Wis. Stat. § 71.26 — WI Code / Chapter 71 / Section 71.26
Income computation.
Status: in_force

(1) Exempt and excludable income. There shall be exempt from taxation under this subchapter income as follows:

(a) Certain corporations. Income of corporations organized under ch. 185 , except income of a cooperative health care association 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 , and the income, except the unrelated business taxable income as defined in section 512 of the internal revenue code and except income 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) , of all religious, scientific, educational, benevolent or other corporations or associations of individuals not organized or conducted for pecuniary profit. This paragraph does not apply to the income of savings banks, mutual loan corporations or savings and loan associations. 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. This paragraph applies to the income of credit unions except to the income of any credit union that is derived from public deposits for any taxable year in which the credit union is approved as a public depository under ch. 34 and acts as a depository of state or local funds under s. 186.113 (20) . For purposes of this paragraph, the income of a credit union that is derived from public deposits is the product of the credit union’s gross annual income for the taxable year multiplied by a fraction, the numerator of which is the average monthly balance of public deposits in the credit union during the taxable year, and the denominator of which is the average monthly balance of all deposits in the credit union during the taxable year.

(am) Veterans service organizations. Income of a veterans service organization that is chartered under federal law.

(b) Political units. Income received by the United States, the state and all counties, cities, villages, towns, school districts, technical college districts, joint local water authorities created under s. 66.0823 , long-term care districts under s. 46.2895 or other political units of this state.

(be) Certain authorities. Income of the University of Wisconsin Hospitals and Clinics Authority, of the Fox River Navigational System Authority, of the Wisconsin Economic Development Corporation, and of the Wisconsin Aerospace Authority.

(bm) Certain local districts. Income of a local exposition district created under subch. II of ch. 229 , a local professional baseball park district created under subch. III of ch. 229 , a local professional football stadium district created under subch. IV of ch. 229 , or a local cultural arts district created under subch. V of ch. 229 .

(c) Cooperative associations or corporations. Income of cooperative associations or corporations engaged in marketing farm products for producers, which turn back to such producers the net proceeds of the sales of their products; provided that such corporations or associations have at least 25 stockholders or members delivering such products and that their dividends have not, during the preceding 5 years, exceeded 8 percent per year; also income of associations and corporations engaged solely in processing and marketing farm products for one such cooperative association or corporation and which do not charge for such marketing and processing more than a sufficient amount to pay the cost of such marketing and processing and 8 percent dividends on their capital stock and to add 5 percent to their surplus.

(d) Bank in liquidation. Income of any bank placed in the hands of the division of banking for liquidation under s. 220.08 , if the tax levied, assessed or collected under this chapter on account of such bank diminishes the assets thereof so that full payment of all depositors cannot be made. Whenever the division of banking certifies to the department of revenue that the tax or any part thereof levied and assessed under this chapter against any such bank will so diminish the assets thereof that full payment of all depositors cannot be made, the department of revenue shall cancel and abate such tax or part thereof, together with any penalty thereon. This paragraph shall apply to unpaid taxes which were levied and assessed subsequent to the time the bank was taken over by the division of banking.

(e) Menominee Indian tribe; distribution of assets. No distribution of assets from the United States to the members of the Menominee Indian tribe as defined in s. 49.385 or their lawful distributees, or to any corporation, or organization, created by the tribe or at its direction pursuant to section 8 of P.L. 83-399 , as amended, and no issuance of stocks, bonds, certificates of indebtedness, voting trust certificates or other securities by any such corporation or organization, or voting trust, to such members of the tribe or their lawful distributees shall be subject to income or franchise taxes under this chapter; provided that so much of any cash distribution made under said P.L. 83-399 as consists of a share of any interest earned on funds deposited in the treasury of the United States pursuant to the supplemental appropriation act, 1952, (65 Stat. 736, 754) shall not by virtue of this paragraph be exempt from the individual income tax of this state in the hands of the recipients for the year in which paid. For the purpose of ascertaining the gain or loss resulting from the sale or other disposition of such assets and stocks, bonds, certificates of indebtedness and other securities under this chapter, the fair market value of such property, on termination date as defined in s. 70.057 (1) , 1967 stats., shall be the basis for determining the amount of such gain or loss.

(f) Real estate mortgage investment conduits. The income of a real estate mortgage investment conduit that is exempt for federal income tax purposes under section 860A of the internal revenue code.

(g) Landowner incentive program. 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.

(h) Small business job creation. 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.

(i) Commercial loans. Income of a financial institution, as defined in s. 69.30 (1) (b) , including interest, fees, and penalties, derived from a commercial loan of five million dollars or less provided to a person residing or located in this state and used primarily for a business or agricultural purpose in this state.

(1m) Exemption from the income tax. The interest and income from the following obligations are exempt from the tax imposed under s. 71.23 (1) :

(b) Those issued under s. 66.1201 .

(c) Those issued under s. 66.1333 .

(d) Those issued under s. 66.1335 .

(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) .

(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.

(f) Those issued under subch. II of ch. 229 .

(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.

(h) Those issued under s. 114.70 or 114.74 .

(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.

(k) Those issued under s. 66.0304 , if any of the following applies:

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.

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.

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 .

(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.

(m) Those issued by the Wisconsin Housing and Economic Development Authority to provide loans to a public affairs network under s. 234.75 (4) .

(n) Those issued by a sponsoring municipality to assist a local exposition district created under subch. II of ch. 229 .

(o) 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.

(2) Net income.

(a) Corporations in general. The “net income” of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) and modified as follows:

2. Plus the amount of credit computed under all of the following:

a. Section 71.28 (1) .

b. Section 71.28 (3) .

c. Section 71.28 (4) .

e. Section 71.28 (5) .

3. Minus, as provided under s. 71.28 (3) (c) 7. , the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit.

4. Plus the amount of the credit computed under all of the following 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) :

a. Section 71.28 (1dm) .

b. Section 71.28 (1dx) .

c. Section 71.28 (1dy) .

d. Section 71.28 (3g) .

e. Section 71.28 (3h) .

f. Section 71.28 (3n) .

g. Section 71.28 (3q) .