2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 (Page 13 of 18) in pdf

For example, for Wisconsin purposes an adjustment is reported

Lines 14a through 14f. Enter on these lines any credits from

on line 6 in column c of Schedule 2K-1, to increase by $10,000

Wisconsin Schedules DI, TC, DC, VC, and HR that are allocable

the amount of depreciation on an asset that has a larger basis

to the beneficiary.

for Wisconsin than for federal purposes. This depreciation is

computed under an accelerated method and $4,000 of the

Line 14g. Enter in column d the withholding tax paid by the

$10,000 represents a tax preference. Therefore, $4,000 would

trust or estate on behalf of a nonresident beneficiary. If a

be entered on line 12, column c under “Accelerated

nonresident beneficiary claims exemption from Wisconsin

depreciation.”

income or franchise taxation, enclose a copy of the exemption

statement with the Form 2 filed with the department.

Line 13. If any portion of an amount entered in column b as

If the trust or estate is a member of another entity that withheld

“Tax-exempt interest” is taxable for Wisconsin purposes, enter

Wisconsin income tax from that entity’s income that is passed

it as a subtraction in column c. The amount in column d is the

through to the trust’s or estate’s beneficiaries, also include that

amount of tax-exempt interest for Wisconsin purposes.

tax withheld in column d.

INSTRUCTIONS FOR 2006 WISCONSIN SCHEDULE WD (FORM 2)

Schedule WD (Form 2) is used to determine the amount of

Items Which Require Adjustment

capital gain or loss which you must include in Wisconsin income.

The following items require adjustments to the amounts reported

Generally, all amounts reported on your federal Schedule D must

on your federal Schedule D or as to whether an amount is

be reported on Schedule WD. However, for Wisconsin tax

reported as a short-term or long-term capital gain or loss:

purposes, you may exclude 60% of the net capital gain from

assets held more than one year or acquired from a decedent.

Capital loss carryovers: Fill in your capital loss carryover

The amount of net capital loss that can be applied against other

from assets held one year or less from line 25 of your 2005

income after offsetting capital gains is limited to $500.

Schedule WD on line 5 of Schedule WD. Fill in your capital loss

carryover from assets held more than one year from line 30 of

Unused capital losses are carried over to later years until fully

your 2005 Schedule WD on line 13 of Schedule WD.

used.

You may have to reduce your capital loss carryover to 2006 if

Distributable or nondistributable capital gains: Capital

you excluded income from discharge of indebtedness from your

losses are not distributable except on the final return. Capital

2006 taxable income. Contact any Department of Revenue office

gains are reportable by the estate or trust on Schedule WD and

for further information.

not distributable to the beneficiaries on Schedule 2K-1 unless

either:

Net capital gain on the sale of small business stock: Do not

include on Schedule WD any net capital gain from the sale of

1. the will or trust instrument specifically requires that capital

qualified small business stock which you acquired on or after

gains are distributed to the beneficiaries, or

January 1, 1986, held for at least 5 years, and did not acquire

by gift. To be qualified small business stock, the corporation

2. it is the final return of the estate or trust.

must have met certain requirements at the time you acquired

the stock from the corporation. You must enclose with your

Enclose Schedule WD with your Wisconsin Form 2.

Form 2 a copy of the certification you received from the

corporation which indicates the requirements were met.

Part I and Part II, Capital Gains and Losses

Nonresident estates and trusts: Nonresident estates and

If you are not affected by any of the items listed in the next

trusts should include only gain or loss from Wisconsin sources

column under “Items Which Require Adjustment,” fill in the net

on Schedule WD.

short-term gain or (loss) from line 5 of your federal Schedule D

on line 6a of Schedule WD. Fill in the net long-term gain or

Gain or loss from Wisconsin sources includes gain or loss from

(loss) from line 12 of your federal Schedule D on line 14a of

the sale of land, buildings, and machinery located in Wisconsin,

Schedule WD. Complete lines 6b, 6c, 14b, and 14c. Write

and your share of gain or loss from a trust, partnership, LLC, or

“Same as federal” in the space by line 1 of Schedule WD, and

tax-option (S) corporation which has been reported to you on

go on to Part III on page 2 of Schedule WD.

Schedule 2K-1, 3K-1, or 5K-1. It doesn’t include losses from

nonbusiness bad debts and worthless securities, and gains or

If you are affected by any of the items listed in the next column

losses from sales of stocks.

under “Items Which Require Adjustment,” fill in each separate

amount from lines 1 through 4 and lines 6 through 11 of your

Gain from installment sales:

federal Schedule D on the appropriate lines on Schedule WD.

However, for those items which require adjustment, fill in the

• Taxable gain from installment sales reported on lines 2 and

amount indicated in these instructions instead of the amount

7 of federal Schedule D must be reported on lines 2 and 8 of

reported on your federal Schedule D.

Schedule WD, as appropriate. Gain from an installment sale

is reported on line 2 of Schedule WD if at the time of sale or

other disposition you held the property for one year or less,

unless the property was acquired from a decedent. If at the

time of sale or other disposition you held the property for

2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 Page 13

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