January 25, 2021

Volume XI, Number 25


January 22, 2021

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Year-End Wisconsin Registration for Gain Exclusion and Deferral re: Income Tax

As the year-end is quickly approaching, we would like to remind you to consider whether your business is eligible to register with the Wisconsin Department of Revenue to enable certain owners of the business to qualify for potential Wisconsin income tax benefits. These benefits are available only to certain owners of "qualified Wisconsin businesses" that register with the Wisconsin Department of Revenue.

For the 2014 year, the business must register online by Thursday, January 1, 2015 by clicking the "Register" button at this link.

As described in the attached publication from the Wisconsin Department of Revenue, individual owners of a qualified Wisconsin business (including individuals who indirectly own their interest through a flow-through entity) may be able to take advantage of Wisconsin long-term capital gain deferral or long-term capital gain exclusions. In order to qualify for the capital gain deferral, the claimant generally must incur a long-term gain on the sale of a capital asset and reinvest the entire gain in a qualified Wisconsin business within 180 days after incurring the gain. In order to qualify for the Wisconsin long-term capital gain exclusion, the claimant generally must invest in a qualified Wisconsin business after 2010, hold the investment continuously for five years, and the business in which the investment is made must be a qualified Wisconsin business for the year in which the investment is made and at least two of the following four years.

Given these potential benefits, we recommend that you register your business with the Wisconsin Department of Revenue each year that it qualifies. At the end of the business’ tax year immediately preceding the registration, the business must meet the following requirements:

  • The business has at least two full-time employees;

  • The Wisconsin payroll of the business is at least 50% of its total payroll; and

  • The value of real and tangible personal property owned or rented and used in Wisconsin is at least 50% of the value of all real and tangible personal property owned or rented and used by the business.

Copyright © 2020 Godfrey & Kahn S.C.National Law Review, Volume IV, Number 365



About this Author

Timothy C. Smith Tax and Employee Benefits Attorney Godfrey Kahn law firm

Tim Smith is a tax attorney in Godfrey & Kahn’s Milwaukee office. His practice focuses primarily on the federal and state income tax aspects of mergers, acquisitions, and other business transactions. Tim advises clients on the tax implications of forming, owning, restructuring, and selling limited liability companies, C corporations, S corporations, partnerships, and joint ventures.  Tim frequently represents clients with structuring and planning tax-free transactions including reorganizations, spin-offs, like-kind exchanges. His other areas of tax experience include...

John McDonald, Corporate Attorney, Godfrey Kahn Law Firm

John McDonald is a shareholder in the firm’s Corporate Law Practice Group, Technology & Digital Business Practice Group and co-chair of the Emerging Companies Practice Group. He is a member of the firm’s Pro Bono Committee and the Knowledge Management Committee. John was admitted to practice in Wisconsin in 2006 and has been with the firm since September 2006.

John counsels clients on all stages of a business, from formation, financing and capitalization to exit strategies. A significant portion of his practice is in the area of mergers,...

Douglas J. Patch Tax Law Attorney Godfrey & Kahn Law Firm

Doug Patch is the leader of the Tax Practice Group and a shareholder in the firm’s Milwaukee office. He focuses his practice on the tax and corporate law aspects of complex business transactions. Representative matters include representation of clients in tax controversy matters, private equity financings, acquisitions, tax-free reorganizations of corporations (both publicly and privately held), like-kind exchanges, equity compensation structuring and acquisitive partnership transactions. His practice also includes general tax planning.

Jed A. Roher Tax Attorney Godfrey Kahn Law Firm

Jed A. Roher is an associate in the Tax and Employee Benefits and Corporate Practice Groups. Based primarily in the firm's Madison office, Jed also spends significant time in Milwaukee.