Instructions For 2009 Schedule W: Wisconsin Subtractions From Federal Income (Page 2 of 3) in pdf

Schedule W Instructions

come or receipts of the transaction were included

Income may also be nontaxable under the principles

in its tax base.

of the U.S. Supreme Court decision in Allied-Signal v.

Director, Div. of Taxation, 504 U.S. 768 (1992), if the

More Information on Related Entity Expenses. For

investment is passive and does not serve an opera-

more information on the deductibility of related entity

tional function.

expenses, see the Schedule RT instructions. Even if

you weren’t required to file Schedule RT for the ex-

For corporations subject to the Wisconsin income tax

penses you added back on Schedule V, the instruc-

rather than the franchise tax, nontaxable income also

tions to Schedule RT provide helpful information re-

includes interest on United States government obliga-

garding deductibility of related entity expenses.

tions.

■ Line 3. Income from Related Entities Whose

CAUTION: Expenses related to nontaxable income

Expenses Were Disallowed – If the corporation, or

aren’t deductible and must be added to federal

any corporation in the combined group, has income

taxable income on Schedule V, line 5.

from a related entity which paid, accrued, or incurred

expenses to the corporation, and that related entity

■ Line 7. Foreign Taxes – Enter foreign taxes paid

could not deduct those expenses according to the in-

or accrued during the year that aren’t deducted in

structions for line 2, the corporation may subtract the

computing federal taxable income and aren’t included

corresponding income from its taxable income.

on Schedule W, line 5.

In order to claim a subtraction on line 3, the corpora-

■ Line 8. Cost Depletion – Enter cost depletion that

tion must obtain Schedule RT-1 from the related en-

wasn’t deducted in computing federal taxable in-

tity and submit Schedule RT-1 with Schedule W. See

come.

the Schedule RT-1 instructions for further details.

■ Line 4. Subpart F Income – Enter income from

CAUTION: Percentage depletion isn’t deductible for

controlled foreign corporations under Subpart F of the

Wisconsin and must be added to federal taxable

Internal Revenue Code as reported on Form 1120,

income on Schedule V, line 6.

Schedule C, line 14. For combined groups, enter the

amount of Subpart F income that is included in the

■ Line 9. Depreciation/Amortization – Enter the

amount on Form 4, line 1. This may be the sum of the

amount by which the Wisconsin deduction for depre-

amounts from Form 1120, Schedule C, line 14 for

ciation or amortization exceeds the federal deduction

more than one company.

for depreciation or amortization. Provide a schedule

■ Line 5. Foreign Dividend Gross-Up – Enter for-

showing the computation details. For further informa-

tion about the differences between federal and Wis-

eign dividend gross-up reported on Form 1120,

consin basis and depreciation, see the section titled

Schedule C, line 15. For combined groups, enter the

Conformity with Internal Revenue Code and Excep-

amount of foreign dividend gross-up income that is

tions in the Form 4 or Form 5 instructions, as appli-

included in the amount on Form 4, line 1. This may

cable.

be the sum of the amounts from Form 1120, Sched-

ule C, line 15 for more than one company.

■ Line 10. Basis Differences – Enter the amount by

■ Line 6. Nontaxable Income – Enter nontaxable

which the Wisconsin basis of assets disposed of ex-

ceeds the federal basis. See the instructions for

income included in computing federal taxable

Schedule V, line 9, for an example. Provide a sched-

income. Include a schedule with your return showing

ule showing the computation details.

the payers and amounts of nontaxable income and

explaining why that income isn’t taxable.

■ Line 11. Federal Work Opportunity Credit

Wages – Enter wages that aren’t deductible in com-

Interest, dividends, and capital gains from the dispo-

puting federal income because they are being used in

sition of intangible assets are nontaxable if both of

computing the federal work opportunity tax credit.

the following are true:

•

The operations of the payer are not unitary with

■ Line 12. Federal Research Credit Expenses –

those of the payee, and

Enter research expenses that aren’t deductible in

computing federal income because they are being

•

The payer and payee are not related as parent

used in computing the federal credit for increasing

company and subsidiary or affiliates and the in-

research activities.

vestment activity from which the income is re-

ceived is not an integral part of a unitary busi-

ness.

Instructions For 2009 Schedule W: Wisconsin Subtractions From Federal Income Page 2

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