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Wisconsin Tax Appeals Commission
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STATE OF WISCONSIN | TAX APPEALS COMMISSION |
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JAMES F. STACE W6870 County Road CM Portage, WI 53901, Petitioner, vs. WISCONSIN DEPARTMENT OF REVENUE P.O. Box 8907 Madison, WI 53708, Respondent. |
DOCKET NO. 01-I-221
DECISION AND ORDER |
THOMAS M. BOYKOFF, COMMISSIONER:
This case comes before the Commission on stipulated facts and exhibits. John E. Gresens, Sr., of De Forest, Wisconsin, represents petitioner. Attorney Mark S. Zimmer represents respondent ("Department"). Each party filed a brief.
Having considered the entire record before it, the Commission finds, concludes, and orders as follows:
FINDINGS OF FACT
The Commission bases its Findings of Fact on the parties' stipulated facts, making non-substantive format and reorganization changes and deleting references to exhibits, as follows:
1. Petitioner currently resides in Portage, Wisconsin. For calendar years 1996 through 1998 ("period under review")(1), petitioner was single and a resident of Wisconsin.
1996 Tax Year
2. For tax year 1996:A. Petitioner's non-farm Wisconsin adjusted gross income was $91,657.
B. Petitioner's non-farm Wisconsin adjusted gross income, exclusive of net gains from the sale or exchange of capital or business assets, and exclusive of net profits from businesses, rents, partnerships, limited liability companies, S corporations, estates or trusts, was $89,769.59.
C. Petitioner's combined net loss incurred in the operation of a farming business was $44,583, exclusive of net gains from the sale or exchange of capital business assets, and exclusive of net profits from businesses, rents, partnerships, limited liability companies, S corporations, estates or trusts, under § 165 of the Internal Revenue code ("IRC"), except losses allowable under §§ 1211 and 1231 of the IRC.
D. Petitioner claimed the full amount of $44,583 as his farm losses on his 1996 Wisconsin income tax return, without reduction for limitations on farm losses under Wis. Stat. § 71.05(6)(a)10.
1997 Tax Year
3. For tax year 1997:A. Petitioner's non-farm Wisconsin adjusted gross income was $84,302.
B. Petitioner's non-farm Wisconsin adjusted gross income, exclusive of net gains from the sale or exchange of capital or business assets, and exclusive of net profits from businesses, rents, partnerships, limited liability companies, S corporations, estates or trusts, was $56,815.84.
C. Petitioner's combined net loss incurred in the operation of a farming business was $54,647, exclusive of net gains from the sale or exchange of capital or business assets, and exclusive of net profits from businesses, rents, partnerships, limited liability companies, S corporations, estates or trusts, under § 165 of the IRC, except losses allowable under §§ 1211 and 1231 of the IRC.
D. Petitioner claimed the full amount of $54,647 as his farm losses on his 1997 Wisconsin income tax return, without reduction for limitations on farm losses under Wis. Stat. § 71.05(6)(a)10.
1998 Tax Year
4. For tax year 1998:A. Petitioner's non-farm Wisconsin adjusted gross income was $57,189.
B. Petitioner's combined net loss incurred in the operation of a farming business was $33,716, exclusive of net gains from the sale or exchange of capital or business assets, and exclusive of net profits from businesses, partnerships, limited liability companies, S corporations, estates or trusts under § 165 of the IRC, except losses allowable under §§ 1211 and 1231 of the IRC.
C. Petitioner claimed the full amount of $33,716 as his farm losses on his 1998 Wisconsin income tax return, without reduction for limitations on farm losses under Wis. Stat. § 71.05(6)(a)10.
Jurisdictional Facts
5. Under date of March 19, 2001, the Department issued an assessment to petitioner for $9,274.44. The Department disallowed portions of the farm losses incurred by petitioner for each year of the period under review.6. Under date of May 1, 2001, petitioner timely filed with the Department a petition for redetermination.
7. Under date of October 29, 2001, the Department denied petitioner's petition for redetermination.
8. Petitioner timely appealed this matter to the Commission.
APPLICABLE STATUTES
(1995-1996)
71.01 Definitions. In this chapter in regard to natural persons and fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds:* * *
(13) "Wisconsin adjusted gross income" means federal adjusted gross income, with the modifications prescribed in s. 71.05 (6) to (12), (19) and (20).
71.05 Income computation.
* * *
(6) MODIFICATIONS AND TRANSITIONAL ADJUSTMENTS. Some of the modifications referred to in s. 71.01(13) and (14) are:
(a) Additions. To federal adjusted gross income add:
* * *
10. For the taxable year, for a person who is not "actively engaged in farming", as that term is used in 7 CFR 1497.201, combined net losses, exclusive of net gains from the sale or exchange of capital or business assets and exclusive of net profits, from businesses, from rents, from partnerships, from limited liability companies, from S corporations, from estates or from trusts, under section 165 of the internal revenue code, except losses allowable under sections 1211 and 1231 of the internal revenue code, otherwise includable in calculating Wisconsin income if those losses are incurred in the operation of a farming business, as defined in section 464(e)1. of the internal revenue code to the extent that those combined net losses exceed $20,000 if nonfarm Wisconsin adjusted gross income exceeds $55,000 but does not exceed $75,000, exceed $17,500 if nonfarm Wisconsin adjusted gross income exceeds $75,000 but does not exceed $100,000, exceed $15,000 if nonfarm Wisconsin adjusted gross income exceeds $100,000 but does not exceed $150,000, exceed $12,500 if nonfarm Wisconsin adjusted gross income exceeds $150,000 but does not exceed $200,000, exceed $10,000 if nonfarm Wisconsin adjusted gross income exceeds $200,000 but does not exceed $250,000, exceed $7,500 if nonfarm Wisconsin adjusted gross income exceeds $250,000 but does not exceed $300,000, exceed $5,000 if nonfarm Wisconsin adjusted gross income exceeds $300,000 but does not exceed $600,000 and exceed $0 if nonfarm adjusted gross income exceeds $600,000, except that the amounts applicable to married persons filing separately are 50% of the amounts specified in this subdivision.
ISSUE AND CONCLUSION OF LAW
Issue: Did the Department correctly limit petitioner's farm losses for the period under review, pursuant to Wis. Stat. § 71.05(6)(a)10?(2) Conclusion: Yes.
OPINION
The Department audited petitioner's 1996, 1997, and 1998 Wisconsin income tax returns. On each tax return, petitioner had both non-farm income and a farm loss. The Department reduced the amounts of farm loss for each year, pursuant to § 71.05(6)(a)10.
The statute before us is not "easy reading." However, it clearly imposes limitations on farm losses based on the amount of non-farm income and the amount of farm loss for each year.
While it appears somewhat complicated, the statute is unambiguous. Statutory interpretation begins with the language of the statute.(3) A statute must be applied according to the meaning of its terms.(4) When a statute is clear and unambiguous, the Commission must apply the statute's plain meaning.(5) When a statute is complicated, it does not follow that it is ambiguous.
In his brief,(6) petitioner objects to the Department applying the statute to his tax returns, but does not otherwise clarify the basis of his objections to the assessment. He seems to assert that his entire farm loss should offset his other income for each year under review. However, the statute clearly limits the amount of farm loss petitioner may claim, and the Department has properly applied it.
The Department interprets petitioner's argument to be that rents should be treated differently than provided in § 71.05(6)(a)10. Like the Department, the Commission rejects this assertion, and must apply the statute's language as written. A different policy position may be addressed to the Legislature with a request to change the statute. The Commission cannot do as petitioner asks.
IT IS ORDERED
That the Department's action on petitioner's petition for redetermination is affirmed.
Dated at Madison, Wisconsin, this 28th day of February, 2003.
WISCONSIN TAX APPEALS COMMISSION
___________________________________________
Don M. Millis, Commission Chairperson
___________________________________________
Thomas M. Boykoff, Commissioner
ATTACHMENT: "NOTICE OF APPEAL INFORMATION"
1 All facts relate to the period under review, unless otherwise stated.
2 The parties' stipulated statement of the issue in this case cites § 71.06(6)(a)10. There is no statute so numbered. It appears to be a typographical error. The correct statute is § 71.05(6)(a)10 (1995-1996), which applies to the period under review. Subsequently, this statute was amended by 1997 Wisconsin Act 27, sections 2260t and 9343(7m). These amendments first applied to taxable years beginning January 1, 1999. The changes take effect after the period under review, and the amended statute is not before the Commission.
3 Alberte v. Anew Health Care Services, Inc., 232 Wis. 2d 587, 605 (2000).
4 State v. Livingston, 159 Wis. 2d 561, 573 (1991).
5 General Castings Corp. v. Labor & Industry Review Commission, 152 Wis. 2d 631, 635 (Ct. App. 1989).