AB 3

This bill makes the following changes to the tax treatment of tax-option

corporations that elect to pay income or franchise tax at the entity level:

1. The bill allows these corporations to exclude from tax 30 percent of the gains

realized from the sale of assets held more than one year and the sale of all assets

acquired from a decedent and 60 percent of the gains realized from the sale of farm

assets held more than one year and the sale of all farm assets acquired from a

decedent.

2. The bill limits the excess capital loss deduction for these corporations to

$500. As such, under the bill, an electing tax-option corporation with a net loss after

netting capital gains and losses may use up to $500 of the net loss to offset income.

A loss in excess of $500 may be carried forward to the next taxable year in which the

corporation makes the election to pay tax at the entity level.

3. The bill provides that an exception from the general requirement to pay

interest on the underpayment of estimated taxes for corporations whose Wisconsin

net income is less than $250,000 does not apply to these corporations.

4. The bill provides that these corporations, when making quarterly estimated

tax payments, compute the amount due using the standards applicable to taxpayers

with net income of less than $250,000, regardless of the corporation's actual net

income.

The bill applies to taxable years beginning after December 31, 2019.