Instructions For 2014 Form 6y: Wisconsin Subtraction Modification For Dividends Page 2
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4Form 6Y Instructions
2. Pro Rata Rule: With respect to an individual tax-
this amount is attributable to overseas operations, the
able year, dividends are treated as paid from all
income from which was not included in combined
E&P earned in that taxable year on a pro rata ba-
unitary income under the water’s edge rules.
sis according to the proportion of net income that
Assume none of the corporations made distributions
was included in the combined unitary income for
in 2013. Under the tiering-up rule, G’s total current
that taxable year.
year E&P are $850,000 (= $500,000 + ($400,000 -
$50,000 attributed from F)), and F’s current year E&P
3. Tiering-up Rule: The dividend payer’s E&P are
are $1,150,000 (= $300,000 + $850,000 attributed
generally determined using the federal consoli-
from H).
dated
return
regulations
(Treas. Reg.
§1.1502-33) as if the combined group is a federal
consolidated group. This means that a combined
group member’s E&P are adjusted to reflect the
undistributed E&P of any subsidiary that is a
Line-by-Line Instructions
member of the same combined group. However,
s. Tax 2.61(6)(g), Wisconsin Administrative
First, group the total dividends received by the corpo-
Code, provides that a subsidiary’s E&P can only
ration into amounts paid by each payer. If this is a
be “tiered up” to its parent company to the extent
combined return, group the dividends received by
it relates to income that was (or the case of E&P
each member into amounts paid by each payer.
from taxable years before 2009, would have
been), included in combined unitary income.
From the total amounts paid by each payer, identify
the dividends that qualify for the “70% ownership”
The following examples illustrate these rules:
dividend deduction. If this is a combined group, iden-
tify any of the remaining dividends that would qualify
Example 1:
for elimination from combined unitary income.
Combined Group MN consists of Member M and
■ Lines 1a through 1f. Qualifying Dividends – On
Member N. The combined group was formed when
lines 1a to 1f, enter the aggregate totals of qualifying
Corporation M acquired 60% of Corporation N on
dividends based on the groupings described above.
June 1, 2013. Group MN uses a calendar year. Dur-
Each of these lines represents the total dividends
ing 2014, N paid a dividend to M of $500,000. N’s
paid from one payer corporation to one payee corpo-
current E&P for 2014, before accounting for the dis-
ration during the entire taxable year. You do not need
tribution to M, are $100,000. N’s E&P attributable to
to report each dividend separately. Instructions for
its 2013 calendar year are $1,000,000, of which
each field of lines 1a through 1f follow:
$50,000 (5% of the total) were earned while N was a
member of Group MN. Assume N had no separate
Name of Payer Corporation. Enter the name of the
entity items while it was a member of Group MN. Also
corporation that paid the dividends eligible for the
assume M did not deduct any foreign taxes attributa-
subtraction.
ble to the dividend and N has sufficient stock basis.
Applying the LIFO and pro rata rules, the amount of
Date Acquired by Payee. Enter the date on which
dividend that qualifies for elimination from Group
the payee obtained the level of voting stock owner-
MN’s combined unitary income in 2014 is $120,000
ship indicated in the Payee’s Ownership of Payer
(= $100,000 + (5% x $400,000)). Under the pro rata
field described below.
rule, 95%, or $380,000, of the dividend paid out of
N’s 2013 E&P is considered to be paid from pre-
Payee’s Ownership of Payer. Check the appropri-
acquisition E&P.
ate line to indicate the payee’s level of ownership of
the payer’s stock. The percentages shown represent
the total ownership of the combined voting power of
Example 2:
the payer’s stock.
Combined Group FGH consists of Member F, Mem-
ber G, and Member H. F owns all the stock of G, and
Dividends Received. Enter the dividends received
G owns of all the stock of H. Group FGH is on a cal-
by the payee from the payer to the extent they qualify
endar year. During the taxable year 2014, F has cur-
for either the dividends received deduction or the
rent year E&P of $300,000 and G has current year
elimination from combined unitary income.
E&P of $500,000, both exclusive of any amounts at-
tributed from subsidiaries. Assume F and G’s E&P
amounts are attributable entirely to items included in
Group FGH’s 2014 combined unitary income. H has
current year E&P of $400,000. However, $50,000 of
IC-425
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