Instructions For 1998 Form 4i - Wisconsin Insurance Company Franchise Tax Return (Page 3 of 4) in pdf

Page 3

Line 2g. Enter the amount by which the federal basis of any assets disposed

• One, if the numerator (line 2) is positive, the denominator (line 3) is zero

of in a taxable transaction exceeds the Wisconsin basis.

or negative, and adjusted federal taxable income (line 1) is positive.

Line 2h. Enter any IRC section 847 deduction that was claimed in computing

• One, if the numerator (line 2) is negative, the denominator (line 3) is zero

federal taxable income.

or positive, and adjusted federal taxable income (line 1) is negative.

Line 2i. Enter any other additions to federal income. These could include

Line 6. Premiums Written on Property and Risks, Other Than Life

manufacturer’s sales tax credit computed, research credits computed, devel-

Insurance, Located Outside Wisconsin — Enter the direct premiums

opment zones credit computed to the extent not included in federal income,

written on all property and risks other than life insurance, where the subject

community development finance credit computed, and farmland preservation

of insurance was resident, located, or to be performed outside Wisconsin.

and farmland tax relief credits received during the taxable year that aren’t

included in federal income.

Line 7. Premiums Written on Property and Risks, Other Than Life

Insurance, Wherever Located — Enter the total direct premiums written on

Line 4a. Enter dividends received which are included in the amount on line

all property and risks, other than life insurance, wherever located during the

3 and qualify for deduction for Wisconsin. Dividends are deductible for

taxable year.

Wisconsin if received during the year from payor corporations that meet the

following requirements:

Line 8. Payroll, Exclusive of Life Insurance Payroll, Paid Outside

Wisconsin — Compensation is paid outside Wisconsin if (a) the individual’s

The dividend must be paid on common stock, and

service is performed entirely outside Wisconsin; (b) the individual’s service

The corporation receiving the dividend must have owned at least 70% of

is performed both in and outside Wisconsin, but the service performed in

the combined voting stock of the payor corporation for the entire taxable year.

Wisconsin is incidental to the individual’s service outside Wisconsin; or (c)

some service is performed outside Wisconsin and the base of operations is

Note: “Dividends received” means gross dividends minus any taxes paid to

outside Wisconsin (or if there is no base of operations, the place from which

a foreign nation on those dividends and claimed as a deduction for Wisconsin

the service is directed or controlled is outside Wisconsin, or the base of

purposes.

operations or the place from which the service is directed or controlled isn’t

in any state in which some part of the service is performed, but the individ-

Line 4b. Enter the amount by which the Wisconsin deduction for depreciation

ual’s residence is outside Wisconsin). Include management or service fees

or amortization exceeds the federal deduction. Refer to the instructions for

paid to a related corporation for services performed outside Wisconsin.

Schedule A, line 2f, for a detailed discussion of depreciation and amortiza-

Exclude payments made to independent contractors.

tion.

Line 9. Payroll, Exclusive of Life Insurance Payroll, Paid Everywhere

Line 4c. Enter the amount by which the Wisconsin basis of any assets

— Enter the total payroll, excluding life insurance payroll, paid everywhere

disposed of in a taxable transaction exceeds the federal basis.

in the taxable year. Include management or service fees paid to a related

corporation for the performance of personal services. Exclude payments made

to independent contractors.

Line 2. Net Gain From Operations, Other Than Life Insurance —

Include net income, after dividends to policyholders and before federal and

Line 13. Average of Premium and Payroll Percentages — Divide line

foreign income taxes, from property and casualty insurance; net gain from

12 by 2. You can’t omit a factor that isn’t employed in producing taxable

operations, after dividends to policyholders and before federal income taxes,

income.

from accident and health insurance; and net realized capital gains or losses on

investments from accident and health insurance operations. Apportion net

Line 16. Wisconsin Net Business Loss Carryforward — Enter any

realized capital gains or losses among life insurance lines and accident and

Wisconsin net business loss sustained in any of the taxable years 1983

health insurance lines in the same manner as net investment income is re-

through 1997 to the extent not offset by other items of Wisconsin income in

quired to be apportioned by the Commissioner of Insurance.

the loss year and by Wisconsin net business income of any year between the

loss year and the current taxable year.

Line 3. Total Net Gain From Operations — Include net income, after

dividends to policyholders and before federal and foreign income taxes, from

The Wisconsin net business loss is computed under sec. 71.45(4), Wis. Stats.,

property and casualty insurance; net gain from operations, after dividends to

which provides that the net business loss is the Wisconsin net loss sustained

policyholders and before federal income taxes, from accident and health and

in a preceding taxable year, except that adjustments for deductible dividends,

life insurance; and net realized capital gains or losses on investments from

excess federal capital losses, and net business losses from prior years must be

accident and health and life insurance operations.

reversed. Attach to the return a schedule similar to Form 4BL showing the

computation of the loss carryforward.

Note for lines 2 and 3: See the Annual Statement adopted by the National

Association of Insurance Commissioners for the year 1998, as filed with the

Line 18. Gross Tax — Enter the lesser of (a) 7.9% of the Wisconsin net

Commissioner of Insurance of the State of Wisconsin, which shows the

income reported on line 17 or (b) 2% of gross Wisconsin premiums.

amounts for net income after dividends to policyholders, net realized capital

gains, etc. For life and accident and health companies, refer to the Summary

The franchise tax imposed on each domestic insurer measured by net income

of Operations, Analysis of Operations by Lines of Business. For property and

attributable to all lines of insurance in Wisconsin may not exceed 2% of the

casualty companies, refer to the Underwriting and Investment Exhibit,

gross Wisconsin premiums as defined in sec. 76.62, Wis. Stats. For property

Statement of Income. Net realized capital gains or losses are allocated after

and casualty companies, “gross premiums” is the amount from the Under-

the Interest Maintenance Reserve (IMR) adjustment and before capital gains

writing and Investment Exhibit, Part 2B — Recapitulation of All Premiums,

tax.

column 1, line 32, or from Schedule T — Exhibit of Premiums Written,

column 2, line 50, of the Annual Statement.

Line 4. Percentage — In determining the income or loss from nonlife

lines of insurance, the percentage will be one of the following:

Line 19. Nonrefundable Credits — Complete Schedule C1, page 2, and

enter the available credit.

• Zero, if the numerator (line 2) is negative and adjusted federal taxable

income (line 1) is positive.

Schedule C1

• Zero, if the numerator (line 2) is positive and adjusted federal taxable

income (line 1) is negative.

Line 1. Enter the manufacturer’s sales tax credit from Form 4, Schedule Z,

• Zero, if the numerator (line 2) is zero.

line 13. Corporations that are engaged in manufacturing in Wisconsin may

claim a credit. In addition, a corporation that owns an interest in a pass-

• Greater than zero but not more than one, if the numerator (line 2) is

through entity, such as a partnership, which is engaged in manufacturing in

positive, the denominator (line 3) is positive, and adjusted federal taxable

Wisconsin may claim its share of the entity’s manufacturer’s sales tax credit

income (line 1) is positive.

computed for the entity’s taxable years beginning on or after January 1, 1998.

• Greater than zero but not more than one, if the numerator (line 2) is

Line 2. Enter the research expense credit from Schedule R, line 30.

negative, the denominator (line 3) is negative, and adjusted federal taxable

Corporations that increase qualified research expenses in Wisconsin may

income (line 1) is negative.

claim a credit.

Instructions For 1998 Form 4i - Wisconsin Insurance Company Franchise Tax Return Page 3

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