LRB-4732/1
JK:cjs:jf
1999 - 2000 LEGISLATURE
March 21, 2000 - Introduced by Senator Shibilski. Referred to Committee on
Education.
SB486,1,4 1An Act to amend 71.05 (6) (a) 15., 71.26 (2) (a), 71.45 (2) (a) 10. and 77.92 (4);
2and to create 71.07 (5dd), 71.10 (4) (cp), 71.28 (5dd), 71.30 (3) (dm), 71.47 (5dd)
3and 71.49 (1) (dm) of the statutes; relating to: an income tax and franchise tax
4credit for employing an undergraduate student.
Analysis by the Legislative Reference Bureau
This bill creates an income tax and franchise tax credit for a business that
employs a student, if the student is a full-time undergraduate student enrolled in
the University of Wisconsin System and is eligible for a Wisconsin higher education
grant; or is a full-time undergraduate student enrolled in a private college or
university in this state and is eligible for a talent incentive grant for needy students;
and if the student works at least 300 hours during the taxable year for the claimant
but works no more than ten hours a week in the taxable year for the claimant while
school is in session. The amount of the credit is $500 for each student that a business
employs in the taxable year. The business may claim credits for employing a student
for no more than ten semesters that the student is enrolled as an undergraduate.
Partnerships, limited liability companies and tax-option corporations compute
the credit but pass it on to the partners, members and shareholders in proportion to
their ownership interests. If the credit exceeds the business's tax liability, the state
will not issue a refund check, but the credit may be carried forward to later taxable
years.

For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB486, s. 1 1Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
SB486,2,62 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dr), (2ds), (2dx) and, (3s) and (5dd) and not passed through by
4a partnership, limited liability company or tax-option corporation that has added
5that amount to the partnership's, company's or tax-option corporation's income
6under s. 71.21 (4) or 71.34 (1) (g).
SB486, s. 2 7Section 2. 71.07 (5dd) of the statutes is created to read:
SB486,2,88 71.07 (5dd) Student employe credit. (a) In this subsection:
SB486,2,119 1. "Claimant" means a sole proprietor, a partner, a member of a limited liability
10company or a shareholder of a tax-option corporation who files a claim under this
11subsection.
SB486,2,1212 2. "Qualified student" means any of the following:
SB486,2,1513 a. A student who is a full-time undergraduate student enrolled in the
14University of Wisconsin System and who is eligible for a Wisconsin higher education
15grant under s. 39.435 for at least 2 semesters that the student is enrolled.
SB486,2,1916 b. A student who is a full-time undergraduate student enrolled in a regionally
17accredited 4-year private college or university in this state and who is eligible for a
18talent incentive grant under s. 39.435 (2) for at least 2 semesters that the student
19is enrolled.
SB486,3,420 (b) Subject to the limitations provided in this subsection, a claimant may claim
21as a credit against the tax imposed under s. 71.02 an amount equal to $500 for each

1qualified student that the claimant employs in a taxable year, if the student works
2at least 300 hours in the taxable year for the claimant and if the student works no
3more than 10 hours a week in the taxable year for the claimant while school is in
4session.
SB486,3,65 (c) A claimant may only claim credits under par. (b) for no more than 10
6semesters that the qualified student is enrolled as an undergraduate.
SB486,3,87 (d) The carry-over provisions of s. 71.28 (4) (e) and (f), as they apply to the credit
8under s. 71.28 (4), apply to the credit under this subsection.
SB486,3,169 (e) Partnerships, limited liability companies and tax-option corporations may
10not claim the credit under this subsection, but the eligibility for, and the amount of,
11the credit are based on their payment of wages to a qualified student employe. A
12partnership, limited liability company or tax-option corporation shall compute the
13amount of credit that each of its partners, members or shareholders may claim and
14shall provide that information to each of them. Partners, members of limited liability
15companies and shareholders of tax-option corporations may claim the credit in
16proportion to their ownership interest.
SB486,3,1817 (f) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4),
18applies to the credit under this subsection.
SB486, s. 3 19Section 3. 71.10 (4) (cp) of the statutes is created to read:
SB486,3,2020 71.10 (4) (cp) The student employe credit under s. 71.07 (5dd).
SB486, s. 4 21Section 4. 71.26 (2) (a) of the statutes is amended to read:
SB486,4,1122 71.26 (2) (a) Corporations in general. The "net income" of a corporation means
23the gross income as computed under the internal revenue code as modified under
24sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
25computed under s. 71.28 (1) and (3) to (5) plus the amount of the credit computed

1under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds) and, (1dx) and (5dd) and not
2passed through by a partnership, limited liability company or tax-option corporation
3that has added that amount to the partnership's, limited liability company's or
4tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount
5of losses from the sale or other disposition of assets the gain from which would be
6wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise
7disposed of at a gain and minus deductions, as computed under the internal revenue
8code as modified under sub. (3), plus or minus, as appropriate, an amount equal to
9the difference between the federal basis and Wisconsin basis of any asset sold,
10exchanged, abandoned or otherwise disposed of in a taxable transaction during the
11taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
SB486, s. 5 12Section 5. 71.28 (5dd) of the statutes is created to read:
SB486,4,1313 71.28 (5dd) Student employe credit. (a) In this subsection:
SB486,4,1414 1. "Claimant" means a corporation that files a claim under this subsection.
SB486,4,1515 2. "Qualified student" means any of the following:
SB486,4,1816 a. A student who is a full-time undergraduate student enrolled in the
17University of Wisconsin System and who is eligible for a Wisconsin higher education
18grant under s. 39.435 for at least 2 semesters that the student is enrolled.
SB486,4,2219 b. A student who is a full-time undergraduate student enrolled in a regionally
20accredited 4-year private college or university in this state and who is eligible for a
21talent incentive grant under s. 39.435 (2) for at least 2 semesters that the student
22is enrolled.
SB486,5,323 (b) Subject to the limitations provided in this subsection, a claimant may claim
24as a credit against the tax imposed under s. 71.23 an amount equal to $500 for each
25qualified student that the claimant employs in a taxable year, if the student works

1at least 300 hours in the taxable year for the claimant and if the student works no
2more than 10 hours a week in the taxable year for the claimant while school is in
3session.
SB486,5,54 (c) A claimant may only claim credits under par. (b) for no more than 10
5semesters that the qualified student is enrolled as an undergraduate.
SB486,5,76 (d) The carry-over provisions of sub. (4) (e) and (f), as they apply to the credit
7under sub. (4), apply to the credit under this subsection.
SB486,5,158 (e) 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 their payment of wages to a qualified student employe. 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.
SB486,5,1716 (f) Subsection (4) (g) and (h), as it applies to the credit under sub. (4), applies
17to the credit under this subsection.
SB486, s. 6 18Section 6. 71.30 (3) (dm) of the statutes is created to read:
SB486,5,1919 71.30 (3) (dm) The student employe credit under s. 71.28 (5dd).
SB486, s. 7 20Section 7. 71.45 (2) (a) 10. of the statutes is amended to read:
SB486,6,221 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
22computed under s. 71.47 (1dd) to (1dx) and (5dd) and not passed through by a
23partnership, limited liability company or tax-option corporation that has added that
24amount to the partnership's, limited liability company's or tax-option corporation's

1income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under
2s. 71.47 (1), (3), (4) and (5).
SB486, s. 8 3Section 8. 71.47 (5dd) of the statutes is created to read:
SB486,6,44 71.47 (5dd) Student employe credit. (a) In this subsection:
SB486,6,55 1. "Claimant" means a corporation that files a claim under this subsection.
SB486,6,66 2. "Qualified student" means any of the following:
SB486,6,97 a. A student who is a full-time undergraduate student enrolled in the
8University of Wisconsin System and who is eligible for a Wisconsin higher education
9grant under s. 39.435 for at least 2 semesters that the student is enrolled.
SB486,6,1310 b. A student who is a full-time undergraduate student enrolled in a regionally
11accredited 4-year private college or university in this state and who is eligible for a
12talent incentive grant under s. 39.435 (2) for at least 2 semesters that the student
13is enrolled.
SB486,6,1914 (b) Subject to the limitations provided in this subsection, a claimant may claim
15as a credit against the tax imposed under s. 71.43 an amount equal to $500 for each
16qualified student that the claimant employs in a taxable year, if the student works
17at least 300 hours in the taxable year for the claimant and if the student works no
18more than 10 hours a week in the taxable year for the claimant while school is in
19session.
SB486,6,2120 (c) A claimant may only claim credits under par. (b) for no more than 10
21semesters that the qualified student is enrolled as an undergraduate.
SB486,6,2322 (d) The carry-over provisions of s. 71.28 (4) (e) and (f), as they apply to the credit
23under s. 71.28 (4), apply to the credit under this subsection.
SB486,7,624 (e) 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 their payment of wages to a qualified student employe. 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.
SB486,7,87 (f) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4),
8applies to the credit under this subsection.
SB486, s. 9 9Section 9. 71.49 (1) (dm) of the statutes is created to read:
SB486,7,1010 71.49 (1) (dm) The student employe credit under s. 71.47 (5dd).
SB486, s. 10 11Section 10. 77.92 (4) of the statutes, as affected by 1999 Wisconsin Act 9, is
12amended to read:
SB486,8,213 77.92 (4) "Net business income", with respect to a partnership, means taxable
14income as calculated under section 703 of the Internal Revenue Code; plus the items
15of income and gain under section 702 of the Internal Revenue Code, including taxable
16state and municipal bond interest and excluding nontaxable interest income or
17dividend income from federal government obligations; minus the items of loss and
18deduction under section 702 of the Internal Revenue Code, except items that are not
19deductible under s. 71.21; plus guaranteed payments to partners under section 707
20(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
21(2di), (2dj), (2dL), (2dr), (2ds), (2dx) and, (3s) and (5dd); and plus or minus, as
22appropriate, transitional adjustments, depreciation differences and basis
23differences under s. 71.05 (13), (15), (16), (17) and (19); but excluding income, gain,
24loss and deductions from farming. "Net business income", with respect to a natural
25person, estate or trust, means profit from a trade or business for federal income tax

1purposes and includes net income derived as an employe as defined in section 3121
2(d) (3) of the Internal Revenue Code.
SB486, s. 11 3Section 11. Initial applicability.
SB486,8,44 (1) This act first applies to taxable years beginning on January 1, 2000.
SB486,8,55 (End)
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