Development zone capital investment credit.

In this subsection: 1. “Certified” means entitled under s. 238.395 (3) (a) 4. or s. 560.795 (3) (a) 4., 2009 stats., [s. 560.795 (3) (a) 4., 2009 stats., or s. 238.395 (3) (a) 4., 2023 stats.,] to claim tax benefits or certified under s. 238.395 (5) or 238.398 (3) or s. 560.795 (5), 2009 stats., or s. 560.798 (3), 2009 stats. [s. 560.795 (5), 2009 stats., s. 560.798 (3), 2009 stats., s. 238.395 (5), 2023 stats., or s. 238.398 (3), 2023 stats.]. 2. “Claimant” means a person who files a claim under this subsection. 3. “Development zone” means a development opportunity zone under s. 238.395 (1) (e) and (f) or 238.398 or s. 560.795 (1) (e) and (f), 2009 stats., or s. 560.798, 2009 stats. [s. 560.795 (1) (e) and (f), 2009 stats., s. 560.798, 2009 stats., s. 238.395 (1) (e) and (f), 2023 stats., or s. 238.398, 2023 stats.]. 4. “Previously owned property” means real property that the claimant or a related person owned during the 2 years prior to the department of commerce or the Wisconsin Economic Development Corporation designating the place where the property is located as a development zone and for which the claimant may not deduct a loss from the sale of the property to, or an exchange of the property with, the related person under section 267 of the Internal Revenue Code, except that section 267 (b) of the Internal Revenue Code is modified so that if the claimant owns any part of the property, rather than 50 percent ownership, the claimant is subject to section 267 (a) (1) of the Internal Revenue Code for purposes of this subsection.

Subject to the limitations provided in this subsection and in s. 73.03 (35), for any taxable year for which the claimant is certified, a claimant may claim as a credit against the taxes imposed under s. 71.23 an amount that is equal to 3 percent of the following: 1. The purchase price of depreciable, tangible personal property. 2. The amount expended to acquire, construct, rehabilitate, remodel, or repair real property in a development zone.

A claimant may claim the credit under par. (b) 1., if the tangible personal property is purchased after the claimant is certified and the personal property is used for at least 50 percent of its use in the claimant’s business at a location in a development zone or, if the property is mobile, the property’s base of operations for at least 50 percent of its use is at a location in a development zone.

A claimant may claim the credit under par. (b) 2. for an amount expended to construct, rehabilitate, remodel, or repair real property, if the claimant began the physical work of construction, rehabilitation, remodeling, or repair, or any demolition or destruction in preparation for the physical work, after the place where the property is located was designated a development zone, or if the completed project is placed in service after the claimant is certified. In this paragraph, “physical work” does not include preliminary activities such as planning, designing, securing financing, researching, developing specifications, or stabilizing the property to prevent deterioration.

A claimant may claim the credit under par. (b) 2. for an amount expended to acquire real property, if the property is not previously owned property and if the claimant acquires the property after the place where the property is located was designated a development zone, or if the completed project is placed in service after the claimant is certified.

No credit may be allowed under this subsection unless the claimant includes with the claimant’s return: 1. A copy of the verification that the claimant may claim tax benefits under s. 238.395 (3) (a) 4. or s. 560.795 (3) (a) 4., 2009 stats., [s. 560.795 (3) (a) 4., 2009 stats., or s. 238.395 (3) (a) 4., 2023 stats.,] or is certified under s. 238.395 (5) or 238.398 (3) or s. 560.795 (5), 2009 stats., or s. 560.798 (3), 2009 stats. [s. 560.795 (5), 2009 stats., s. 560.798 (3), 2009 stats., s. 238.395 (5), 2023 stats., or s. 238.398 (3), 2023 stats.]. 2. A statement from the department of commerce or the Wisconsin Economic Development Corporation verifying the purchase price of the investment and verifying that the investment fulfills the requirements under par. (b).

In calculating the credit under par. (b) a claimant shall reduce the amount expended to acquire property by a percentage equal to the percentage of the area of the real property not used for the purposes for which the claimant is certified and shall reduce the amount expended for other purposes by the amount expended on the part of the property not used for the purposes for which the claimant is certified.

The carry-over provisions of sub. (5b) (e) and (f) as they relate to the credit under sub. (5b) relate to the credit under this subsection.

A claimant may claim the credit under this subsection, including any credits carried over, against the amount of the tax otherwise due under this subchapter.

Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, that credit shall be determined on the basis of their economic activity, not that of their shareholders, partners, or members. The corporation, partnership, or limited liability company shall compute the amount of credit that may be claimed by each of its shareholders, partners, or members and provide that information to its shareholders, partners, or members. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit based on the partnership’s, company’s, or corporation’s activities in proportion to their ownership interest and may offset it against the tax attributable to their income from the partnership’s, company’s, or corporation’s business operations in the development zone; except that partners, members, and shareholders in a development zone under s. 238.395 (1) (e) or s. 560.795 (1) (e), 2009 stats., [s. 560.795 (1) (e), 2009 stats., or s. 238.395 (1) (e), 2023 stats.,] may offset the credit against the amount of the tax attributable to their income.

If a person who is entitled under s. 238.395 (3) (a) 4. or s. 560.795 (3) (a) 4., 2009 stats., [s. 560.795 (3) (a) 4., 2009 stats., or s. 238.395 (3) (a) 4., 2023 stats.,] to claim tax benefits becomes ineligible for such tax benefits, or if a person’s certification under s. 238.395 (5) or 238.398 (3) or s. 560.795 (5), 2009 stats., or s. 560.798 (3), 2009 stats., [s. 560.795 (5), 2009 stats., s. 560.798 (3), 2009 stats., s. 238.395 (5), 2023 stats., or s. 238.398 (3), 2023 stats.,] is revoked, that person may claim no credits under this subsection for the taxable year that includes the day on which the person becomes ineligible for tax benefits, the taxable year that includes the day on which the certification is revoked, or succeeding taxable years, and that person may carry over no unused credits from previous years to offset tax under this chapter for the taxable year that includes the day on which the person becomes ineligible for tax benefits, the taxable year that includes the day on which the certification is revoked, or succeeding taxable years.

If a person who is entitled under s. 238.395 (3) (a) 4. or s. 560.795 (3) (a) 4., 2009 stats., [s. 560.795 (3) (a) 4., 2009 stats., or s. 238.395 (3) (a) 4., 2023 stats.,] to claim tax benefits or certified under s. 238.395 (5) or 238.398 (3) or s. 560.795 (5), 2009 stats., or s. 560.798 (3), 2009 stats., [s. 560.795 (5), 2009 stats., s. 560.798 (3), 2009 stats., s. 238.395 (5), 2023 stats., or s. 238.398 (3), 2023 stats.,] ceases business operations in the development zone during any of the taxable years that that zone exists, that person may not carry over to any taxable year following the year during which operations cease any unused credits from the taxable year during which operations cease or from previous taxable years.

Subsection (4) (g) and (h) as it applies to the credit under sub. (4) applies to the credit under this subsection.