Instructions For 2008 Schedule Rt - State Of Wisconsin (Page 6 of 12) in pdf

Wisconsin Schedule RT Instructions

Page 6

• That the transaction changed the economic

If Expenses Are Not Eligible for Deduction

position of the taxpayer in a meaningful way

If any portion of your interest or rental expenses

apart from tax effects; and

did not qualify for a Wisconsin deduction be-

• That the interest expenses or rental expenses

cause it did not fully meet any of the criteria cor-

were paid, accrued, or incurred using terms

responding to boxes i., ii., or iii. of item A, you

that reflect an arm’s length relationship.

must:

• Review your prior years’ returns and amend

See Additional Guidance for Item A, Box iii. be-

them as necessary. If you engaged in sub-

ginning on page 8 for a list of factors the De-

stantially identical transactions in those years,

partment would generally consider relevant in

the Department may audit those transactions

determining whether all of the above are true.

and make adjustments under its authority in

You may submit with Schedule RT any informa-

secs. 71.30(2) and 71.80(1)(b), Wis. Stats.

tion pertaining to these factors or other factors

(see Department of Revenue’s Authority, be-

you believe are relevant. However, you are not

low).

required to submit this additional information

with Schedule RT.

• Notify the related entity of the amount of ex-

pense not deductible to you so that the re-

Item B

lated entity may subtract the corresponding

interest or rental income. Use Schedule RT-1

For item B, enter the total amount of interest or

to notify the related entity. See the Sched-

rental expense which meets the criteria de-

ule RT-1 instructions for details.

scribed in box i., box ii. or box iii. of item A. If

you are filing under the apportionment method,

Department of Revenue’s Authority

enter the unapportioned amount. If you checked

more than one box, you do not need to sepa-

Wisconsin

Statutes

(secs. 71.30(2)

and

rately state the amount that qualifies under each

71.80(1)(b)) expressly provide that although a

criteria.

taxpayer may meet one or more of the criteria

shown on Schedule RT, Part II, item A, the De-

Provided that you properly made Wisconsin ad-

partment of Revenue retains the right to distrib-

dition modifications to add back related entity in-

ute, apportion, or allocate gross income, deduc-

terest and rental expense deductions as re-

tions, credits or allowances between or among

quired by 2007 Wisconsin Act 226, the amount

two or more related entities in circumstances

you enter in item B is the amount you may enter

where it is necessary to prevent evasion of taxes

as a subtraction modification on your Wisconsin

or to clearly reflect the income of the related en-

return.

tities.

Additional Guidance for Part II

Following are guidelines which will help you de-

sider an expense paid to an unrelated entity be-

termine if you are eligible to check box i., box ii.,

fore the unextended due date of the taxpayer’s

or box iii. in Part II, item A:

income or franchise tax return to be paid within

the taxpayer’s “taxable year.” However, such

expenses that occur after the end of the tax-

Item A, Box i.: Taxable Year

payer’s tax year may not then be counted again

as occurring in the subsequent taxable year.

“Taxable year” refers to the taxable year of the

taxpayer who wishes to claim the deduction for

the expense paid, accrued or incurred to the re-

lated

entity.

For

purposes

applying

sec. 71.80(23)(a)1., the Department will con-

Instructions For 2008 Schedule Rt - State Of Wisconsin Page 6

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