Wisconsin Tax Bulletin (No. 222), Wis. Dept. of Rev. (7/23). The Wisconsin Department of Revenue (Department) issued a bulletin summarizing some recent state tax law changes [see S.B. 70 (Act 19), signed by gov. 7/5/23, for details on some of these tax law changes], including revisions to how a brokerage house, investment adviser, investment company, or underwriter that is engaged in business both in and outside of Wisconsin must apportion its apportionable income. Specifically, the Department summarizes a new rule providing that, in certain instances, the Department cannot order or permit the substitution of net gains for gross receipts in the receipts factor if the use of gross receipts results in substantial distortion of the taxpayer’s receipts factor. That is, under the new law, the Department cannot substitute net gains if any taxpayer who, before January 1, 2023, elected to source its sales of trading assets using the customer billing address method defined in Wis. Adm. Code, sec. Tax 2.495(4)(d)1m., if the taxpayer has not revoked that election, and who, for any taxable year beginning after December 31, 2021, determines its receipts factor under Wis. Adm. Code, sec. Tax 2.495(4) by using the average of the receipts factor determined by using (a) gross receipts, net of commissions, and (b) net gain, net of commissions, from sales of trading assets for the taxable year, with all other components of the receipts factor under Wis. Adm. Code, sec. Tax 2.495(4) remaining the same. According to the Department, any such taxpayer may compute its receipts factor under this new rule using that averaging method, and the Department cannot require any taxpayer who elected before January 1, 2023, to use the customer billing address method for sourcing sales of trading assets, if the taxpayer has not revoked that election, to use any other method of determining its receipts factor under Wis. Adm. Code, sec. Tax 2.495(4). Please contact us with any questions.
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