WI Stat § 71.25 (2021)
2021 Wisconsin Statutes & Annotations|Chapter 71 - Income and franchise taxes for state and local revenues.|71.25 - Situs of income; allocation and apportionment.

71.25  Situs of income; allocation and apportionment. For purposes of determining the situs of income under this section and s. 71.255 (5) (a) 1. and 2.: (1)  Beneficiaries. The situs of income derived by any taxpayer as the beneficiary of the estate of a decedent or of a trust estate shall be determined as if such income had been received without the intervention of a fiduciary. (2)  Grantor trusts. The situs of income received by a trustee, which income, under the internal revenue code, is taxable to the grantor of the trust or to any person other than the trust, shall be determined as if such income had been actually received directly by such grantor or such other person, without the intervention of the trust. (4)  Corporations engaged in business wholly within this state. For corporations engaged in business wholly within this state, all income is subject to, or included in the measure of, the Wisconsin income or franchise tax. (5)  Corporations engaged in business both within and without the state.  (a)  Apportionable income. Except as provided in sub. (6), corporations engaged in business both within and without this state are subject to apportionment. Income gain or loss from the sources listed in this paragraph is presumed apportionable as unitary or operational income or other income that has a taxable presence in this state. Apportionable income includes all income or loss of corporations, other than nonapportionable income as specified in par. (b), including, but not limited to, income, gain or loss from the following sources:1. Sale of inventory.2. Farms, mines and quarries.3. Sale of scrap and by-products.4. Commissions.5. Sale of real property or tangible personal property used in the production of business income.6. Royalties from intangible assets.7. Redemption of securities.8. Interest on trade accounts and trade notes receivable.9. Interest and dividends if the operations of the payer are unitary with those of the payee, or if those operations are not unitary but the investment activity from which that income is derived is an integral part of a unitary business and the payer and payee are neither affiliates nor related as parent company and subsidiary. In this subdivision, “investment activity" includes decision making relating to the purchase and sale of stocks and other securities, investing surplus funds and the management and record keeping associated with corporate investments, not including activities of a broker or other agent in maintaining an investment portfolio.10. Sale of intangible assets if the operations of the company in which the investment was made were unitary with those of the investing company, or if those operations were not unitary but the investment activity from which that gain or loss was derived is an integral part of a unitary business and the companies were neither affiliates nor related as parent company and subsidiary. In this subdivision, “investment activity" has the meaning given under subd. 9.11. Management fees.12. Franchise fees.13. Treble damages.14. A partner's share of income or loss from a partnership or a member's share of income or loss from a limited liability company.16. Foreign exchange gain or loss.17. Sale of receivables.18. Rentals of, or royalties from, real property or tangible personal property if that real property or tangible personal property is used in the business.19. Sale or exchange of petroleum at the wellhead.20. Personal services performed by employees of the corporation.21. Patents, copyrights, trademarks, trade names, plans, specifications, blueprints, processes, techniques, formulas, designs, layouts, patterns, drawings, manuals and technical know-how.22. Redemption of the corporation's bonds.23. Interest on state and federal tax refunds on business income or business property.24. Pari-mutuel wager winnings or purses under ch. 562.(b)  Nonapportionable income. Income, gain or loss from the sale of nonbusiness real property or nonbusiness tangible personal property, rental of nonbusiness real property or nonbusiness tangible personal property and royalties from nonbusiness real property or nonbusiness tangible personal property are nonapportionable and shall be allocated to the situs of the property, except that all 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 shall be allocated to this state. (6)  Allocation and separate accounting and apportionment formula. Corporations engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such corporation within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, railroads, car line companies and corporations or associations that are subject to a tax on unrelated business income under s. 71.26 (1) (a) there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The remaining net income shall be apportioned to this state by use of the following: (a) For taxable years beginning before January 1, 2006, an apportionment fraction composed of a sales factor under sub. (9) representing 50 percent of the fraction, a property factor under sub. (7) representing 25 percent of the fraction, and a payroll factor under sub. (8) representing 25 percent of the fraction.(b) For taxable years beginning after December 31, 2005, and before January 1, 2007, an apportionment fraction composed of a sales factor under sub. (9) representing 60 percent of the fraction, a property factor under sub. (7) representing 20 percent of the fraction, and a payroll factor under sub. (8) representing 20 percent of the fraction.(c) For taxable years beginning after December 31, 2006, and before January 1, 2008, an apportionment fraction composed of a sales factor under sub. (9) representing 80 percent of the fraction, a property factor under sub. (7) representing 10 percent of the fraction, and a payroll factor under sub. (8) representing 10 percent of the fraction.(d) For taxable years beginning after December 31, 2007, an apportionment fraction composed of the sales factor under sub. (9).(e) For taxable years beginning after December 31, 2005, and before January 1, 2008, the apportionment fraction for the remaining net income of a financial organization shall include a sales factor that represents more than 50 percent of the apportionment fraction, as determined by rule by the department. For taxable years beginning after December 31, 2007, the apportionment fraction for the remaining net income of a financial organization is composed of a sales factor, as determined by rule by the department. (6m)  Apportionment formula computation.  (a)1. For taxable years beginning before January 1, 2008, if both the numerator and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income are zero, the sales factor under sub. (9) is eliminated from the apportionment formula to determine the taxpayer's remaining net income under sub. (6).2. For taxable years beginning after December 31, 2007, if both the numerator and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income are zero, none of the taxpayer's remaining net income is apportioned to this state.(b)1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a positive number, a negative number, or zero, the sales factor under sub. (9) is zero.2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a positive number, a negative number, or zero, none of the taxpayer's remaining net income is apportioned to this state.(c)1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income is zero or a negative number, the sales factor under sub. (9) is one.2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (9) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under sub. (9) related to a taxpayer's remaining net income is zero or a negative number, all of the taxpayer's remaining net income is apportioned to this state. (7)  Property factor. For purposes of sub. (6) and for taxable years beginning before January 1, 2008:(a) The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used during the tax period. Cash on hand or in the bank, shares of stock, notes, bonds, accounts receivable, or other evidence of indebtedness, special privileges, franchises, goodwill, or property the income of which is not taxable or is separately allocated, shall not be considered tangible property nor included in the apportionment.(b) Property used in the production of nonapportionable income or losses shall be excluded from the numerator and denominator of the property factor. Property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the property factor so as to exclude, as near as possible, the portion of such property producing the nonapportionable income or loss.(c) Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at 8 times the net annual rental. Net annual rental is the annual rental paid by the taxpayer less any annual rental received by the taxpayer from sub-rentals.(d) The average value of property shall be determined by averaging the values at the beginning and ending of the tax period but the secretary of revenue may require the averaging of monthly values during the tax period if reasonably required to reflect properly the average value of the taxpayer's property. (8)  Payroll factor. For purposes of sub. (6) and for taxable years beginning before January 1, 2008:(a) The payroll factor is a fraction, the numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period.(b) Compensation is paid in this state if:1. The individual's service is performed entirely within this state;2. The individual's service is performed within and without this state, but the service performed without this state is incidental to the individual's service within this state;3. A portion of the service is performed within this state and the base of operations of the individual is in this state;4. A portion of the service is performed within this state and, if there is no base of operations, the place from which the individual's service is directed or controlled is in this state;5. A portion of the service is performed within this state and neither the base of operations of the individual nor the place from which the service is directed or controlled is in any state in which some part of the service is performed, but the individual's residence is in this state; or6. The individual is neither a resident of nor performs services in this state but is directed or controlled from an office in this state and returns to this state periodically for business purposes and the state in which the individual resides does not have jurisdiction to impose income or franchise taxes on the employer.(c) Compensation related to the operation, maintenance, protection or supervision of property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the payroll factor so as to exclude, as near as possible, the portion of pay related to the operation, maintenance, protection and supervision of property used in the production of nonapportionable income.(d) In this subsection, compensation includes deductible management or service fees paid to a related corporation as consideration for the performance of personal services, and the situs of those fees is in this state if the services fulfill one of the requirements under par. (b). The recipient of the fees may not include the compensation paid to its employees with respect to personal services in either the numerator or denominator of its payroll factor. Except for management or service fees, payments made to a related corporation, an independent contractor or any person not properly classifiable as an employee are excluded. In this paragraph, “related corporation" means a corporation which is part of a controlled group as defined in section 267 (f) (1) of the internal revenue code.(e) If the company has no employees and pays no management or service fees or the department determines that employees are not a substantial income-producing factor and that the management or service fees paid are insubstantial, the department may order or permit the elimination of the payroll factor. (9)  Sales factor. For purposes of sub. (5):(a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under par. (b) 1. and 2. plus 100 percent of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of applying pars. (b) 2m. and 3. and (c), if a taxpayer is within another state's jurisdiction for income or franchise tax purposes for any part of the taxable year, it is considered to be within that state's jurisdiction for income or franchise tax purposes for the entire taxable year.(b) Sales of tangible personal property are in this state if any of the following occur:1. The property is delivered or shipped to a purchaser, other than the federal government, within this state regardless of the f.o.b. point or other conditions of the sale.2. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government within this state regardless of the f.o.b. point or other conditions of sale.2m. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government outside this state and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.3. The property is shipped from an office, store, warehouse, factory or other place of storage in this state to a purchaser other than the federal government and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.(c) Sales of tangible personal property by an office in this state to a purchaser in another state and not shipped or delivered from this state are in this state if the taxpayer is not within the jurisdiction for income tax purposes of either the state from which the property is delivered or shipped or of the destination state.(df)1. Gross receipts from the use of computer software are in this state if the purchaser or licensee uses the computer software at a location in this state.2. Computer software is used at a location in this state if the purchaser or licensee uses the computer software in the regular course of business operations in this state, for personal use in this state, or if the purchaser or licensee is an individual whose domicile is in this state. If the purchaser or licensee uses the computer software in more than one state, the gross receipts shall be divided among those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the computer software in those states. To determine computer software use in this state, the department may consider the number of users in each state where the computer software is used, the number of site licenses or workstations in this state, and any other factors that reflect the use of computer software in this state.(dh)1. Gross receipts from services are in this state if the purchaser of the service received the benefit of the service in this state.2. The benefit of a service is received in this state if any of the following applies:a. The service relates to real property that is located in this state.b. The service relates to tangible personal property that is delivered directly or indirectly to customers in this state.c. The service is purchased by an individual who is physically present in this state at the time that the service is received.d. The service is provided to a person engaged in a trade or business in this state and relates to that person's business in this state.3. Except as provided in subd. 4. if the purchaser of a service receives the benefit of a service in more than one state, the gross receipts from the performance of the service are included in the numerator of the sales factor according to the portion of the service received in this state.4. For taxable years beginning after December 31, 2018, a broadcaster's gross receipts from advertising are in this state only if the advertiser's commercial domicile is in this state. With regard to a broadcaster who is a member of a combined group, as defined in s. 71.255 (1) (a), this subdivision does not apply to the gross receipts of the members who are not broadcasters.(dj)1. Except as provided in subd. 2m. and par. (df), gross royalties and other gross receipts received for the use or license of intangible property, including patents, copyrights, trademarks, trade names, service names, franchises, licenses, plans, specifications, blueprints, processes, techniques, formulas, designs, layouts, patterns, drawings, manuals, technical know-how, contracts, and customer lists, are sales in this state if any of the following applies:a. The purchaser or licensee uses the intangible property in the operation of a trade or business at a location in this state. Except as provided in subd. 2m., if the purchaser or licensee uses the intangible property in the operation of a trade or business in more than one state, the gross royalties and other gross receipts from the use of the intangible property shall be divided between those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the intangible property in those states.b. The purchaser or licensee is billed for the purchase or license of the use of the intangible property at a location in this state.c. The purchaser or licensee of the use of the intangible property has its commercial domicile in this state.2m. For taxable years beginning after December 31, 2018, a broadcaster's gross royalties and other gross receipts received for the use or license of intangible property are sales in this state only if the commercial domicile of the purchaser or licensee is in this state and the purchaser or licensee has a direct connection or relationship with the broadcaster pursuant to a contract under which the royalties or receipts are derived. With regard to a broadcaster who is a member of a combined group, as defined in s. 71.255 (1) (a), this subdivision does not apply to the gross royalties and receipts of the members who are not broadcasters.(dk) Sales of intangible property, excluding securities, are sales in this state if any of the following applies:1. The purchaser uses the intangible property in the regular course of business operations in this state or for personal use in this state. If the purchaser uses the intangible property in more than one state, the sales shall be divided between those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the intangible property in those states.2. The purchaser is billed for the purchase of the intangible property at a location in this state.3. The purchaser of the intangible property has its commercial domicile in this state.(e)  Sales defined. In this subsection, “sales" includes, but is not limited to, the following items related to the production of business income:1. Gross receipts from the sale of inventory.2. Gross receipts from the operation of farms, mines and quarries.3. Gross receipts from the sale of scrap or by-products.4. Gross commissions.5. Gross receipts from personal and other services.6. Gross rents from real property or tangible personal property.7. Interest on trade accounts and trade notes receivable.8. A partner's share of the partnership's gross receipts or a member's share of the limited liability company's gross receipts.9. Gross management fees.10. Gross royalties from income-producing activities.11. Gross franchise fees from income-producing activities.(f)  Items that are not sales. The following items are among those that are not included in “sales" in this subsection:1. Gross receipts and gain or loss from the sale of tangible business assets, except those under par. (e) 1., 2. and 3.2. Gross receipts and gain or loss from the sale of nonbusiness real or tangible personal property.3. Gross rents and rental income or loss from real property or tangible personal property if that real property or tangible personal property is not used in the production of business income.4. Royalties from nonbusiness real property or nonbusiness tangible personal property.5. Proceeds and gain or loss from the redemption of securities.6. Interest, except interest under par. (e) 7., and dividends.7. Gross receipts and gain or loss from the sale of intangible assets, except those under par. (e) 1.8. Dividends deductible by corporations in determining net income.9. Gross receipts and gain or loss from the sale of securities.10. Proceeds and gain or loss from the sale of receivables.11. Refunds, rebates and recoveries of amounts previously expended or deducted.12. Other items not includable in apportionable income.13. Foreign exchange gain or loss.14. Royalties and income from passive investments in the property under sub. (5) (a) 21.16. Pari-mutuel wager winnings or purses under ch. 562.17. Gross receipts from sales of property or services as part of performing disaster relief work, as defined in s. 323.12 (5) (a) 3.(g)1. For taxable years beginning after December 31, 2018, the amount of a broadcaster's gross receipts from advertising and the use or license of intangible property, as determined under pars. (dh) 4. and (dj) 2m., shall be adjusted as follows:a. Determine the amount of the numerator of the sales factor for a broadcaster as provided in this subsection.b. Multiply .01 by the total amount of the domestic gross receipts of the broadcaster from advertising and royalties and other gross receipts for the use or license of intangible property.c. Determine the numerator of the sales for a broadcaster by substituting the amount determined under subd. 1. b. for the total amount determined under subd. 1. a.d. Except as provided in subd. 1. e., if the amount of the numerator determined under subd. 1. c. is more than the amount determined under subd. 1. a., substitute the amount of total gross receipts determined under subd. 1. b. for the total amount of the gross receipts determined under subd. 1. a. For purposes of this subd. 1. d., the amount of the numerator for a broadcaster is the amount determined under subd. 1. c.e. If the amount of the numerator computed under subd. 1. c. is more than 140 percent of the amount determined under subd. 1. a., adjust the total amount of the gross receipts under subd. 1. a. so that the amount of the numerator for a broadcaster is 140 percent of the numerator otherwise determined under subd. 1. a.2. The department may promulgate rules to administer this paragraph. (10)  Railroads, financial organizations and public utilities. (a)1. In this section, “ financial organization" means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, credit union, cooperative bank, small loan company, sales finance company, investment company, brokerage house, underwriter or any type of insurance company.2. As used in this section, “financial organization" includes any subsidiary of an entity described in subd. 1., if a significant purpose for the subsidiary is to hold investments or if the subsidiary primarily functions to hold investments.(b)1. In this section, for taxable years beginning before January 1, 2006, “public utility" means any business entity described under subd. 2. and any business entity which owns or operates any plant, equipment, property, franchise, or license for the transmission of communications or the production, transmission, sale, delivery, or furnishing of electricity, water or steam the rates of charges for goods or services of which have been established or approved by a federal, state or local government or governmental agency.2. In this section, for taxable years beginning after December 31, 2005, “public utility" means any business entity providing service to the public and engaged in the transportation of goods and persons for hire, as defined in s. 194.01 (4), regardless of whether or not the entity's rates or charges for services have been established or approved by a federal, state or local government or governmental agency.(c) The net business income of railroads, car line companies, pipeline companies, financial organizations, telecommunications companies, air carriers, and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state. (11)  Department may waive factor. Where, in the case of any corporation engaged in business in and outside of this state and required to apportion its income as provided in sub. (6), it shall be shown to the satisfaction of the department of revenue that the use of any one of the 3 factors provided in sub. (6) gives an unreasonable or inequitable final average ratio because of the fact that such corporation does not employ, to any appreciable extent in its trade or business in producing the income taxed, the factors made use of in obtaining such ratio, this factor may, with the approval of the department of revenue, be omitted in obtaining the final average ratio which is to be applied to the remaining net income. This subsection does not apply to taxable years beginning after December 31, 2007. (12)  Department may apportion by rule. If the income of any such corporation properly assignable to the state of Wisconsin cannot be ascertained with reasonable certainty by the methods under this section, then the same shall be apportioned and allocated under such rules as the department of revenue may prescribe. (13)  Unrelated business taxable income. The unrelated business taxable income of organizations that are subject to tax on that income under s. 71.26 (1) (a) shall be apportioned under the department of revenue's rules. (14)  Alternative allocation. (a) Upon request by a corporation on or before January 1, 2000, the department of revenue may authorize a corporation or a subsidiary thereof to use or continue to use a different method of apportioning its income to this state for purposes of this subchapter, and may specify the method of apportionment that the corporation or subsidiary shall use. This paragraph is to be used exclusively in the event of a corporate restructuring that would result in an unfair representation of the degree of business activity in this state. In no instance may the alternative method proposed under the new corporate structure result in less franchise or income tax revenue to the state than the current corporate structure is liable for, given the same overall level of sales, payroll and property.(b) Before the department of revenue grants permission to any corporation to use an alternative method of allocation under par. (a), the department of revenue shall promulgate rules that specify in more detail the circumstances in which that authority may be granted and the kinds of alternative methods that the department may authorize.(c) At least 14 days before giving final approval to an alternative method of apportionment under par. (a), the department of revenue shall submit the proposed alternative method of apportionment to the cochairpersons of the joint committee for review of administrative rules, together with a description of the proposed alternative and the reasons for the proposed alternative. If, within 14 days after receipt of the proposed alternative method, the cochairpersons of the joint committee for review of administrative rules do not notify the department of revenue that the proposed alternative must be promulgated as an administrative rule in order to be used, the department of revenue may give final approval to the proposed method without promulgating an administrative rule. If the cochairpersons of the joint committee for review of administrative rules notify the department of revenue within 14 days after receipt of the proposed alternative that the proposed alternative must be promulgated as an administrative rule, the proposed alternative may not be used until it is promulgated as an administrative rule under ch. 227. (15)  Partnerships and limited liability companies.  (a) A general or limited partner's share of the numerator and denominator of a partnership's apportionment factors under this section are included in the numerator and denominator of the general or limited partner's apportionment factors under this section.(b) If a limited liability company is treated as a partnership, for federal tax purposes, a member's share of the numerator and denominator of a limited liability company's apportionment factors under this section are included in the numerator and denominator of the member's apportionment factors under this section. (16)  Disaster relief work. For purposes of the apportionment of any income under this section, the disaster relief work, as defined in s. 323.12 (5) (a) 3., of an out-of-state business, as defined in s. 323.12 (5) (a) 6., shall not increase the amount of income apportioned to this state. For purposes of sub. (7), any property brought temporarily into this state by an out-of-state business in connection with performing disaster relief work is not considered property located in this state. For purposes of sub. (8), compensation paid to out-of-state employees, as defined in s. 323.12 (5) (a) 7., who are performing disaster relief work is not considered compensation paid in this state. For purposes of sub. (9), gross receipts from the sale of property or services as part of performing any disaster relief work are not considered gross receipts from sales received in this state.History: 1987 a. 312; 1987 a. 411 ss. 57, 62, 117 to 123; 1989 a. 31; 1991 a. 39, 269; 1993 a. 112; 1997 a. 299; 1999 a. 9; 2001 a. 16; 2003 a. 37; 2005 a. 25; 2009 a. 2, 28, 276; 2015 a. 84, 216; 2017 a. 59.Under sub. (6), it is within the Department of Revenue's discretion to decide whether to permit a multistate business to deviate from the apportionment method. Nelson Bros. v. DOR, 152 Wis. 2d 746, 449 N.W.2d 328 (Ct. App. 1989).Subjecting an entity's income to apportionment when the entity's operations constitute a “unitary business" under sub. (6) is discussed. Chilstrom Erecting Corp. v. DOR, 174 Wis. 2d 517, 497 N.W.2d 785 (Ct. App. 1993).A corporation's investment income that served an “operational" function and was not unrelated to corporate functions within the state was subject to apportionment. Port Affiliates, Inc. v. DOR, 190 Wis. 2d 271, 526 N.W.2d 806 (Ct. App. 1994).Sub. (9) (df) is limited to a “licensee" who uses software in Wisconsin. The provision makes no reference to use of the computer software in this state by a “sublicensee." In this case, when the defendant taxpayer received royalties from licensing its software to businesses that were not located in this state and that manufactured or assembled computers that incorporated the defendant's software but whose products were used in this state under a sublicense, the royalties were not considered in calculating the defendant's franchise tax liability under this section. The software end-users were not licensees of the defendant. DOR v. Microsoft Corp., 2019 WI App 62, 389 Wis. 2d 350, 936 N.W.2d 160, 18-2024.