2.49 Apportionment of apportionable income

of interstate financial institutions. (1) SCOPE. A financial institution that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the financial institution is in a combined group, its Wisconsin share of the combined group[s apportionable in- come is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). Nonapportionable income shall be al- located as provided in s. 71.25 (5) (b), Stats. Note: A financial institution that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a de- scription of corporations required to use combined reporting. (2) DEFINITIONS. In this section: (a) XBilling addressY means the address indicated in the tax- payer[s books and records on the first day of the taxable year, or on a later date in the taxable year when the customer relationship Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. WISCONSIN ADMINISTRATIVE CODE began, to which a taxpayer under this section regularly sends any notice, statement, or bill to the taxpayer[s customer. The billing address of a customer who is a natural person means the address of that person[s domicile. (b) XBorrower located in this stateY means either of the following: 1. A borrower that is engaged in a trade or business and uses the loan proceeds in trade or business activities in this state. If it cannot be determined where the funds are used, Xborrower lo- cated in this stateY means a borrower whose billing address is in this state. 2. A borrower whose billing address is in this state, but is not engaged in a trade or business. (c) XCommercial domicileY means the location from which a trade or business is principally managed and directed. If the tax- payer is organized under the laws of a foreign country, the com- monwealth of Puerto Rico, or any territory or possession of the United States, Xcommercial domicileY shall be deemed for the purposes of this section to be the state of the United States or the District of Columbia from which the taxpayer[s trade or business in the United States is principally managed and directed. It shall be rebuttably presumed that the location from which a trade or business is principally managed and directed is the state of the United States or the District of Columbia at which the greatest number of the taxpayer[s employees work, have their office or base of operations, or are directed or controlled, as of the last day of the taxable year. (d) XCredit cardY includes a credit card, debit card, purchase card, charge card, and a travel or entertainment card. (dm) XCredit card bankY means an institution that is primarily engaged in credit card operations, which does not accept demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others, and which does not engage in the business of making commercial loans. (e) XCredit card issuer[s reimbursement feeY means the fee that a taxpayer receives from a merchant[s bank because a person to whom the taxpayer has issued a credit card has paid for mer- chandise or services sold by the merchant with the credit card. (f) XDomicileY means a natural person[s true, fixed, and per- manent home where that person intends to remain permanently and indefinitely and to which, whenever absent, that person in- tends to return. A natural person may have only one domicile at any time. (fm) XEngaged in business in and outside this stateY has the same meaning as in s. Tax 2.39 (2) (b). (g) XFinancial institutionY means any financial organization whether incorporated or organized under federal law or under the laws of any state or foreign country that is one of the following: 1. A bank holding company as defined in s. 221.0901 (2) (c), Stats., including a federal bank holding company, an in-state bank holding company, an out-of-state bank holding company, and a foreign bank holding company. 2. A bank as defined under 12 USC 1841 (c), including a na- tional bank organized and existing as a national bank association pursuant to the provisions of 12 USC ch. 2 and a state bank orga- nized and operating under ch. 221, Stats. 3. A savings and loan holding company as defined under 12 USC 1467a (1) (D) or s. 215.01 (24m), Stats. 4. A savings bank holding company as defined in s. 214.01 (1) (tm), Stats. 5. A savings association or federal savings bank as defined in 12 USC 1813 (b), including a savings and loan association, build- ing and loan association, or cooperative bank, and an association as defined in s. 215.01 (1), Stats., and a savings bank as defined in s. 214.01 (1) (t), Stats. 6. A trust company operating as a fiduciary under ch. 223, Stats., or a corporation, limited liability company, association, partnership, business trust, or other legal entity authorized to act as a trustee, personal representative, executor, administrator, guardian, conservator, assignee, or agent or in any other fiduciary capacity for individuals and businesses in the administration of trust funds, estates, and custodial arrangements, in stock and bond transfer and registration, in fiduciary investment and estate planning, and other related services. 7. An industrial bank, industrial loan company, or similar or- ganization as described in 12 USC 1841 (c) (2) (H). 8. A safe deposit company that maintains vaults for the de- posit and safe-keeping of valuables and rents compartments or boxes to customers who have exclusive access to these compart- ments or boxes, subject to the oversight and under the rules and regulations of the company. 9. A private banker including an unincorporated entity oper- ated as a partnership that specializes in investing and managing the money of private clients. 10. Any corporation engaged in international or foreign banking that is organized under the provisions of 12 USC 611 to 633. 11. Any agency or branch of a foreign depository as defined in 12 USC 3101. 12. Any credit union to the extent not exempt under s. 71.26 (1) (a), Stats., and s. 186.113 (20), Stats. 13. A production credit association organized under 12 USC 2071 or a land bank created under the Federal Farm Loan Act. 14. A consumer finance company, small loan company, or a sales finance company licensed under ch. 218, Stats. 15. A mortgage banker as defined in s. 224.71 (3), Stats. 16. A credit card bank. 17. Any subsidiary of an entity described in subds. 1. to 16., if a significant purpose for the subsidiary is to hold investments or if the subsidiary primarily functions to hold investments, as provided in s. 71.25 (10) (a) 2., Stats. (h) XGuarantor of a loan located in this stateY means a guaran- tor whose billing address is in this state. (hm) XIntangible propertyY has the same meaning as in s. Tax 2.39 (2) (cm). (i) XInvestment banking servicesY include assisting business customers in obtaining new financing by underwriting and selling new securities issued by the customer to the public. (j) XLoanY means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the pur- chase, in whole or in part, of an extension of credit from another. XLoansY include participations, syndications, and leases treated as loans for federal income tax purposes. XLoansY do not include properties treated as loans under section 595 of the Internal Rev- enue Code prior to its repeal by P.L. 104-188; futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relation- ships; non-interest bearing balances due from depository institu- tions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in a real estate mortgage in- vestment conduit, or other mortgage-backed or asset-backed se- curity; and other similar items. (k) XLoan secured by real propertyY means that any of the col- lateral used to secure a loan or other obligation at the time the original loan or obligation was incurred or during the current tax- Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. able year is real property. A loan secured by real property in- cludes an installment sales contract for real property. An Xagri- cultural lienY as defined in s. 409.102 (1) (b), Stats., or a Xfixture filingY as defined in s. 409.102 (1) (js), Stats., does not by itself constitute a loan secured by real property. (L) XLoan secured by tangible personal propertyY means that any of the collateral used to secure a loan or other obligation, other than a loan secured by real property, at the time the original loan or obligation was incurred or during the current taxable year is tangible personal property. A loan secured by tangible per- sonal property includes an installment sales contract for tangible personal property. (m) XLoan servicing feesY include fees or charges for originat- ing and processing loan applications, such as prepaid interest and loan discounts, and for collecting, tracking, and accounting for loan payments received. XLoan servicing feesY also include gross receipts from the sale of loan servicing rights. (n) XMerchant discountY means the fee or negotiated discount that is charged to a merchant for accepting a credit card as pay- ment for merchandise or services that are sold to the credit card holder. (o) XParticipationY means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. Note: In a loan participation, the credit originator initially makes the loan and subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower. (p) XPersonY means a natural person, estate, trust, partner- ship, limited liability company, corporation, or any other busi- ness entity. (q) XRegular place of businessY means an office at which the taxpayer carries on its business in a regular and systematic man- ner and which is regularly maintained, occupied, or used by em- ployees of the taxpayer. (r) XStateY means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States. (s) XSyndicationY means an extension of credit in which 2 or more persons fund and each person is at risk only up to a speci- fied percentage of the total extension of credit or up to a specified dollar amount. (t) XTaxpayerY means a financial organization that is subject to apportionment under this section. (3) APPORTIONMENT FORMULA COMPUTATION. For taxable years beginning after December 31, 2005, a financial institution that is engaged in business in and outside this state shall deter- mine its net income for state franchise or income tax purposes as provided in this section. The financial institution shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allo- cated as provided in s. 71.25 (5) (b), Stats. The financial institu- tion shall apportion its remaining net income to this state as follows: (a) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be appor- tioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 60% of the fraction and a pay- roll factor under sub. (5) representing 40% of the fraction. (b) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be appor- tioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 80% of the fraction and a pay- roll factor under sub. (5) representing 20% of the fraction. (c) For taxable years beginning before January 1, 2008, in any case in which the financial institution has no employees nor pays management or service fees to a related entity, or in which the de- partment determines that employees are not a substantial income producing factor, the department may order or permit the elimi- nation of the payroll factor. (d) For taxable years beginning after December 31, 2007, ap- portionable income shall be apportioned using an apportionment fraction composed of the receipts factor under sub. (4). Note: Financial institutions that are in combined groups use the receipts factor numerator and denominator to compute the modified sales factor, which then deter- mines the financial institution[s Wisconsin share of the combined group[s appor- tionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details. (4) RECEIPTS FACTOR. The receipts factor is the ratio of the taxpayer[s receipts in this state to the taxpayer[s total receipts ev- erywhere during the taxable year. Interest, dividends, gross re- ceipts or net gains from sales of securities held for investment purposes, and other income from investment assets may not be included in the receipts factor. The receipts factor shall include all of the following items: Note: A financial institution that is a combined group member must adjust its re- ceipts factor numerator and denominator as described in s. Tax 2.61 (7). (a) Gross receipts from the lease of real property. The numer- ator of the receipts factor includes gross receipts from the lease, rental, or licensing of real property owned by the taxpayer if the real property is located in this state and gross receipts from the sublease of real property if the real property is located in this state. (b) Gross receipts from the lease of tangible personal prop- erty. 1. Except as described in subd. 2., the numerator of the re- ceipts factor includes gross receipts from the lease, rental, or li- censing of tangible personal property owned by the taxpayer and the sublease of tangible personal property if the property is lo- cated in this state during the entire period of lease, rental, licens- ing, sublease, or other use. If the property is used in and outside this state during the period of lease, rental, licensing, or sublease, gross receipts are included in the numerator of the receipts factor to the extent that the property is used in this state. The proportion of use in this state is determined by multiplying the gross receipts from the lease, rental, licensing, sublease, or other use of the property by a fraction having as a numerator the number of days the property is in this state while leased, rented, licensed, or sub- leased in the taxable year and having as a denominator the total number of days that the property is leased, rented, licensed, or subleased in all states having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in the taxable year. 2. Gross receipts from the lease, rental, or licensing of mov- ing property, including motor vehicles, rolling stock, aircraft, ves- sels, or mobile equipment, owned by the taxpayer and the sub- lease of moving property are included in the numerator of the re- ceipts factor to the extent that the property is used in this state. The proportion of use of moving property in this state is deter- mined as follows: a. The proportion of use of a motor vehicle or rolling stock in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the motor vehicle or rolling stock by a fraction having as a numerator the number of miles traveled within this state by the motor vehicle or rolling stock while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of miles traveled by the motor vehicle or rolling stock while leased, rented, licensed, or subleased in the taxable year. b. The proportion of use of an aircraft in this state is deter- mined by multiplying the gross receipts from the lease, rental, li- censing, or sublease of the aircraft by a fraction having as a nu- Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. WISCONSIN ADMINISTRATIVE CODE merator the number of takeoffs and landings of the aircraft in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of takeoffs and landings of the aircraft while leased, rented, licensed, or sub- leased in the taxable year. c. The proportion of use of a vessel or mobile equipment in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the vessel or mobile equip- ment by a fraction having as a numerator the number of days that the vessel or mobile equipment is in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of days that the vessel or mobile equipment is leased, rented, licensed, or subleased in the taxable year. d. If the taxpayer is unable to determine the use of moving property under subd. 2. a., b., or c. while the property is leased, rented, licensed, or subleased in the taxable year, the moving property is conclusively deemed to be used in the state in which the property is located at the time that the lessee, renter, licensee, or sublessee takes possession of the property. (c) Gross interest and other fees from loans secured by real property. 1. The numerator of the receipts factor includes gross interest, fees, points, charges, and penalties from loans secured by real property if the real property securing the loan is located in this state. If the real property securing the loan is located in both this state and one or more other states or foreign countries, the gross interest, fees, points, charges, and penalties shall be divided among those states or foreign countries having jurisdiction to im- pose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country. 2. The determination of whether the real property securing a loan is located in this state shall be made at the time the original agreement was made and for each subsequent taxable year. (d) Gross interest and other fees from loans secured by tangi- ble personal property. 1. The numerator of the receipts factor in- cludes gross interest, fees, points, charges, and penalties from loans secured by tangible personal property if the tangible per- sonal property securing the loan is located in this state as de- scribed in par. (b). If the tangible personal property securing the loan is located in both this state and one or more other states or foreign countries, the gross interest, fees, points, charges, and penalties shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax mea- sured by net income on the taxpayer in proportion to the fair mar- ket value of the tangible personal property securing the loan lo- cated in each state or foreign country. 2. The determination of whether the tangible personal prop- erty securing a loan is located in this state shall be made at the time the original agreement was made and for each subsequent taxable year. (e) Gross interest and other fees from loans not secured by real or tangible personal property. The numerator of the receipts factor includes interest, fees, points, charges, and penalties from loans that are not secured by real or tangible personal property if the loan borrower is located in this state. (f) Net gains from the sale of loans. The numerator of the re- ceipts factor includes net gains from the sale of loans, determined as follows: 1. The amount of net gains, but not less than zero, from the sale of loans secured by real property located in this state. If the real property securing the loan is located in both this state and one or more other states or foreign countries, the net gain shall be divided among those states or foreign countries having jurisdic- tion to impose an income tax or franchise tax measured by net in- come on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country. 2. The amount of net gains, but not less than zero, from the sale of loans secured by tangible personal property located in this state as described in par. (b). If the tangible personal property se- curing the loan is located in both this state and one or more other states or foreign countries, the net gain shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the tax- payer in proportion to the fair market value of the tangible per- sonal property securing the loan located in each state or foreign country. 3. The amount of net gains, but not less than zero, from the sale of loans not secured by real or tangible personal property if the loan borrower is located in this state. (g) Gross receipts from credit card receivables. The numera- tor of the receipts factor includes gross interest, fees, points, charges, and penalties from credit card receivables and gross re- ceipts from annual fees and other fees charged to credit card hold- ers if the billing address of the credit card holder is in this state. (h) Net gains from the sale of credit card receivables. The nu- merator of the receipts factor includes net gains, but not less than zero, from the sale of credit card receivables if the billing address of the credit card holder is in this state. (i) Credit card issuer[s reimbursement fees. The numerator of the receipts factor includes the taxpayer[s credit card issuer[s re- imbursement fees if the billing address of the credit card holder is in this state. (j) Gross receipts from merchant discount. The numerator of the receipts factor includes gross receipts from merchant discount if the merchant[s trade or business is located in this state. If the merchant[s trade or business is located in and outside this state, the numerator includes only receipts from merchant discounts on sales made in this state. If the location of a sale cannot be deter- mined, the numerator includes the merchant discount on the sale if the merchant[s commercial domicile is in this state. The re- ceipts shall be computed net of any credit card holder charge backs but may not be reduced by any interchange transaction fees or by any issuer[s reimbursement fees paid to another for charges made by its credit card holders. (k) Loan servicing fees. 1. The numerator of the receipts fac- tor includes loan servicing fees derived from loans owned by the taxpayer or another person, including servicing participations, and secured by real property located in this state. If the real prop- erty securing the loan is located in both this state and one or more other states or foreign countries, the loan servicing fees shall be divided among those states or foreign countries having jurisdic- tion to impose an income tax or franchise tax measured by net in- come on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country. If the location of the real property securing the loan can- not be determined, the numerator includes the loan servicing fees if the loan borrower or guarantor of the loan is located in this state. 2. The numerator of the receipts factor includes loan servic- ing fees derived from loans owned by the taxpayer or another per- son, including servicing participations, and secured by tangible personal property located in this state as described in par. (b). If the tangible personal property securing the loan is located in both this state and one or more other states or foreign countries, the loan servicing fees shall be divided among those states or foreign Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. countries having jurisdiction to impose an income tax or fran- chise tax measured by net income on the taxpayer in proportion to the fair market value of the tangible personal property securing the loan located in each state or foreign country. If the location of the tangible personal property securing the loan cannot be deter- mined, the numerator includes the loan servicing fees if the loan borrower or guarantor of the loan is located in this state. 3. The numerator of the receipts factor includes loan servic- ing fees derived from loans owned by the taxpayer or another per- son, including servicing participations, and not secured by real or tangible personal property if the loan borrower or guarantor of the loan is located in this state. (L) Gross receipts from travelers checks, cashiers checks, cer- tified checks, and money orders. The numerator of the receipts factor includes gross fees or other charges for the issuance of trav- elers checks, cashiers checks, certified checks, and money orders if the checks or money orders are purchased in this state. (m) Gross receipts from automated teller machines. The nu- merator of the receipts factor includes gross receipts from the us- age of automated teller machines located in this state. (n) Gross receipts from safety deposit boxes. The numerator of the receipts factor includes gross receipts from the rental of safety deposit boxes if the boxes are located in this state. (o) Gross receipts from maintaining accounts. The numerator of the receipts factor includes gross receipts from the mainte- nance of accounts, including but not limited to service charges for maintaining accounts, overdraft charges, charges for copies of statements and checks, and fees for account reconciliation, if ei- ther of the following applies: 1. The service is provided to an account holder that is not en- gaged in a trade or business, and the account holder[s billing ad- dress is in this state. 2. The service is provided to an account holder that is en- gaged in a trade or business, the account holder maintains a regu- lar place of business in this state, and the service received relates to the business in this state. If the account holder receives the ser- vice in more than one state or the state in which the service is re- ceived cannot be determined, the service is received in this state if the account holder, in the regular course of the account holder[s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the account holder[s billing address is in this state. (p) Gross receipts from electronic funds transfer. The numer- ator of the receipts factor includes electronic funds transfer fees if either of the following applies: 1. The service is provided to a customer that is not engaged in a trade or business, and the customer[s billing address is in this state. 2. The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of busi- ness in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be deter- mined, the service is received in this state if the customer, in the regular course of the customer[s business, ordered the service from an office in this state. If the ordering office cannot be deter- mined, the services are received in this state if the customer[s billing address is in this state. (q) Gross receipts from cash management services. The nu- merator of the receipts factor includes the gross amount of any fees or charges generated from cash management services, in- cluding but not limited to lockbox services, depository transfer checks, and payables management, if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer re- ceives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the cus- tomer[s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are re- ceived in this state if the customer[s billing address is in this state. (r) Gross receipts from international trade services. The nu- merator of the receipts factor includes the gross receipts from in- ternational trade services, including but not limited to letters of credit and bankers acceptance notes, if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer re- ceives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the cus- tomer[s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are re- ceived in this state if the customer[s billing address is in this state. (s) Gross receipts from data processing services, document imaging services, and microfilming services. The numerator of the receipts factor includes the gross receipts from data process- ing services, document imaging services, and microfilming ser- vices if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of busi- ness in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be deter- mined, the service is received in this state if the customer, in the regular course of the customer[s business, ordered the service from an office in this state. If the ordering office cannot be deter- mined, the services are received in this state if the customer[s billing address is in this state. (t) Gross receipts from research services. The numerator of the receipts factor includes gross receipts from research services if either of the following applies: 1. The service is provided to a customer that is not engaged in a trade or business, and the customer[s billing address is in this state. 2. The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of busi- ness in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be deter- mined, the service is received in this state if the customer, in the regular course of the customer[s business, ordered the service from an office in this state. If the ordering office cannot be deter- mined, the services are received in this state if the customer[s billing address is in this state. (u) Gross receipts from trust services. The numerator of the receipts factor includes gross receipts from trust services if either of the following applies: 1. The service is provided to a customer that is not engaged in a trade or business, and the customer[s billing address is in this state. 2. The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of busi- ness in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be deter- mined, the service is received in this state if the customer, in the regular course of the customer[s business, ordered the service Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. WISCONSIN ADMINISTRATIVE CODE from an office in this state. If the ordering office cannot be deter- mined, the services are received in this state if the customer[s billing address is in this state. (v) Gross receipts from investment banking services. The nu- merator of the receipts factor includes gross receipts, including commissions, management fees, or underwriting fees, earned from investment banking services if either of the following applies: 1. The issuer of the securities is not engaged in a trade or business, and the issuer[s billing address is in this state. 2. The issuer of the securities is engaged in a trade or busi- ness, the issuer of the securities maintains a regular place of busi- ness in this state, and the securities relate to that person[s business in this state. If the securities relate to that person[s regular place of business in more than one state, the receipts from the perfor- mance of the service are included in the numerator of the receipts factor according to the portion of the service received in this state. If the regular place of business to which the securities re- late cannot be determined, the service is received in this state if the issuer of the securities, in the regular course of the issuer[s business, ordered the service from an office in this state. If the ordering office cannot be determined, the service is received in this state if the issuer[s billing address is in this state. (w) Gross receipts from security brokerage services. 1. The numerator of the receipts factor includes fees, commissions, mar- gin interest, and other gross receipts from security brokerage ser- vices if the customer[s billing address is in this state. 2. The numerator of the receipts factor includes net gains, net of commissions, but not less than zero, from sales of trading as- sets if the customer[s billing address is in this state. XTrading as- setsY include securities, commodities, and related financial in- struments that a taxpayer acquires and holds for sale in its inven- tory account. The receipts factor does not include gross receipts or net gains from sales or other dispositions of investment assets. (x) Gross receipts from other services. The numerator of the receipts factor includes gross receipts from services that are not described in pars. (a) to (w) if the purchaser of the service re- ceived the benefit of the service in this state under any of the fol- lowing circumstances: 1. The benefit of a service is received in this state if any of the following applies: a. The service relates to real property that is located in this state. b. The service relates to tangible personal property that is de- livered directly or indirectly to customers in this state. c. The service is purchased by an individual who is physi- cally present in this state at the time that the service is received. d. The service is provided to a person engaged in a trade or business in this state and relates to that person[s business in this state. 2. If the purchaser of a service receives the benefit of a ser- vice in more than one state, the gross receipts from the perfor- mance of the service are included in the numerator of the receipts factor according to the portion of the service received in this state. (y) Gross receipts from computer software. 1. The numerator of the receipts factor includes gross receipts from the use of com- puter software if the purchaser or licensee uses the computer soft- ware at a location in this state. 2. Computer software is used at a location in this state if the purchaser or licensee uses the computer software in the regular course of business operations in this state, for personal use in this state, or if the purchaser or licensee is an individual whose domi- cile is in this state. If the purchaser or licensee uses the computer software in more than one state, the gross receipts shall be di- vided among those states having jurisdiction to impose an in- come tax or franchise tax measured by net income on the tax- payer in proportion to the use of the computer software in those states. To determine computer software use in this state, the de- partment may consider the number of users in each state where the computer software is used, the number of site licenses or workstations in this state, and any other factors that reflect the use of computer software in this state. (z) Gross royalties and other gross receipts from intangibles. 1. The numerator of the receipts factor includes gross royalties and other gross receipts received for the use of intangible prop- erty if the user, purchaser, or licensee uses the intangible property at a location in this state. 2. Intangible property is used at a location in this state if the user, purchaser, or licensee uses the property in the operation of a trade or business at a location in this state, for personal use in this state, or if the user, purchaser, or licensee is an individual whose domicile is in this state. If the user, purchaser, or licensee uses the intangible property in more than one state, the gross royalties and other gross receipts from the sale or use of the intangible property shall be divided among those states having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the use of the intangible property in those states. To determine intangible property use in this state, the department may consider the number of licensed sites in each state, the volume of property manufactured, produced, or sold at locations in this state, or any other factors that reflect the use of the intangible property in this state. (ze) Gross receipts from services provided to regulated invest- ment companies. 1. Except as provided in subd. 2., the numera- tor of the receipts factor includes gross receipts and net gain de- scribed under pars. (a) to (z) from services provided to or on be- half of a regulated investment company, as defined in section 851 of the Internal Revenue Code. The regulated investment com- pany is considered the purchaser or consumer of the services. 2. At the taxpayer[s option, the portion of the gross receipts received from a regulated investment company from the sale of administration, distribution, or management services shall be in- cluded in the numerator of the receipts factor as described in subd. 3. A taxpayer that makes this election shall use this method to determine the receipts included in the numerator of the receipts factor from each regulated investment company for or on behalf of which it performs services and shall compute the receipts from each regulated investment company separately. For purposes of this subdivision: a. XAdministration servicesY include clerical, accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal, and tax services provided for a regulated investment company but only if the provider of the services also provides, or is affiliated with a per- son that provides, distribution or management services to the reg- ulated investment company. b. XDistribution servicesY include advertising, servicing in- vestor accounts, marketing, or selling shares of the regulated in- vestment company. In the case of advertising, servicing, or mar- keting shares, the services shall be performed by a person that is or, in the case of a closed end company, was either engaged in the service of selling the shares or affiliated with a person that is en- gaged in the service of selling the shares. In the case of an open end company, the service of selling shares shall be performed pursuant to a contract entered into under 15 USC 80a-15(b). Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. c. XManagement servicesY include rendering investment ad- vice directly or indirectly to a regulated investment company, de- termining when sales and purchases of securities are to be made on behalf of the regulated investment company, selling or pur- chasing securities constituting assets of a regulated investment company, and related activities, but only if the activities are per- formed pursuant to a contract with the regulated investment com- pany entered into under 15 USC 80a-15(a), for a person that has entered into the contract with the regulated investment company or for a person that is affiliated with a person that has entered into the contract with a regulated investment company. d. A person is affiliated with another person if each person is a member of the same affiliated group, as defined under section 1504 of the Internal Revenue Code without regard to sub. (b) of section 1504. e. Receipts received from a regulated investment company include amounts received directly or indirectly from the regulated investment company and amounts received from shareholders in the regulated investment company. 3. The numerator of the receipts factor includes the sum of receipts determined by multiplying the gross receipts from the sale of administration, distribution, and management services provided to or on behalf of each separate regulated investment company by a fraction, computed as follows: a. The numerator of the fraction is the sum of the monthly percentages determined for each month of the regulated invest- ment company[s taxable year for federal income tax purposes, which taxable years ends within or at the same time as the tax- payer[s taxable year, but excluding any month during which the regulated investment company had no outstanding shares. The monthly percentage for each month is determined by dividing the number of shares in the regulated investment company that are owned on the last day of the month by shareholders whose domi- cile or commercial domicile is in this state by the total number of shares in the regulated investment company outstanding on that date. b. The denominator of the fraction is the number of monthly percentages. (zm) Other sales. The numerator of the receipts factor in- cludes all other receipts described in s. Tax 2.39 (6) (b) to (i), to the extent not described in this subsection. (zs) Receipts not taxed. For taxable years beginning before January 1, 2009, fifty percent of the taxpayer[s receipts that are apportioned under this section to a state which does not have ju- risdiction to impose an income tax or franchise tax measured by net income on the taxpayer shall be included in the numerator of the apportionment fraction if the taxpayer[s employees or repre- sentatives performed such services from a location in this state. With regard to receipts described in pars. (a) to (ze), this para- graph does not apply to taxable years beginning on or after Janu- ary 1, 2009. (5) PAYROLL FACTOR. The payroll factor is the ratio of the to- tal compensation paid to employees located in this state to the to- tal compensation paid to employees located everywhere, deter- mined in accordance with the provisions of ss. 71.04 (6) and 71.25 (8), Stats., and s. Tax 2.39 (5). XCompensation paid to em- ployeesY includes deductible management or service fees paid to a related entity directly or indirectly for the performance of per- sonal services, and the situs of the fees is in this state if the ser- vices are performed in this state. The recipient of the fees may not include the compensation paid to its employees with respect to the personal services in either the numerator or denominator of its payroll factor. Note: The provisions of s. Tax 2.49 first apply for taxable years beginning on January 1, 2006. History: Cr. Register, August, 1973, No. 212, eff. 9-1-73; am. (1) (b), Register, July, 1978, No. 271, eff. 8-1-78; corrections in (1) (b) and (3) made under s. 13.93 (2m) (b) 7., Stats., Register, March, 1999, No. 519; CR 04-031: r. and recr. Register June 2006 No. 606, eff. 7-1-06; correction in (4) (zm) made under s. 13.93 (2m) (b) 7., Stats., Register November 2006 No. 611; corrections in (1) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31- 09 and CR 10-001: am. (1), (2) (h), (3) (intro.), (4) (intro.), (z) 1., (zm) and (zs), cr. (2) (dm), (fm), (g) 16., 17., (hm) and (3) (d), r. (3) (c), renum. (3) (d) to be (3) (c) Register June 2010 No. 654, eff. 7-1-10; CR 19-141: am. (2) (hm), (4) (x) 1. b., c. Register September 2020 No. 777, eff. 10-1-20.