Instructions For Completing Wisconsin Schedule I

INSTRUCTIONS FOR PART II

4. Installment Method for Accrual Basis Taxpayers

(a) Federal – Accrual basis taxpayers may report income from an

7. Whenever federal adjusted gross income has been increased or decreased

installment sale under the installment method. (Public

in Part I of Schedule I, itemized deductions which are computed using

Law 106-573)

federal adjusted gross income (for example, medical expenses and

charitable contributions) may require adjustment. The deductible

(b) Wisconsin – Accrual basis taxpayers cannot use the installment

amounts of any such items used to compute the Wisconsin itemized

method for reporting sales and other dispositions. Gain from the

deduction credit must be determined by using the federal adjusted gross

sale of property must be recognized in the year of the sale, rather

income computed on line 6 of Part I.

than when payments are received. This does not apply to

dispositions of property used or produced in farming or for

See the listing under Section B of ITEMS REQUIRING ADJUSTMENT for

certain dispositions of timeshares or residential lots.

other itemized deductions that require adjustment.

5. Increase in Section 179 Expensing

ITEMS REQUIRING ADJUSTMENT

(a) Federal – For taxable years beginning in 2005, the amount that

may be expensed under sec. 179, Internal Revenue Code, is

$105,000. The phase-out threshold is $420,000. Off-the-shelf

Following are brief explanations of differences between federal and

computer software is considered qualifying property. (Public

Wisconsin law which were known at the time this form was printed

Law 108-357)

(December 3, 2005).

(b) Wisconsin – The amount that may be expensed under sec. 179

The “Federal” explanation indicates how an item is to be treated for federal

is limited to $25,000. The phase-out threshold is $200,000.

income tax purposes as of December 31, 2005. The “Wisconsin” explanation

indicates how the item is to be treated for Wisconsin purposes.

6. Health Savings Accounts

If you need additional information regarding these items, contact any

(a) Federal – Certain individuals may establish health savings

Wisconsin Department of Revenue office.

accounts. A deduction is allowed for contributions to the ac-

count. Amounts contributed by an employer to an employee’s

CAUTION At the time these instructions were printed, Congress was

account are excluded from the employee’s gross income. (Pub-

scheduled to return in December 2005 to consider further legislation, and that

lic Law 108-173)

further legislation could affect the taxable year 2005. Federal law changes

enacted after December 31, 2004, do not apply for Wisconsin purposes for

(b) Wisconsin – The federal provisions relating to health savings

2005 unless retroactively adopted by the Wisconsin Legislature.

accounts do not apply. For example:

1) a deduction is not allowed for the amount paid to a health

If federal law changes are enacted which affect 2005 tax returns, you may

savings account,

obtain information on the Wisconsin treatment of such changes from any

2) earnings on the health savings account are subject to

Wisconsin Department of Revenue office.

Wisconsin income tax,

3) amounts distributed from the account are not subject to

A. ITEMS AFFECTING THE COMPUTATION OF FEDERAL

Wisconsin income tax,

ADJUSTED GROSS INCOME

4) rollovers from Archer Medical Savings Accounts result in

a taxable transaction, and

1. Small Business Stock

5) the amounts contributed by an employer (or contributed

(a) Federal – An exclusion is allowed for 50% of the gain from the

pre-tax for federal purposes by an employee) are taxable

sale or exchange of qualified small business stock issued after

wages to the employee.

August 10, 1993, and held for more than five years. (Public Law

103-66)

7. Environmental Remediation Costs

(b) Wisconsin – Gain from the sale or exchange of qualified small

(a) Federal – The provision allowing the expensing of environmen-

business stock is included in gross income.

tal remediation costs is extended through December 31, 2005.

(Public Law 108-311)

2. Treatment of Extraterritorial Income

(b) Wisconsin – A taxpayer may not elect to treat environmental

(a) Federal – An exclusion from gross income is allowed for

remediation costs as an expense which is not chargeable to

extraterritorial income that is qualifying foreign trade income.

capital account.

(Public Law 106-519)

8. Depreciation or Amortization

(b) Wisconsin – The treatment of extraterritorial income is deter-

mined under the provisions of the Internal Revenue Code as

(a) Federal – Depreciation or amortization is determined under the

amended to December 31, 1999.

provisions of the Internal Revenue Code in effect for federal tax

purposes.

3. Deduction for Tuition and Fees

(b) Wisconsin – Depreciation or amortization is determined under

(a) Federal – A deduction is allowed for up to $4,000 of qualified

the provisions of the Internal Revenue Code in effect on Decem-

tuition and fees paid during the taxable year in connection with

ber 31, 2000. For example, the federal provisions relating to

enrollment at an institute of higher education. (Public

thirty percent and fifty percent bonus depreciation do not apply

Law 107-16)

for Wisconsin.

(b) Wisconsin – The federal deduction for up to $4,000 of qualified

9. Film and Television Productions

tuition and fees does not apply for Wisconsin. (Note Although

the federal deduction for tuition and fees cannot be claimed for

(a) Federal – A taxpayer may elect to treat the cost of any qualified

Wisconsin, you may qualify for a tuition deduction provided by

film or television production as an expense which is not

Wisconsin law. If you claimed the federal tuition and fees

chargeable to capital account. (Public Law 108-357)

deduction, you must complete Schedule I to remove the federal

(b) Wisconsin – The treatment of a film or television production is

deduction. See page 11 of the Form 1 instructions (page 16 of

determined under the provisions of the Internal Revenue Code

Form 1NPR instructions) for more information on the

in effect on December 31, 2000.

Wisconsin deduction for tuition paid.)

Instructions For Completing Wisconsin Schedule I - 2005 Page 2

Related Articles

Related forms

Related Categories