Instructions For Form 3 - Wisconsin Partnership Return

Line-by-Line Instructions

(continued)

Page 5

For example, federal ACRS deductions weren’t available for

Schedule 3K – Partners’ Shares

Wisconsin purposes for the following property placed in service

of Income, Deductions, etc.

during the 1986 taxable year: (a) residential real property, and (b)

property used in farming, as defined in IRC section 464(e)(1), if

Schedule 3K is a summary schedule of all the partners’ shares of the

the taxpayer’s nonfarm Wisconsin adjusted gross income or gross

partnership’s income, deductions, etc., as computed under Wisconsin

farm profit exceeded specified amounts. Instead, such property

law, similar to federal Schedule K.

had to be depreciated under a method permitted in the Internal

Revenue Code as amended to December 31, 1980. This property

Column b. Federal amount — Enter the applicable amounts

must continue to be depreciated for Wisconsin purposes under the

from column b, federal Schedule K. For the net long-term gain

December 31, 1980, Internal Revenue Code.

(loss) items reported on line 4e, use the total reported for the year

from federal Schedule K.

• An adjustment is required in the year of the disposition of an asset

if its basis differs for federal and Wisconsin purposes due to a law

Column c. Adjustment — Enter any adjustments necessary to

difference in a prior year.

arrive at the amount of any partnership item under Wisconsin law.

Be sure to attach an explanation of any adjustments in column c.

2. Adjustments required because different elections are made for

federal and Wisconsin purposes

Caution: Don’t make any adjustments on Schedule 3K to exclude

Examples of different elections include the following:

a nonresident or part-year resident partner’s share of partner-

• For assets first placed into service on or after January 1, 1998, a

ship items that are attributable to business transacted outside

partnership may compute depreciation or amortization under ei-

Wisconsin, services performed outside Wisconsin, or real or

ther the Internal Revenue Code in effect for the year for which the

tangible personal property located outside Wisconsin and aren’t

return is filed or the Internal Revenue Code as amended to De-

taxable or deductible for Wisconsin purposes. These modifica-

cember 31, 1996, at the taxpayer’s option. An asset placed in

tions will be made on the Schedule 3K-1 of each individual

service before January 1, 1998, must continue to be depreciated

partner, as described in the instructions for Schedule 3K-1 that

or amortized under the method elected for Wisconsin purposes for

follow.

the year in which it was placed in service.

• For property placed in service after December 31, 1982, a tax-

In addition, don’t make any adjustments on Schedule 3K (or on

payer that claimed investment tax credit for federal purposes

Schedule 3K-1) for an individual, estate, or trust partner’s 60%

could either (a) claim the full 10% credit and reduce the deprecia-

capital gain deduction or capital loss limitation. Instead, each

ble basis of the property by one-half of the credit, or (b) in the

partner will compute its own capital gain deduction or loss

case of regular investment credit property, claim a reduced credit

limitation on Wisconsin Schedule WD.

and depreciate the full cost of the property. A partnership that

claimed the regular investment tax credit and reduced the depre-

ciable basis of the property for federal purposes could compute

Note: Show additions as a positive number. Show subtractions by

depreciation on the full (unreduced) basis of the property for Wis-

putting the amount in parentheses.

consin purposes.

Additions to or subtractions from federal amounts may be required

• Wages that aren’t deductible for federal purposes because they

for the following items:

were used in computing the federal targeted jobs credit may be

deducted for Wisconsin purposes.

1. Adjustments required because a federal law doesn’t apply for

Wisconsin purposes

3. Adjustments required for modifications prescribed in Wisconsin

law

You must make an adjustment if an amount in column b is figured

under a provision of federal law that doesn’t apply for Wisconsin

Most modifications required to figure a partner’s Wisconsin net

purposes. This may occur if a federal provision is excluded from the

income are computed by that partner rather than at the partnership

definition of “Internal Revenue Code” for Wisconsin purposes or if

level. This includes many of the modifications prescribed in section

a federal law change becomes effective for Wisconsin at a different

71.05(6) to (12), (19), and (20), Wisconsin Statutes. However, several

time than federally. These adjustments are often called “Schedule I

types of modifications may be reportable by the partnership in col-

adjustments” because individuals must report them on Wisconsin

umn c, including the following:

Schedule I. Examples of Schedule I adjustments include the follow-

ing:

• The amount of development zones credit computed by the part-

nership must be shown as an addition to ordinary income on

• If any federal laws are enacted after December 31, 1997, and

line 1, column c.

apply for taxable years beginning in 1998, the changes generally

• The amount of manufacturer’s sales tax credit computed by the

won’t apply for Wisconsin unless retroactively adopted by the

partnership plus manufacturer’s sales tax credits passed through

Wisconsin Legislature.

from other entities must be shown as an addition to ordinary in-

• If you depreciated an asset under different methods for federal and

come on line 1, column c.

Wisconsin purposes in the year the asset was placed in service be-

• State taxes and taxes of the District of Columbia that are value-

cause Wisconsin didn’t follow a provision of federal law for that

added taxes, single business taxes, or taxes on or measured by all

year, you must continue to depreciate the asset under the Wiscon-

or a portion of net income, gross income, gross receipts, or capital

sin method in future years.

Instructions For Form 3 - Wisconsin Partnership Return - 1998 Page 5

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