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• Only the investments made on 5-31-2011 and 12-31-2011 are considered a qualified Wisconsin investment.

– The business did not register with the Wisconsin Department of Revenue (DOR) to be a qualified Wisconsin business in

2015 and 2016; therefore, investments made in XYZ in 2009, 2010, 2015, and 2016 do not qualify.

– The investments made in 2012, 2013, and 2014 are not qualified Wisconsin investments because the investments were

not held at least five years.

• In this example, the Wisconsin tax basis must be increased by $50,000 due to depreciation differences, and decreased

by $20,000 because the investment made on 5-31-2011 included a $20,000 deferred long-term capital gain from an asset

previously sold.

– The $50,000 increase in Wisconsin tax basis and the $20,000 decrease in Wisconsin tax basis must be reported on

Schedule T and Schedule WD.

– The basis on line 6 of Schedule QI must be adjusted to reflect the $50,000 increase in Wisconsin tax basis and the

$20,000 decrease in Wisconsin tax basis. This results in a $130,000 basis ($100,000 + $50,000 - $20,000) on line 6 of

Schedule QI.

• The allocation percentage for non-taxable qualified gain is computed as follows:

$ 80,000

= 40%

$200,000

– $80,000 reflects the FMV of qualified Wisconsin investments made in XYZ ($30,000 + $50,000) by Partner A on 5-31-2011

and 12-31-2011.

– $200,000 reflects the FMV of the total investments made in XYZ by Partner A.

• The non-taxable qualified gain is computed as follows:

$850,000 x 40% = $340,000

– $850,000 is the Wisconsin gain on the sale of the investment ($1,000,000 - $100,000 + $50,000).

– The $50,000 adjustment to increase Wisconsin tax basis for depreciation differences is recognized when computing the

gain used in the non-taxable qualified gain allocation.

– The $20,000 adjustment to decrease Wisconsin tax basis for deferred long-term gain is not recognized when computing

the gain used in the non-taxable qualified gain allocation.

• $340,000 is the non-taxable qualified gain reported on line 10 of Schedule QI and must be reported on line 15a of Schedule

WD. The net taxable gain from the sale of the investment is $530,000.

• The sale of the investment is entered on Schedule QI as follows:

Line 1

Date investment sold: 12 31 2016

Line 2

Purchase date of initial investment in the qualified Wisconsin business: 05 31 2011

Line 3

Type of investment:

Stock purchase

X Partnership interest

LLC membership

Line 4

Entity Name:

XYZ LLC

FEIN: xx-xxxxxxx

Line 5

Sales price of investment as reported on federal Form 8949 . . . . . . . . . . . . . . . . . . . . 1000000

Line 6

Cost or other basis adjusted for Wisconsin as reported on Schedule T . . . . . . . . . . . .

130000

Line 7

Deferred long-term gain included in the investment . . . . . . . . . . . . . . . . . . . . . . . . . . .

20000

Line 8

Add line 6 and line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

150000

Line 9

Amount used to determine non-taxable qualified gain.

Subtract line 8 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850000

Non‑taxable Long‑Term Gain

Line 10 Amount you computed to be non-taxable qualified gain.

(Enter on line 15a of Schedule WD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

340000

Taxable Long‑Term Gain

Line 11

Add line 6 and line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

470000

Line 12 Net taxable long-term gain or (loss). Subtract line 11 from 5 . . . . . . . . . . . . . . . . . . .

530000

- 8 -

I-177 (N. 12-16)

Wisconsin Department of Revenue

Instructions For 2016 Schedule Qi - Sale Of Investment In A Qualified Wisconsin Business Page 8

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