2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 (Page 9 of 18) in pdf

or (b) a combination of active personal labor and active

h. Dairy and livestock farm investment credit. Fill in the

personal management.

amount of dairy and livestock farm investment credit that

you computed for 2006. The amount of your credit is income

After the two years, the deceased individual’s estate shall

and must be reported on your Wisconsin Form 2, even if

not be considered to be actively engaged in farming unless,

you cannot take the full credit this year and must carry part

on a case by case basis, it is determined that the estate has

of it forward. (NOTE: Dairy and livestock farm investment

not been settled primarily for the purpose of obtaining

credit that you receive from a partnership or a tax-option

program payments.

(S) corporation will be accounted for when you make the

adjustments described in paragraph a under “ADDITIONS

Your combined net losses from farming operations in which

TO OR SUBTRACTIONS FROM INCOME” on page 10.)

you are not actively engaged are limited if your non-farm

Wisconsin adjusted gross income is more than $55,000.

i. Early stage seed investment credit. Fill in the amount of

To figure your combined net losses from farming operations,

early stage seed investment credit that you computed for

add together any losses you have from farming operations

2006. The amount of your credit is income and must be

in which you were not actively engaged (for example, these

reported on your Wisconsin Form 2, even if you cannot take

could be losses from a farm partnership or tax-option

the full credit this year and must carry part of it forward.

(S) corporation). Do not reduce these losses by any net farm

(NOTE: Early stage seed investment credit that you receive

gains. If the total of these losses is more than the maximum

from a partnership or a tax-option (S) corporation will be

allowable loss shown in the table below, include the excess

accounted for when you make the adjustments described in

on line 5, Schedule A.

paragraph a under “ADDITIONS TO OR SUBTRACTIONS

FROM INCOME” on page 10.)

Example For 2006, a trust reports a loss of $25,000 on

Schedule E from a farm partnership (the trust is not actively

SUBTRACTIONS

engaged in this farming operation), and a profit of $5,000

from the rental of farmland. The trust’s nonfarm Wisconsin

Line 7. Adjustments to Convert 2006 Federal Taxable

adjusted gross income is $60,000. Therefore, only $20,000

Income to the Amount Allowable for Wisconsin (see

of the $25,000 farm loss may be deducted for 2006. The

instructions for Schedule B on page 11).

trust must fill in $5,000 on line 5 of Schedule A.

Line 8. Interest (Less Related Expenses) on Obligations

of the United States Enter in the appropriate column the net

Farm Loss Limits

amount of interest and dividends on obligations and certain

Nonfarm Wisconsin

securities of the United States, which are by federal law exempt

Adjusted Gross Income

from taxation by states. To arrive at the net amount, you must

But Not

Maximum

reduce the total U.S. interest by the proportionate share of

More Than

Allowable Loss

deductions claimed on Form 1041.

0 ............ $ 55,000 ................. Full Amount

55,000 ................ 75,000 ..................... $20,000

An ordinary dividend received from a mutual fund which invests

75,000 .............. 100,000 ....................... 17,500

in U.S. government securities may be partially or completely

100,000 .............. 150,000 ....................... 15,000

nontaxable for Wisconsin tax purposes. If information received

150,000 .............. 200,000 ....................... 12,500

from a mutual fund advises that any portion of a distribution is

200,000 .............. 250,000 ....................... 10,000

from investments in U.S. government securities, that portion of

250,000 .............. 300,000 .......................... 7,500

the distribution may be included as U.S. government interest

300,000 .............. 600,000 .......................... 5,000

on line 8.

600,000 ................................................... No Loss

CAUTION: Do not fill in on line 8 interest from Ginnie Mae

(Government National Mortgage Association) securities and

other similar securities which are “guaranteed” by the U.S.

e. Excess distribution from a passive foreign investment

government.

company. Fill in the amount of excess distribution from a

passive foreign investment company which has not been

If a charitable deduction is claimed, reduce the amount of U.S.

included in federal taxable income (see federal Form 8621).

interest subtracted by the amount of U.S. interest included in

the charitable deduction on federal Form 1041.

f. Manufacturer’s sales tax credit. Fill in the amount of

manufacturer’s sales tax credit that was allocated to you as

Line 9. Capital Gain/Loss Adjustment If federal taxable

the beneficiary of an estate or trust that filed its 2005 return

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

on a fiscal year basis. This is the amount from line 14a of

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

the 2005 Schedule 2K-1. The amount of your credit is income

determine if an adjustment must be made to arrive at Wisconsin

and must be reported on your Wisconsin Form 2, even if

taxable income. For example, an adjustment may be required

you cannot take the full credit this year and must carry part

because Wisconsin law allows an exclusion of 60% of capital

of it forward.

gain from assets held more than one year. You can obtain

Schedule WD (Form 2) from any Department of Revenue office.

g. Development zones credit and technology zone credit.

Fill in the amount of development zones credit from

Line 10. Refunds of State and Local Taxes Enter refunds of

Wisconsin Schedule DC and technology zone credit from

state and local income taxes included in line 8 of federal

Schedule TC. The amount of the credit is income and must

Form 1041.

be reported on the Wisconsin Form 2, even if you cannot

take the full credit this year and must carry part of it forward.

Line 11. Other Subtractions Enter on this line any amount

(NOTE: Development zones credit and technology zone

which is deductible or exempt from taxation by Wisconsin law

credit that you receive from a partnership or tax-option (S)

and which has been included in the computation of federal

corporation will be accounted for when you make the

taxable income. Examples are:

adjustments described in paragraph a under “ADDITIONS

TO OR SUBTRACTIONS FROM INCOME” on page 10.)

2006 Instructions For The Wisconsin Fiduciary Return Form 2 And Schedules Cc, Wd, And 2k-1 Page 9

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