Wisconsin ~ Corporate, Personal Income Taxes: “Investment” Defined for Capital Gains Deferral, Other Changes Enacted

CCH Tax Day Report

Recently enacted Wisconsin legislation amends a number of personal income and corporation franchise and income tax provisions. For purposes of claiming a capital gain deferral or exclusion based on investments in a qualified Wisconsin business, “investment” is defined to mean amounts paid to acquire stock or other ownership interest in a partnership, corporation, S corporation, or limited liability company treated as a partnership or corporation. The legislation also clarifies that a qualifying gain from the sale of an investment in a qualified Wisconsin business cannot exceed the fair market value of the investment on the date sold, less the fair market value of the investment on the date acquired.

In addition, the legislation makes certain information return filing requirements applicable to S corporations. Specifically, under prior law, C corporations, partnerships, and individuals were required to file certain information returns in order to claim deductions for payments of wages, salaries, commissions, bonuses, and rent. The legislation extends the requirements to S corporations, applicable to taxable years beginning on or after January 1, 2017.

The legislation also provides clarification on agreements signed by designated agents of a combined group (applicable to documents executed on or after January 1, 2017) and addresses an obsolete reference to the Internal Revenue Code regarding active foreign business income.

The Department of Revenue’s notice regarding the legislation is available at https://www.revenue.wi.gov/Pages/TaxPro/news-170622.aspx.

Act 17 (S.B. 89), Laws 2017, effective June 23, 2017, applicable as noted

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