Instructions For 2008 Schedule Rt - State Of Wisconsin (Page 2 of 12) in pdf

Wisconsin Schedule RT Instructions

Page 2

Other Related Entity Expenses. For related

For related entity expenses that are not interest

entity expenses that are not interest expenses or

expenses or rental expenses, a deduction may

still be allowed if a taxpayer fails to file

rental expenses, the taxpayer or pass-through

entity must file Schedule RT to disclose to the

Schedule RT when required. However, if addi-

Department of Revenue that certain expenses

tional tax is subsequently discovered, a penalty

deducted on the Wisconsin return were ex-

of 25% of the additional tax may apply if the fail-

penses paid, accrued, or incurred to a related

ure to meet all requirements was not due to

entity.

good cause.

Due Date for Schedule RT

Special Instructions for Pass-Through

Entities and Their Members

Taxpayers or pass-through entities must file

Schedule RT by the due date of the Wisconsin

Partnerships, limited liability companies treated

income or franchise tax return, including exten-

as partnerships, tax-option (S) corporations, and

sions. File Schedule RT along with your Wis-

fiduciaries which pay, accrue, or incur expenses

consin income or franchise tax return.

to a related entity must complete Schedule RT

and submit it with their Wisconsin return. The

Exception for due date: If you had a short pe-

partners, members, shareholders, or beneficiar-

riod for a taxable year beginning in 2008 and

ies of these entities are not required to file

have expenses reportable on Schedule RT, but

Schedule RT for their share of the related entity

have already filed your return, you must file an

expenses.

amended 2008 return which includes Schedule

RT by October 15, 2009.

However, the pass-through entity must report on

the designated lines of Schedule 3K-1, 5K-1, or

A Wisconsin deduction will not be allowed for re-

2K-1 the shareholder’s, partner’s, member’s, or

lated entity interest or rental expenses if Sched-

beneficiary’s share of the expense added back

ule RT (where required) is filed with an amended

and the amount which qualifies for deduction

return after the due date, including extensions.

based on Schedule RT, Part II.

(Note the exception for 2008 short period returns

above.)

Definitions Relating to Schedule RT

Who Is a “Related Entity”?

• An individual and a corporation of which more

than 50% of the outstanding stock is owned

For purposes of the Schedule RT filing require-

(directly or indirectly) by or for the individual.

ment, a “related entity” is a related person under

• Two corporations which are members of the

sections 267 and 1563 of the Internal Revenue

Code (IRC). A “related entity” also includes cer-

same controlled group as defined in section

tain real estate investment trusts (REITs) if they

1563(a), IRC, except that 50% is substituted

are not “qualified REITs.” (See the section

for 80% wherever it appears in sec. 1563(a).

Transactions Involving REITs on page 9 for the

• A grantor and fiduciary of any trust.

definition of “qualified REIT.”)

• A fiduciary of a trust and a fiduciary of an-

Section 267, IRC, provides that the following re-

other trust, if the same person is the grantor

lationships result in “related persons”:

of both trusts.

• Members of a family, namely, brothers and

• A fiduciary of a trust and a beneficiary of such

sisters, half-brothers and half-sisters, spouse,

trust.

ancestors, and lineal descendants.

Instructions For 2008 Schedule Rt - State Of Wisconsin Page 2

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