Instructions For 2015 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-

ence, Amortization of Assets –

tion must obtain Schedule RT-1 from the related entity

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

Difference in federal and Wisconsin basis of de-

Schedule RT-1 instructions for further details.

preciated or amortized assets:

■ Line 4. Subpart F Income – Enter income from con-

Starting with the first taxable year beginning in 2014,

trolled foreign corporations under Subpart F of the In-

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

the difference between the Wisconsin adjusted basis

ternal Revenue Code as reported on Form 1120,

and the federal adjusted basis of assets owned on the

Schedule C, line 14.

last day of the taxable year beginning in 2013. The as-

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

sets must have been depreciated or amortized for both

Wisconsin and federal tax purposes. As a result of

dividend gross-up reported on Form 1120, Schedule

these adjustments, the Wisconsin adjusted basis and

C, line 15.

the federal adjusted basis of these assets is deemed

■ Line 6. Nontaxable Income – Enter nontaxable

to be equal on the first day of the taxable year begin-

ning in 2014.

income included in computing federal taxable income.

Include a schedule with your return showing the

You must first determine the difference between the

payers and amounts of nontaxable income and

explaining why that income isn’t taxable.

Wisconsin adjusted basis and the federal adjusted ba-

sis of all assets that are being depreciated or amor-

tized on the last day of your taxable year beginning in

Interest, dividends, and capital gains from the disposi-

2013. This would be on December 31, 2013, if you file

tion of intangible assets are nontaxable if both of the

your tax return on a calendar-year basis.

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, 2014,

ceived is not an integral part of a unitary business.

for calendar-year filers) will be the same as the federal

adjusted basis.

Income may also be nontaxable under the principles

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

Note: If the total Wisconsin adjusted basis is less than

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

total federal adjusted basis, see the instructions for

investment is passive and does not serve an opera-

Schedule 4V, line 6.

tional function.

For corporations subject to the Wisconsin income tax

Worksheet for Difference in Basis

rather than the franchise tax, nontaxable income also

(Keep for your records)

includes interest on United States government obliga-

tions.

1. Combined Wisconsin adjusted basis

of all depreciated and amortized assets

CAUTION: Expenses related to nontaxable income

as of the last day of the taxable year

aren’t deductible and must be added to federal

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

taxable income on Schedule 4V, line 5.

2. Combined federal adjusted basis of

all depreciated and amortized assets

■ Line 7. Foreign Taxes – Enter foreign taxes paid or

as of the last day of your taxable year

accrued during the year that aren’t deducted in com-

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

puting federal taxable income and aren’t included on

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

Schedule 4W, line 5.

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

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

your subtraction for 2015…….….______________

ning on or after January 1, 2014, Wisconsin allows

percentage depletion, so an adjustment is generally

not required.

IC-124

Instructions For 2015 Schedule 4w: Wisconsin Subtractions From Federal Income Page 2

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