01-0488 Borge v. Wisconsin Tax Appeals Commission

Listen to this article

“[T]he relevant language in Wis. Stat. § 71.05(6)(a)1 provides that Wisconsin taxpayers are to add to their federal adjusted gross income “any interest … which is not included in federal adjusted gross income.” The plain meaning of this language requires taxpayers to determine the types of interest that are expressly excluded from federal adjusted gross income and then to add those items back into Wisconsin adjusted gross income unless they fall in one of the express exceptions. As explained above, 26 U.S.C. § 852(b)(5), clearly states that exempt-interest dividends are to be treated as ‘an item of interest excludable from gross income under section 103(a)’ for purposes of determining federal gross income. Wisconsin relies on the federal definition of adjusted gross income as its baseline definition of Wisconsin adjusted gross income, and, for that reason, the distributions at issue are a type of interest for purposes of § 71.05(6)(a)1. Stated another way, the IRC excludes the distributions from taxable income as a type of interest, and § 71.05(6)(a)1 unambiguously requires Wisconsin taxpayers to include in Wisconsin adjusted gross income (with a few exceptions not relevant here) all types of interest excluded for federal purposes.”

Affirmed.

Dist IV, Dane County, Nichol, J., Roggensack, J.

Attorneys:

For Appellant: Michael Borge, Cambridge

For Respondent: Alan Lee, Madison