Excluding from taxable income gains from a Wisconsin business

Under the bill, the claimant must place the gain from the original asset in a segregated account in a financial institution, must invest all of the proceeds in the account in a Wisconsin business within 180 days after the sale of the original asset that generated the gain, and must notify the Department of Revenue (DOR) on a form prepared by DOR that the claimant will not declare the gain from the original asset because the proceeds have been reinvested in a Wisconsin business.

A "Wisconsin business" is defined under the bill as a business that is headquartered in Wisconsin; that employs at least 51 percent of its employees in this state; that is engaged in, or is committed to engage, in businesses such as manufacturing, agriculture, silviculture, conducting research, or developing new products or business processes; that is not engaged in businesses such as real estate development, insurance, banking, lending, lobbying, political consulting, professional services, retail, leisure, hospitality, transportation, or construction; that has fewer than 500 employees; that has been in operation in this state for not more than seven consecutive years; and that is not a publicly traded entity.

The bill also specifies that the basis of the investment shall be its cost minus the gain generated by the sale of the original asset. If a claimant claims the subtraction allowed under the bill, the claimant may not use that gain to net the claimant's gains and losses as the claimant could do if the claimant did not claim the subtraction.