1. (1) Scope. A public utility that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the public utility 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). Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

   Note: A public utility 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. (2) Definitions. In this section:

   1. (a) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).
   2. (b) “Payroll factor” means the payroll fraction computed under s. 71.04 (6) or 71.25 (8), Stats., and s. Tax 2.39.
   3. (c) “Property factor” means the property fraction computed under s. 71.04 (5) or 71.25 (7), Stats., and s. Tax 2.39.
   4. (d) “Public utility” means any business entity that owns or operates any plant, equipment, property, franchise, or license for the production, transmission, sale, delivery, or furnishing of electricity, water, or steam the rates of charges for goods or services of which have been established or approved by a federal, state, or local government or governmental agency.
   5. (e) “Sales factor” means the sales fraction computed under ss. 71.04 (4m) and (7) or 71.25 (6m) and (9), Stats., and s. Tax 2.39.

3. (3) Apportionment formula computation. For taxable years beginning after December 31, 2004, a public utility that is engaged in business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The public utility shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats. The public utility shall apportion its remaining net income to this state as follows:

   1. (a) For taxable years beginning before January 1, 2006, apportionable income shall be apportioned using an apportionment fraction obtained by taking the arithmetical average of the sales factor, property factor, and payroll factor.
   2. (b) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor representing 60% of the fraction, the property factor representing 20% of the fraction, and the payroll factor representing 20% of the fraction.
   3. (c) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor representing 80% of the fraction, the property factor representing 10% of the fraction, and the payroll factor representing 10% of the fraction.

   4. (d) For taxable years beginning after December 31, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor.

      Note: Public utilities that are in combined groups must adjust the numerator and denominator of the sales factor as described in s. Tax 2.61 (7).

      Note: The provisions of s. Tax 2.50 first apply for taxable years beginning on January 1, 2005.

      Note: Section Tax 2.50 interprets ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats.

History

History: Cr. Register, August, 1973, No. 212, eff. 9-1-73; am. (1), Register, February, 1990, No. 410, eff. 3-1-90; emerg. r. and recr. eff. 12-5-05; CR 05-117: r. and recr. Register June 2006 No. 606, eff. 7-1-06; 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) and (3) (intro.), renum. (2) (a) to (d) to be (2) (b) to (e), cr. (2) (a) Register June 2010 No. 654, eff. 7-1-10.