1. (1) General. The apportionable income of a railroad or car line company engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the company is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

   Note: A railroad or car line company 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 description of corporations required to use combined reporting.

2. (1m) Definitions.

   1. (a) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).
   2. (b) “Gross receipts from carriage” means gross receipts received for the carriage of property or persons net of interline payments made to other railroads as a result of the interchange of carriage between and among railroads. Gross receipts from carriage includes interline payments received from other railroads.
   3. (c) “Revenue ton mile” means the movement of one net ton of property or persons, or both, the distance of one mile, for consideration. For carriage of persons, each person shall be considered the equivalent of 150 pounds, and the average weight of the contents of head end cars, or “baggage cars,” is considered to be 4 tons.

3. (2) Interstate railroads. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income for taxable years beginning on or after January 1, 1991, the apportionable income of a railroad engaged in business in and outside this state shall be apportioned to Wisconsin on the basis of the arithmetical average of the following 2 factors:

   1. (a) The ratio of the gross receipts from carriage of property or persons, or both, first acquired for carriage in Wisconsin to the total gross receipts from carriage of property or persons, or both, everywhere.

   2. (b) The ratio of revenue ton miles of carriage in Wisconsin to revenue ton miles of carriage everywhere.

      Note: Railroads that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

4. (3) Substitution of factors. Whenever gross receipts data is not available the department may authorize or direct substitution of a similar factor, such as gross tonnage, and whenever revenue ton mile data is not available the department may similarly authorize substitution of a similar factor, such as revenue miles.

5. (4) Car line companies. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income for taxable years beginning on or after January 1, 1991, the income of a car line company engaged in business in and outside this state shall be allocated or apportioned to Wisconsin as provided in s. 71.04 (4) or 71.25 (6), Stats., and s. Tax 2.39.

   Note: Section 71.26 (1) (a), Stats., was amended by 1991 Wis. Act 39, effective for taxable years beginning on or after January 1, 1991. For taxable years beginning before January 1, 1991, railroads and car line companies were exempt from Wisconsin franchise and income taxation.

   Note: Section Tax 2.475 interprets ss. 71.04 (8) (c) and 71.25 (10) (c), Stats.

History

History: Emerg. cr. eff. 2-17-92; cr. Register, August, 1992, No. 440, eff. 9-1-92; EmR0943: emerg. am. (title), (2) (intro.) and (4), cr. (intro.) and (1) (a), renum. (1) (a) and (b) to be (1) (b) and (c), eff. 12-31-09; CR 10-001: am. (title), (2) (intro.) and (4), r. and recr. (1), cr. (1m) Register June 2010 No. 654, eff. 7-1-10; corrections to (1) (title) and (1m) (title) made under s. 13.92 (4) (b) 2., Stats., Register June 2010 No. 654; CR 17-019: am. (1) (title), (2) (intro.) Register June 2018 No. 750 eff. 7-1-18.