which the fuel and electricity are consumed.
12If Except as provided in subd. 7., if the credit computed is not entirely offset against
13taxes otherwise due, the unused balance shall be carried forward and credited
14against taxes otherwise due for the following 15 taxable years to the extent not offset
15by taxes otherwise due in all intervening years between the year in which the
16expense was incurred and the year in which the carry-forward credit is claimed.
AB507-ASA2, s. 4 17Section 4. 71.07 (3s) (c) 7. of the statutes is created to read:
AB507-ASA2,3,518 71.07 (3s) (c) 7. No credit may be claimed under this subsection for taxable
19years that begin after December 31, 2005. For credits that are claimed but unused
20under this subsection for taxable years that begin before January 1, 2006, up to 50
21percent may be used in each of the following 2 taxable years if the taxpayer has
22$25,000 or less in unused credits as of January 1, 2006. For taxable years beginning
23after December 31, 2005, and before January 1, 2008, a taxpayer who has more than
24$25,000 in unused credits as of January 1, 2006, may deduct an amount in each year
25that is equal to 50 percent of the amount the taxpayer added back to income under

1s. 71.05 (6) (a) at the time that the taxpayer first claimed the credit or, with regard
2to credits passed through from a partnership, limited liability company, or
3tax-option corporation, 50 percent of the amount that the entity added back to its
4income and was included in the partner's, member's, or shareholder's Wisconsin net
5income at the time that the credit was first claimed.
AB507-ASA2, s. 5 6Section 5. 71.07 (3t) of the statutes is created to read:
AB507-ASA2,3,87 71.07 (3t) Manufacturing investment credit. (a) Definition. In this
8subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA2,3,149 (b) Credit. Subject to the limitations provided in this subsection and in s.
10560.28, for taxable years beginning after December 31, 2007, a claimant may claim
11as a credit, amortized over 15 taxable years starting with the taxable year beginning
12after December 31, 2007, against the tax imposed under s. 71.02 and 71.08, up to the
13amount of the tax, an amount equal to the claimant's unused credits under s. 71.07
14(3s).
AB507-ASA2,3,2115 (c) Limitations. 1. No credit may be claimed under this subsection unless the
16claimant submits with the claimant's return a copy of the claimant's certification by
17the department of commerce under s. 560.28, except that, with regard to credits
18claimed by partners of a partnership, members of a limited liability company, or
19shareholders of a tax-option corporation, the entity shall provide a copy of its
20certification under s. 560.28 to the partner, member, or shareholder to submit with
21his or her return.
AB507-ASA2,4,422 2. Partnerships, limited liability companies, and tax-option corporations may
23not claim the credit under this subsection, but the eligibility for, and the amount of,
24the credit are based on the amount of their unused credits under s. 71.07 (3s). A
25partnership, limited liability company, or tax-option corporation shall compute the

1amount of credit that each of its partners, members, or shareholders may claim and
2shall provide that information to each of them. Partners, members of limited liability
3companies, and shareholders of tax-option corporations may claim the credit in
4proportion to their ownership interest.
AB507-ASA2,4,65 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
6credit under s. 71.28 (4), applies to the credit under this subsection.
AB507-ASA2,4,87 2. The amount of any unused credit under this subsection in any taxable year
8may be carried forward to subsequent taxable years.
AB507-ASA2, s. 6 9Section 6. 71.08 (1) (intro.) of the statutes is amended to read:
AB507-ASA2,4,1810 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married
11couple filing jointly, trust or estate under s. 71.02, not considering the credits under
12ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s), (3t),
13(6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and,
14(3), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and, (3),
15and (3t)
and subchs. VIII and IX and payments to other states under s. 71.07 (7), is
16less than the tax under this section, there is imposed on that natural person, married
17couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative
18minimum tax computed as follows:
AB507-ASA2, s. 7 19Section 7. 71.10 (4) (gbb) of the statutes is created to read:
AB507-ASA2,4,2020 71.10 (4) (gbb) Manufacturing investment credit under s. 71.07 (3t).
AB507-ASA2, s. 8 21Section 8. 71.21 (4) of the statutes is amended to read:
AB507-ASA2,4,2422 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
23(2dj), (2dL), (2dm), (2ds), (2dx), (3g), and, (3s), and (3t) and passed through to
24partners shall be added to the partnership's income.
AB507-ASA2, s. 9 25Section 9. 71.26 (2) (a) of the statutes is amended to read:
AB507-ASA2,5,18
171.26 (2) (a) Corporations in general. The "net income" of a corporation means
2the gross income as computed under the Internal Revenue Code as modified under
3sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
4computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
57., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
6under this paragraph at the time that the taxpayer first claimed the credit
plus the
7amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
8(1ds), (1dx), and (3g), and (3t) and not passed through by a partnership, limited
9liability company, or tax-option corporation that has added that amount to the
10partnership's, limited liability company's, or tax-option corporation's income under
11s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or other disposition
12of assets the gain from which would be wholly exempt income, as defined in sub. (3)
13(L), if the assets were sold or otherwise disposed of at a gain and minus deductions,
14as computed under the Internal Revenue Code as modified under sub. (3), plus or
15minus, as appropriate, an amount equal to the difference between the federal basis
16and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed
17of in a taxable transaction during the taxable year, except as provided in par. (b) and
18s. 71.45 (2) and (5).
AB507-ASA2, s. 10 19Section 10. 71.28 (3) (c) 1. of the statutes is amended to read:
AB507-ASA2,6,220 71.28 (3) (c) 1. If Except as provided in subd. 7., if the credit computed under
21par. (b) is not entirely offset against Wisconsin income or franchise taxes otherwise
22due, the unused balance shall be carried forward and credited against Wisconsin
23income or franchise taxes otherwise due for the following 15 taxable years to the
24extent not offset by these taxes otherwise due in all intervening years between the

1year in which the expense was incurred and the year in which the carry-forward
2credit is claimed.
AB507-ASA2, s. 11 3Section 11. 71.28 (3) (c) 7. of the statutes is created to read:
AB507-ASA2,6,164 71.28 (3) (c) 7. No credit may be claimed under this subsection for taxable years
5that begin after December 31, 2005. For credits that are claimed but unused under
6this subsection for taxable years that begin before January 1, 2006, up to 50 percent
7may be used in each of the following 2 taxable years if the taxpayer has $25,000 or
8less in unused credits as of January 1, 2006. For taxable years beginning after
9December 31, 2005, and before January 1, 2008, a taxpayer who has more than
10$25,000 in unused credits as of January 1, 2006, may deduct an amount in each year
11that is equal to 50 percent of the amount the taxpayer added back to income under
12s. 71.26 (2) (a) at the time that the taxpayer first claimed the credit or, with regard
13to credits passed through from a partnership, limited liability company, or
14tax-option corporation, 50 percent of the amount that the entity added back to its
15income and was included in the partner's, member's, or shareholder's Wisconsin net
16income at the time that the credit was first claimed.
AB507-ASA2, s. 12 17Section 12. 71.28 (3t) of the statutes is created to read:
AB507-ASA2,6,1918 71.28 (3t) Manufacturing investment credit. (a) Definition. In this
19subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA2,6,2420 (b) Credit. Subject to the limitations provided in this subsection and in s.
21560.28, for taxable years beginning after December 31, 2007, a claimant may claim
22as a credit, amortized over 15 taxable years starting with the taxable year beginning
23after December 31, 2007, against the tax imposed under s. 71.23, up to the amount
24of the tax, an amount equal to the claimant's unused credits under s. 71.28 (3).
AB507-ASA2,7,7
1(c) Limitations. 1. No credit may be claimed under this subsection unless the
2claimant submits with the claimant's return a copy of the claimant's certification by
3the department of commerce under s. 560.28, except that, with regard to credits
4claimed by partners of a partnership, members of a limited liability company, or
5shareholders of a tax-option corporation, the entity shall provide a copy of its
6certification under s. 560.28 to the partner, member, or shareholder to submit with
7his or her return.
AB507-ASA2,7,158 2. Partnerships, limited liability companies, and tax-option corporations may
9not claim the credit under this subsection, but the eligibility for, and the amount of,
10the credit are based on the amount of their unused credits under s. 71.28 (3). A
11partnership, limited liability company, or tax-option corporation shall compute the
12amount of credit that each of its partners, members, or shareholders may claim and
13shall provide that information to each of them. Partners, members of limited liability
14companies, and shareholders of tax-option corporations may claim the credit in
15proportion to their ownership interest.
AB507-ASA2,7,1716 (d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
17under sub. (4), applies to the credit under this subsection.
AB507-ASA2,7,1918 2. The amount of any unused credit under this subsection in any taxable year
19may be carried forward to subsequent taxable years.
AB507-ASA2, s. 13 20Section 13. 71.30 (3) (bb) of the statutes is created to read:
AB507-ASA2,7,2121 71.30 (3) (bb) Manufacturing investment credit under s. 71.28 (3t).
AB507-ASA2, s. 14 22Section 14. 71.34 (1) (g) of the statutes is amended to read:
AB507-ASA2,7,2523 71.34 (1) (g) An addition shall be made for credits computed by a tax-option
24corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), and
25(3g), and (3t) and passed through to shareholders.
AB507-ASA2, s. 15
1Section 15. 71.45 (2) (a) 10. of the statutes is amended to read:
AB507-ASA2,8,72 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
3computed under s. 71.47 (1dd) to (1dx) and not passed through by a partnership,
4limited liability company or tax-option corporation that has added that amount to
5the partnership's, limited liability company's or tax-option corporation's income
6under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47
7(1), (3), (3t), (4) and (5).
AB507-ASA2, s. 16 8Section 16. 71.45 (2) (a) 10b. of the statutes is created to read:
AB507-ASA2,8,119 71.45 (2) (a) 10b. By subtracting from federal taxable income, as provided
10under s. 71.47 (3) (c) 7., the amount of the credit under s. 71.47 (3) that the taxpayer
11added to income under subd. 10. at the time that the taxpayer first claimed the credit.
AB507-ASA2, s. 17 12Section 17. 71.47 (3) (c) 1. of the statutes is amended to read:
AB507-ASA2,8,1913 71.47 (3) (c) 1. If Except as provided in subd. 7., if the credit computed under
14par. (b) is not entirely offset against Wisconsin income or franchise taxes otherwise
15due, the unused balance shall be carried forward and credited against Wisconsin
16income or franchise taxes otherwise due for the following 15 taxable years to the
17extent not offset by these taxes otherwise due in all intervening years between the
18year in which the expense was incurred and the year in which the carry-forward
19credit is claimed.
AB507-ASA2, s. 18 20Section 18. 71.47 (3) (c) 7. of the statutes is created to read:
AB507-ASA2,9,821 71.47 (3) (c) 7. No credit may be claimed under this subsection for taxable years
22that begin after December 31, 2005. For credits that are claimed but unused under
23this subsection for taxable years that begin before January 1, 2005, up to 50 percent
24may be used in each of the following 2 taxable years if the taxpayer has $25,000 or
25less in unused credits as of January 1, 2006. For taxable years beginning after

1December 31, 2005, and before January 1, 2008, a taxpayer who has more than
2$25,000 in unused credits as of January 1, 2006, may deduct an amount in each year
3that is equal to 50 percent of the amount the taxpayer added back to income under
4s. 71.45 (2) (a) 10. at the time that the taxpayer first claimed the credit or, with regard
5to credits passed through from a partnership, limited liability company, or
6tax-option corporation, 50 percent of the amount that the entity added back to its
7income and was included in the partner's, member's, or shareholder's Wisconsin net
8income at the time that the credit was first claimed.
AB507-ASA2, s. 19 9Section 19. 71.47 (3t) of the statutes is created to read:
AB507-ASA2,9,1110 71.47 (3t) Manufacturing investment credit. (a) Definition. In this
11subsection, "claimant" means a person who files a claim under this subsection.
AB507-ASA2,9,1612 (b) Credit. Subject to the limitations provided in this subsection and in s.
13560.28, for taxable years beginning after December 31, 2007, a claimant may claim
14as a credit, amortized over 15 taxable years starting with the taxable year beginning
15after December 31, 2007, against the tax imposed under s. 71.43, up to the amount
16of the tax, an amount equal to the claimant's unused credits under s. 71.47 (3).
AB507-ASA2,9,2317 (c) Limitations. 1. No credit may be claimed under this subsection unless the
18claimant submits with the claimant's return a copy of the claimant's certification by
19the department of commerce under s. 560.28, except that, with regard to credits
20claimed by partners of a partnership, members of a limited liability company, or
21shareholders of a tax-option corporation, the entity shall provide a copy of its
22certification under s. 560.28 to the partner, member, or shareholder to submit with
23his or her return.
AB507-ASA2,9,2524 2. Partnerships, limited liability companies, and tax-option corporations may
25not claim the credit under this subsection, but the eligibility for, and the amount of,

1the credit are based on the amount of their unused credits under s. 71.47 (3). A
2partnership, limited liability company, or tax-option corporation shall compute the
3amount of credit that each of its partners, members, or shareholders may claim and
4shall provide that information to each of them. Partners, members of limited liability
5companies, and shareholders of tax-option corporations may claim the credit in
6proportion to their ownership interest.
AB507-ASA2,10,87 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
8credit under s. 71.28 (4), applies to the credit under this subsection.
AB507-ASA2,10,109 2. The amount of any unused credit under this subsection in any taxable year
10may be carried forward to subsequent taxable years.
AB507-ASA2, s. 20 11Section 20. 71.49 (1) (bb) of the statutes is created to read:
AB507-ASA2,10,1212 71.49 (1) (bb) Manufacturing investment credit under s. 71.47 (3t).
AB507-ASA2, s. 21 13Section 21. 77.54 (2) of the statutes is amended to read:
AB507-ASA2,10,1914 77.54 (2) The gross receipts from sales of and the storage, use or other
15consumption of tangible personal property becoming an ingredient or component
16part of an article of tangible personal property or which is consumed or destroyed or
17loses its identity in the manufacture of tangible personal property in any form
18destined for sale, but this exemption shall not include fuel or electricity except as
19provided in sub. (30) (a) 6
.
AB507-ASA2, s. 22 20Section 22. 77.54 (30) (a) 6. of the statutes is created to read:
AB507-ASA2,10,2221 77.54 (30) (a) 6. Fuel and electricity sold for use in manufacturing tangible
22personal property in this state.
AB507-ASA2, s. 23 23Section 23. 77.92 (4) of the statutes is amended to read:
AB507-ASA2,11,1324 77.92 (4) "Net business income", with respect to a partnership, means taxable
25income as calculated under section 703 of the Internal Revenue Code; plus the items

1of income and gain under section 702 of the Internal Revenue Code, including taxable
2state and municipal bond interest and excluding nontaxable interest income or
3dividend income from federal government obligations; minus the items of loss and
4deduction under section 702 of the Internal Revenue Code, except items that are not
5deductible under s. 71.21; plus guaranteed payments to partners under section 707
6(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
7(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), and (3g), and (3s), and (3t); and plus or
8minus, as appropriate, transitional adjustments, depreciation differences, and basis
9differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain,
10loss, and deductions from farming. "Net business income", with respect to a natural
11person, estate, or trust, means profit from a trade or business for federal income tax
12purposes and includes net income derived as an employee as defined in section 3121
13(d) (3) of the Internal Revenue Code.
AB507-ASA2, s. 24 14Section 24. 560.28 of the statutes is created to read:
AB507-ASA2,11,18 15560.28 Manufacturing investment credit. (1) Definition. In this section,
16"full-time job" means a regular, nonseasonal full-time position in which an
17individual, as a condition of employment, is required to work at least 35 hours in a
18week.
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