Instructions For 2008 Schedule Rt - State Of Wisconsin Page 5
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12Wisconsin Schedule RT Instructions
Page 5
• The expense was paid, accrued, or incurred
country, multiplied by the apportionment per-
centage (if any) applicable to the entity in that
to a related entity which was acting as a con-
state, U.S. possession, or foreign country.
duit because the related entity paid, accrued,
or incurred that expense to an unrelated third
Except as indicated below, check box ii. if the
party during the same taxable year as the
taxpayer meets both prongs of the test shown
taxpayer paid, accrued, or incurred the ex-
above. You may use Worksheet A on page 11 of
pense to the related entity.
these instructions to compute the aggregate ef-
• The expense was paid, accrued or incurred to
fective tax rates and apply the 80% test. You do
not need to submit this worksheet with your
a bank holding company under 12 USC
Schedule RT.
1841(a), a savings bank holding company
under 12 USC 1841(l), or a savings and loan
Items Not Includable In “Aggregate Effective
holding
company
under
12
USC
Tax Rate.” The following items may not be in-
1467a(a)(1)(D) or direct or indirect subsidiary
cluded in the computation of the aggregate ef-
of such company; and not paid, accrued, or
fective tax rate:
incurred directly or indirectly to any entity or-
ganized under the laws of another jurisdiction
• The tax rate of any state, U.S. possession, or
and that primarily holds and manages invest-
foreign country where the taxpayer or related
ments of a bank, subsidiary, or affiliate.
entity files a combined or consolidated report
or return if it results in eliminating the tax ef-
Except as indicated below, you may check box i.
fects of the transaction between the taxpayer
if either of the above is true.
and the related entity in that state, U.S. pos-
session, or foreign country.
Expenses Ineligible for Item A, Box i. You
may not check box i. for interest expense in
• For expenses paid, accrued, or incurred to
connection with any debt that is used to acquire
pass-through entities, the pass-through entity
the taxpayer’s own stock or assets under section
members’ tax rate attributable to income or
368 of the Internal Revenue Code.
receipts for which the state, U.S. possession
or foreign country does not impose a tax at
Item A, Box ii.
the pass-through entity level.
Section 71.80(23)(a)2., Wis. Stats., provides that
Expenses Ineligible for Item A, Box ii. You
a Wisconsin deduction is generally allowed for a
may not check box ii. if the interest or rental ex-
related entity interest or rental expense if both of
pense is paid, accrued or incurred to a real es-
the following are true:
tate investment trust (REIT) that is not a “quali-
fied REIT.” See the section Transactions Involv-
• The expense was paid, accrued, or incurred
ing REITs on page 9 for further details.
to a related entity that included the corre-
sponding interest income or rental income in
Item A, Box iii.
its tax base for any tax on (or measured by)
its net income or receipts in Wisconsin or an-
Section 71.80(23)(a)3., Wis. Stats., provides that
other jurisdiction, and
a Wisconsin deduction is allowable for related
• That entity’s “aggregate effective tax rate”
entity interest or rental expense if the taxpayer
establishes any other conditions the Department
applied to that corresponding income was at
considers relevant, based on the facts and cir-
least 80% of the taxpayer’s “aggregate effec-
cumstances of each particular case, to deter-
tive tax rate.”
mine that all of the following are true:
The “aggregate effective tax rate” is the sum of
• The primary motivation for the transaction
the entity’s “effective tax rates” for each applica-
was one or more business purposes other
ble state or jurisdiction.
than the avoidance or reduction of state in-
come or franchise taxes;
The “effective tax rate” is the maximum tax rate
imposed by a state, U.S. possession, or foreign
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