Wisconsin Dept. of Taxation v. Aluminum Goods Mfg. Co.

• Decision Date: 09 April 1957
• Citation: Wisconsin Dept. of Taxation v. Aluminum Goods Mfg. Co., 82 N.W.2d 349, 275 Wis. 389 (Wis. 1957)
• Parties: WISCONSIN DEPARTMENT OF TAXATION, Appellant, v. ALUMINUM GOODS MFG. CO., a New Jersey corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 349

82 N.W.2d 349

275 Wis. 389

WISCONSIN DEPARTMENT OF TAXATION, Appellant, v. ALUMINUM GOODS MFG. CO., a New Jersey corporation, Respondent.

Supreme Court of Wisconsin.

April 9, 1957

Rehearing Denied June 26, 1957.

See 84 N.W.2d 67.

Stewart G. Honeck, Atty. Gen., Harold H. Persons, Asst. Atty. Gen., for appellant.

Fairchild, Foley & Sammond, Theodore C. Bolliger, Milwaukee, for respondent.

FAIRCHILD, Justice.

The statute involved is sec. 71.07, Stats. 1947 which reads as follows:

'71.07 Situs of income; allocation and apportionment. (1) For the purposes of taxation income from mercantile or manufacturing business, not requiring apportionment under section 71.07(2) shall follow the situs of the business from which derived. Income derived from rentals and royalties from real estate or tangible personal property, or from the operation of any farm, mine or quarry, or from the sale of real property or tangible personal property shall follow the situs of the property from which derived. All other income, including royalties from patents, income derived from personal services, professions and vocations and from land contracts, mortgages, stocks, bonds and securities or from the sale of similar intangible personal property, shall follow the residence of the recipient, except as provided in section 71.08.

'(2) Persons engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income apportionable to Wisconsin may be determined by an allocation and separate accounting thereof, when, in the judgment of the department of taxation, that method will reasonably reflect the income properly assignable to this state, but otherwise in the following manner: There shall first be deducted from the total net income of the taxpayer such part thereof (less related expenses, if any) as follows the situs of the property or the residence of the recipient; provided, that in the case of income which follows the residence of the recipient, the amount of interest and dividends deductible under this provision shall be limited to the total interest and dividends received which are in excess of the total interest (or related expenses, if any) paid and allowable as a deduction under section 71.04 during the income year. The remaining net income shall be apportioned to Wisconsin on the basis of the ratio obtained by taking the arithmetical average of the following 3 ratios.'

Subd. (1) separates income into three classes. The first has the situs of the business from which derived; the second the situs of the property from which derived, and the third follows the residence of the recipient. The first two classes are, in form, specifically...