Instructions For 2008 Schedule Rt - State Of Wisconsin Page 9
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12Wisconsin Schedule RT Instructions
Page 9
Factors Specific to Related Entity Interest
A loan from a “captive” insurance com-
Expenses.
pany.
8) The taxpayer is not sufficiently capitalized or
A dividend note.
has no reasonable expectation to make
A loan from a related entity with net op-
payment on the debt underlying the interest
erating loss carryforwards.
expense.
A loan from a related entity that is an in-
9) There is no written contract underlying the
termediary set up in a jurisdiction that
interest expense that reflects an arm’s length
imposes no corporate-level income tax.
interest rate.
Factors Specific to Related Entity Rental
10) The interest is attributable to any of the fol-
Expenses.
lowing:
11) The rental expense is paid to a “captive”
An unpaid charge that is not an allow-
REIT.
able expense, such as an expense that
may have any of the characteristics of 1)
through 9) above or 11) below.
Transactions Involving REITs
A real estate investment trust (REIT) that is a
Foreign Entities Substantially Similar to
“qualified REIT” is not considered a “related en-
Qualified REITs. A foreign entity is substantially
tity.” Thus, expenses paid, accrued, or incurred
similar to a qualified REIT, and thus may own
to a “qualified REIT” are not required to be
more than 50% of a qualified REIT, if all of the
added back or reported on Schedule RT.
following are true:
• At least 75% of the entity’s total asset value
A “qualified REIT” is any of the following:
consists of real estate assets, cash and cash
• Any REIT which is not owned (directly or indi-
equivalents, and U.S. Government securities;
rectly) more than 50% by an entity taxable as
• The entity is not taxed at the entity level;
a corporation.
• The entity annually distributes at least 85% of
• Any publicly traded REIT.
taxable income to shareholders;
• Any REIT owned more than 50% by:
• The entity is not owned more than 10% by a
An entity exempt from federal and Wis-
single entity or the entity is publicly traded;
consin tax;
and
• The entity is organized in a country that has a
An entity that is a “qualified REIT” itself;
tax treaty with the U.S.
A qualified REIT subsidiary under
sec. 856(i), IRC; or
A foreign entity substantially similar to a
“qualified REIT,” which is true if all of the
criteria under the header below are met.
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