1. (1) Scope. The apportionable income of professional sports clubs engaged in business in and outside Wisconsin during the year shall be apportioned to Wisconsin using the apportionment fraction described in s. 71.25 (6), Stats., and the apportionment formula computation described in s. 71.25 (6m), Stats., if applicable, except if the professional sports club 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). The property, payroll, and sales factors described in s. 71.25 (6) and (6m), Stats., shall be determined as described in this section.

   Note: A professional sports club 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) Definition. In this section, “engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

3. (3) Property factor. The property factor is a fraction as defined in s. 71.25 (7), Stats. Owned or rented real and tangible personal property shall be included in the factor as provided in s. 71.25 (7), Stats., and s. Tax 2.39 (4). Minor equipment, such as uniforms, and playing and practice equipment, need not be included in the factor.

   Note: The property factor does not apply to taxable years beginning after December 31, 2007.

4. (4) Payroll factor. The payroll factor is a fraction as defined in s. 71.25 (8), Stats. Compensation shall be reported as provided in s. 71.25 (8), Stats., and s. Tax 2.39 (5). Bonuses and payments shall be included in the payroll factor on a prorated basis in accordance with internal revenue service ruling 71-137, Cum. Bull., 1971-1. Compensation paid for optioned players shall be included in the factor only if paid directly to the player by the taxpayer.

   Note: The payroll factor does not apply to taxable years beginning after December 31, 2007.

5. (5) Sales factor. The sales factor is a fraction as defined in s. 71.25 (9), Stats. Sales shall be included in the factor in accordance with s. 71.25 (9), Stats., s. Tax 2.39 (6) and the following rules:

   1. (a) Gate receipts. Gate receipts include all receipts from games played at the taxpayer’s home facility plus any gate receipts received from games played away from the taxpayer’s home facility. The numerator of the sales fraction for taxpayers whose home facility is in Wisconsin shall include all gate receipts from games played in its home facility. The numerator of the sales fraction for taxpayers whose home facility is outside Wisconsin shall include the percentage of gate receipts received from games played in Wisconsin.
   2. (b) Radio and television receipts. Radio and television receipts received by the taxpayer as its proportionate share from a league or association contract with the major communications networks are in Wisconsin in proportion to the number of games played in Wisconsin to total games played by the taxpayer covered by the contract during the season. Local television and radio receipts are in Wisconsin if the games are played in Wisconsin.
   3. (c) Concession income and miscellaneous income. Concession income is assigned to the numerator if the concession is operated within Wisconsin. Miscellaneous income such as parking lot income, advertising income, and other similar income is assigned to the numerator if the activity is conducted within Wisconsin.

   4. (d) Player contracts, franchises, and similar sources. Income from player contract transactions, franchise fees, and other similar sources shall be excluded from the numerator and the denominator of the sales fraction.

      Note: Professional sports clubs 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 2.505 first apply for taxable years beginning on January 1, 2005.

      Note: Section Tax 2.505 interprets s. 71.25 (6), Stats.

History

History: Cr. Register, December, 1980, No. 300, eff. 1-1-81; am. (1) to (3) (intro.), (c) and (d), Register, July, 1989, No. 403, eff. 8-1-89; emerg. am. (title), (intro.) to (3) (intro.) and (d) (title), eff. 10-12-07; CR 07-091: am. (title), (intro.) to (3) (intro.) and (d) (title) Register March 2008 No. 627, eff. 4-1-08; EmR0943: emerg. am. (intro.), renum. (1) to (3) to be (2) to (4), cr. (1), eff. 12-31-09; CR 10-001: renum. (intro.) and (1) to (3) to be (1) and (3) to (5) and am. (1), cr. (2) Register June 2010 No. 654, eff. 7-1-10; correction to (1) (title) made under s. 13.92 (4) (b) 2., Stats., Register June 2010 No. 654.