Instructions For 2014 Schedule 4w: Wisconsin Subtractions From Federal Income (Page 2 of 3) in pdf

Schedule 4W Instructions

■ Line 9. Basis, Section 179, Depreciation Differ-

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

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

ence, Amortization of Assets –

ty and submit Schedule RT-1 with Schedule 4W. See

Difference in federal and Wisconsin basis of de-

the Schedule RT-1 instructions for further details.

preciated or amortized assets:

■ Line 4. Subpart F Income – Enter income from

Starting with the first taxable year beginning in 2014,

controlled foreign corporations under Subpart F of the

adjustments are to be made over a 5-year period for

Internal Revenue Code as reported on Form 1120,

the difference between the Wisconsin adjusted basis

Schedule C, line 14.

and the federal adjusted basis of assets owned on

the last day of the taxable year beginning in 2013.

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

The assets must have been depreciated or amortized

for both Wisconsin and federal tax purposes. As a re-

eign dividend gross-up reported on Form 1120,

sult of these adjustments, the Wisconsin adjusted

Schedule C, line 15.

basis and the federal adjusted basis of these assets

■ Line 6. Nontaxable Income – Enter nontaxable

is deemed to be equal on the first day of the taxable

year beginning in 2014.

income included in computing federal taxable

income. Include a schedule with your return showing

You must first determine the difference between the

the payers and amounts of nontaxable income and

Wisconsin adjusted basis and the federal adjusted

explaining why that income isn’t taxable.

basis of all assets that are being depreciated or

amortized on the last day of your taxable year begin-

Interest, dividends, and capital gains from the dispo-

ning in 2013. This would be on December 31, 2013, if

sition of intangible assets are nontaxable if both of

you file your tax return on a calendar-year basis.

the following are true:

•

The operations of the payer are not unitary with

If the total federal adjusted basis of the assets is less

those of the payee, and

than the total Wisconsin adjusted basis, a subtraction

must be claimed to adjust for this difference. As result

•

The payer and payee are not related as parent

of this subtraction, your Wisconsin adjusted basis of

company and subsidiary or affiliates and the in-

all depreciated or amortized assets on the first day of

vestment activity from which the income is re-

your taxable year beginning in 2014 (January 1,

ceived is not an integral part of a unitary busi-

2014, for calendar-year filers) will be the same as the

ness.

federal adjusted basis.

Income may also be nontaxable under the principles

Note: If the total Wisconsin adjusted basis is less

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

than total federal adjusted basis, see the instructions

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

for Schedule 4V, line 7.

investment is passive and does not serve an opera-

tional function.

Worksheet for Difference in Basis

For corporations subject to the Wisconsin income tax

(Keep for your records)

rather than the franchise tax, nontaxable income also

includes interest on United States government obliga-

1. Combined Wisconsin adjusted basis

tions.

of all depreciated and amortized assets

as of the last day of the taxable year

CAUTION: Expenses related to nontaxable income

beginning in 2013………………...______________

aren’t deductible and must be added to federal

2. Combined federal adjusted basis of

taxable income on Schedule 4V, line 5.

all depreciated and amortized assets

as of the last day of your taxable year

■ Line 7. Foreign Taxes – Enter foreign taxes paid

beginning in 2013……………...…______________

or accrued during the year that aren’t deducted in

3. Subtract line 2 from line 1…….…______________

computing federal taxable income and aren’t included

on Schedule 4W, line 5.

4. Multiply line 3 by .20 (20%). This is

your subtraction for 2014…….….______________

■ Line 8. Cost Depletion – For taxable years begin-

ning on or after January 1, 2014, Wisconsin allows

percentage depletion, so an adjustment is generally

not required.

IC-024

Instructions For 2014 Schedule 4w: Wisconsin Subtractions From Federal Income Page 2

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