Bowman Dairy Co. v. Wis. Tax Comm'n
| Decision Date | 10 March 1942 |
| Citation | 1 N.W.2d 905,240 Wis. 1 |
| Parties | BOWMAN DAIRY CO. v. WISCONSIN TAX COMMISSION et al. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from a judgment of the Circuit Court for Dane County; Alvin C. Reis, Circuit Judge.
Affirmed.
Action by Bowman Dairy Company against Wisconsin Tax Commission to review an order of the Commission confirming additional income taxes. From a judgment affirming the order of the Commission, the taxpayer appeals. The facts are stated in the opinion.
Leo J. Federer, of Milwaukee, for appellant.
John E. Martin, Atty. Gen., and Harold H. Persons, Asst. Atty. Gen., for respondents.
The plaintiff is an Illinois corporation doing business within and without the State of Wisconsin. It filed its income tax return in Wisconsin for the year 1936 and paid the normal income and surtaxes according to that return, as it then construed the taxing statutes. An office audit was made by the taxing authorities and the taxpayer was notified that additional taxes would be imposed under sec. 71.11 et seq., Stats. On hearing the additional taxes were imposed, the Wisconsin Tax Commission sustained the imposition, and the circuit court on review has affirmed the Commission. The facts are stipulated.
The controversy arises over the method of computing the taxes payable in 1937 on the 1936 income in view of the provisions of sec. 71.045, Stats. for deducting business losses of previous years. The taxpayer duly filed its income tax returns for the years 1934, 1935 and 1936. It had sustained losses on its entire business in 1934, and made gains in such business in 1935 and 1936. Sec. 71.045 under the facts involved provides that if a taxpayer sustained a net business loss in 1934, such loss might be offset against the net business income of 1935, and if not completely offset by that income, the remainder might be offset against the net business income of 1936. The section concludes: “For the purposes of this section, net business income shall consist of all the income attributable to the operation of a trade or business regularly carried on by the taxpayer, less the deduction of business expenses allowed in sections 71.03 and 71.04.” Sec. 71.03 applies to corporations; sec. 71.04 to other taxpayers. There is no controversy over what business expenses were deductible by the taxpayer under sec. 71.03.
It is stipulated that the entire net losses and gains of the taxpayer as reported by its income tax returns for the years involved were as follows: 1934, net loss, $652,222.45; 1935, net income, $253,655.51; 1936, net income $1,284,509.52.
This is correct, except that income of the taxpayer on bonds held by it in 1934 was not considered in reporting its loss in that year. The taxing authority deducted this sum, $5,568.19, from the net loss reported. This deduction is conceded to have been proper, and left the total net loss of 1934 as $646,654.26.
In applying sec. 71.045 to ascertain the taxable income of 1936, the taxing authorities deducted the gain of 1935, from the loss of 1934, which left the amount of the loss of 1934 not offset by the 1935 gain as $392,998.75. This sum the taxing authorities deducted from the 1936 gain, which gave the total net income of 1936 not covered by the first offset as $891,510.77. It is stipulated that the net income of the taxpayer not apportionable to Wisconsin business in 1936 was $441,785.61. The taxing authorities deducted this from the amount last above stated which left $449,725.16 as the total income apportionable for the year 1936.
Sec. 71.02 (3) (d), Stats. provides that persons doing business within and without the state shall be taxed only on income derived from business within the state. Under the situation here involved the amount of the taxable income attributable to business within the state is determinable as follows: ...
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