2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 (Page 8 of 18) in pdf

determine if an adjustment must be made to arrive at Wisconsin

SCHEDULE A INSTRUCTIONS –

income. For example, an adjustment may be required because

ADDITIONS AND SUBTRACTIONS

Wisconsin law limits deductions for net capital losses to $500.

You can obtain Schedule WD (Form 2) from any Department of

Revenue office. If assets sold during 2006 had a different basis

Certain additions and subtractions must be made to federal

for federal than for Wisconsin purposes, see instructions for

taxable income in order to arrive at Wisconsin taxable income.

Schedule C on page 11 and item b under Additions To or

Federal taxable income is the amount shown on the federal

Subtractions From Income on page 10.

Form 1041, line 22. Additions and subtractions are described

in detail below.

Line 5. Other Additions Enter any other amount subject to

Wisconsin taxation that has been excluded or deducted in the

Enter in column 1, Distributable Income, the additions or sub-

computation of federal taxable income or distributable net

tractions that relate to items of income or deductions which affect

income. Enclose a schedule with a computation or explanation.

the computation of the distributable net income for the taxable

Examples are:

year. Enter in column 2, Nondistributable Income, any of the

additions or subtractions that affect nondistributable income

a. Federal net operating loss carryover.

taxable to the fiduciary.

b. Lump-sum distribution. If you reported lump-sum distri-

ADDITIONS

bution income on federal Form 4972, you must also include

the distribution in Wisconsin income. Fill in on Schedule A,

line 5 the amount of lump-sum distribution income which is

Line 1. Adjustments to Convert 2006 Federal Taxable

reported on line 10 of Form 4972 plus any capital gain

Income to the Amount Allowable for Wisconsin (see

reported on line 6 of Form 4972. You may reduce this amount

instructions for Schedule B on page 11).

by any federal estate tax on line 18 of Form 4972.

Line 2. Interest (Less Related Expenses) on State and

NOTE: No portion of a lump-sum distribution may be

Municipal Obligations Enter in the appropriate column the

reported as a capital gain on a Wisconsin Schedule WD

amount of interest on state and municipal obligations which was

(Form 2).

excluded from federal taxable income. (If you were required for

federal purposes to allocate expenses to this income, reduce

c. Transitional adjustments. These are adjustments required

the amount to be filled in by such expenses.) EXCEPTION:

by the Wisconsin Statutes to account for differences between

Interest which is by federal or Wisconsin law exempt from Wis-

federal basis and Wisconsin basis of changing basis assets

consin taxation should not be entered on line 2. Interest income

(those subject to depreciation or amortization). Enclose a

which is exempt for both federal and Wisconsin tax purposes

schedule showing the computation of each transitional

includes interest from (1) public housing authority or community

adjustment made.

development authority bonds issued by municipalities located

in Wisconsin, (2) Wisconsin Housing Finance Authority bonds,

d. Farm losses. An addition may be required if farm losses

(3) Wisconsin municipal redevelopment authority bonds,

were deducted on the federal tax return and the estate or

(4) Wisconsin higher education bonds, (5) Wisconsin Housing

trust was not actively engaged in the farming operation that

and Economic Development Authority bonds issued on or after

produced those losses.

December 11, 2003, to fund multifamily affordable housing

TRUSTS: A trust shall be considered to be actively engaged

projects or elderly housing projects, (6) Wisconsin Housing and

in farming with respect to a farming operation if:

Economic Development Authority bonds issued before Janu-

ary 29, 1987, except business development revenue bonds,

1. The entity separately makes a significant contribution to

economic development revenue bonds, and CHAP housing

the farming operation of capital, equipment, or land, or a

revenue bonds, (7) public housing agency bonds issued before

combination of capital, equipment, or land; and

January 29, 1987, by agencies located outside Wisconsin where

the interest therefrom qualifies for exemption from federal taxa-

2. The income beneficiaries collectively make a significant

tion for a reason other than or in addition to section 103 of the

contribution of active personal labor or active personal

Internal Revenue Code, (8) local exposition district bonds,

management to the farming operation. The combined

(9) Wisconsin professional baseball park district bonds,

interest of all the income beneficiaries providing active

(10) bonds issued by the Government of Puerto Rico, Guam,

personal labor or active personal management, or a

or the Virgin Islands or, for bonds issued after October 16, 2004,

combination of active personal labor and active personal

the Government of American Samoa, (11) local cultural arts

management must be at least 50 percent; and

district bonds, (12) Wisconsin professional football stadium

3. The trust has provided a tax identification number unless

bonds, and (13) Wisconsin Aerospace Authority bonds. Interest

the trust is a revocable trust and the grantor is the sole

from these sources is exempt from Wisconsin income tax

beneficiary; and

whether received by a direct owner of these securities or by a

shareholder in a mutual fund which invests in these securities.

4. The trust has provided a copy of the trust agreement to the

county committee unless the trust is a revocable trust.

If a charitable deduction is claimed, reduce the amount of interest

added back by the amount of the municipal interest which is

ESTATES: For two program years after the program year in

used or set aside for charitable purposes.

which an individual dies, the individual’s estate shall be con-

sidered to be actively engaged in farming if:

Line 3. Taxes Enter the amount of taxes deducted from federal

taxable income on line 11, Form 1041. This amount must be

1. The estate makes a significant contribution of either

allocated between distributable and nondistributable income

(a) capital, equipment, or land; or (b) a combination of

capital, equipment, or land; and

based on tax benefit.

2. The personal representative or heirs of the estate

Line 4. Capital Gain/Loss Adjustment If federal taxable

collectively make a significant contribution of either:

income includes capital gains and/or losses (see line 4,

(a) active personal labor or active personal management;

Form 1041), complete Wisconsin Schedule WD (Form 2) to

2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 Page 8

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