As has been previously indicated, a foreign enterprise is an enterprise conducted either by individuals residing outside Wisconsin or a corporation organised outside and having its principal business outside Wisconsin, or a corporation organised in Wisconsin but having its principal business outside. A foreign corporation is treated on a plane of equality with a Wisconsin corporation.

A foreign enterprise is taxable only on items of income which are subject to Wisconsin tax because they have their source within the State — namely, rents from real estate and royalties paid in respect of mines situated in Wisconsin, and profits from the sale of real or tangible $$$personalty or from carrying on a business situated in Wisconsin. The foreign enterprise is not taxable on (a) dividends, (b) interest, (c) royalties for use of patents, copyrights, trade marks, secret processes, formulæ and all other income. The sale of stocks or bonds within Wisconsin by a non-resident would be exempt from tax. The method of determining the taxable income from the sale of tangible personal property within the State by foreign enterprises will be treated in detail under Part III in connection with the methods of allocating taxable income.

Salaries, wages, commissions, and other remuneration for services are taxable in Wisconsin, provided the taxpayer resides there.

In the case of income from a trust, the trustee makes the return of all the income of the corpus, but the tax is payable by the beneficiary. The extent to which the beneficiary is taxable depends, as indicated above, on whether or not he is resident in the State.


The taxation of income from the carrying on of a business or industry depends upon whether the foreign enterprise is carrying on interstate business, which is regulated and taxed only by the Federal Government, or is transacting business within Wisconsin and is therefore subject to the State levy. Enterprises carrying on business within and without Wisconsin are taxable only on such income as is derived from business transacted and property situated within the State (Income-Tax Act 71.02 (3) (d)). The test of liability is whether business is transacted within the State rather than whether a certain medium is employed. This is a question of fact within the final determination of the courts. Nevertheless, the following decisions indicate fairly clearly the line of demarcation between interstate and intrastate business:

A reasonable interpretation of a State statute relating to foreign corporations “doing business” within the State does not include the doing of a single act or the making of a single contract, but does include a continuous series of acts by an agent continuously within the State. (International Textbook Company v. Pigg (1910), 217 U.S. 91, 30 Sup. Ct. 481, 54 Law Ed. 678, 3 Am. Fed. Tax Rep. 2817; Loomis v. People’s Construction Company (1914), C.C.A. 211, Fed. 455.)

Without procuring a licence to transact within the State, any foreign corporation may advance and loan money therein and take, acquire, hold and enforce notes, bonds, mortgages and trust deeds given to represent or secure money so loaned (W.S., section 226.02 (2), paragraph 659).

Foreign corporations placing orders for goods with Wisconsin concerns are not doing business within the State (Southern Flour and Grain Company v. McGeehan et al. (1911), 144 Wis. 130, 128 N.W. 879; Jerome P. Parker Harris Company v. Kissel Motor-Car Company (1917), 165 Wis. 518, 163 N.W. 141).

Interstate commerce was being carried on where contracts were made by foreign corporations for the sale of machinery and installation of the same, and when contracts were made for the sale of merchandise, with provision providing for demonstration and inspection (American Slicing Machine Company v. Jaworski (1923), 179 Wis. 634,192 N.W. 50; Regina Company v. Toynbee (1916), 163 Wis. 551,158 N.W. 313; Unitype v. Schwittay (1919), 168 Wis. 489, 170 N.W. 451; Greek-American Sponge Company v. Richardson Drug Company (1905), 124 Wis. 469, 102 N.W. 888).

Similarly, business was not done in Wisconsin when a foreign corporation took security for payment of sales made to Wisconsin residents under a conditional contract, retaining title in the seller until payment (Regina Company v. Toynbee (1916), 163 Wis. 551,158 N.W. 313).

Commission Agent or Broker.

In general, interstate commerce is carried on when a foreign corporation sells goods on orders obtained through a broker in Wisconsin, or consigns goods to a factor in that State. A factor is one to whom goods are consigned by another party, called consignor, who retains ownership of the goods as long as they are in the factor’s hand. The factor sells the goods to his customers in the State and pays the consignor an agreed price, retaining for himself the difference between that price and the price he is required by contract to pay the consignor. In effect, the factor purchases the goods and resells them to the customer. While the sale of the consignor is interstate business, that of the factor is intrastate business (Duluth Music Company v. Clancy (1909), 139 Wis. 189).

Sales to Local Dealer or Distributor.

Foreign corporations selling goods outright to agents within the State are not themselves doing business in Wisconsin (Sanitas Company v. Niezorawski (1909), 138 Wis. 377, 120 N.W. 292).

Similarly, a foreign corporation was held not to be doing business in the State when it made contracts for a correspondence course through agents in Wisconsin (International Textbook Company v. Pigg (1910), 217 U.S. 91, 30 Sup. Ct. 481, 54 Law Ed. 658, 3 Am. Fed. Tax Rep. 2817).

Travelling Salesman.

If a foreign corporation merely solicits business through a travelling salesman or by letter, it is not considered to be doing business, provided the orders are transmitted to the corporation at its domicile and the goods are shipped from there to Wisconsin.

The sale of goods in original packages by a travelling salesman for a foreign corporation is interstate commerce (Greek-American Sponge Company v. Richardson Drug Company (1905), 124 Wis. 469, 102 N.W. 888).

A foreign corporation was held to be engaged in interstate commerce when its travelling salesman sold in Wisconsin goods to be shipped to the Wisconsin purchasers from a point outside the State. (Loverin and Browne Company v. Travis (1908), 135 Wis. 322, 115 N.W. 829; St. Louis Clay Products Company v. Christopher (1913), 152 Wis. 603,140 N.W. 351).

Local Agent with a Power of Attorney or selling out of a Stock belonging to the Foreign Enterprise.

If the foreign enterprise gives a power of attorney to a local agent to carry on its business in Wisconsin and the business is of such a nature as to produce taxable income (e.g., selling goods or services), the enterprise will be liable.

A foreign corporation is doing business in Wisconsin if its local agent has charge of a stock of goods in the State, belonging to the foreign corporation, and delivers them to customers whom he solicits. (Ruling, 6-8-25, Prentice — Hall W.S.T.S. 1925–1926, paragraph 11,046.)

Permanent Establishments.

A foreign corporation having in Wisconsin its own sales office, warehouse, factory or other establishment productive of income is liable to taxation. Some border-line cases are given below:

A foreign corporation is not regarded as doing business within the State if it maintains there a show-room to display merchandise, provided no sales are made therein. No liability is incurred, furthermore, if it ships goods into the State subject to sale upon inspection at a show-room or other convenient place (Greek-American Sponge Company v. Richardson Drug Company (1905), 124 Wis. 469,102 N.W. 888).

The holding of meetings of stockholders of a foreign corporation in Wisconsin, even in an office maintained for that purpose, does not constitute doing business nor entail obtaining a license (O.A.G. 1908, page 244, Bradbury v. Waukegan and Washington Mining Company (1903), 113 111 App. 600 W.S., section 226.02 (10), paragraph 666).

A contract merely to manufacture outside the State and ship and deliver in Wisconsin, and even to $$$instal in Wisconsin, constitutes interstate commerce, but if the contract provides for the manufacture in Wisconsin of goods stipulated in the contract under a superintendent supplied by the foreign corporation, the latter is transacting business within the State (Loomis v. People’s Construction Company (1914), C.C.A. 211 Fed. 453).

Similarly, intrastate business is done when a foreign corporation, which sells and supervises the erection of coke-ovens, performs the necessary construction work and purchases supplies and materials therefor. The corporation was held taxable on account of: (1) certain rentals of a shed and typewriter; (2) materials purchased and sold in Wisconsin: (3) brick stacks; and (4) salary of engineer and expert brickman (Coppers Co. v. Milwaukee (1926), 211 N.W. 147).


For the purpose of this study, the term “national enterprise” is presumed to mean a Wisconsin enterprise — i.e., an enterprise carried on by individuals resident in Wisconsin, singly or in partnership, or by a corporation organised in Wisconsin. It would also include a corporation organised in another State but having its principal business in Wisconsin. Such enterprises are taxable in respect of dividends, interest and other items taxable by reason of residence in Wisconsin, and also income from real estate, mining royalties and the sale of tangible personal property and real estate having their situs in Wisconsin and income from transacting business in Wisconsin.