Instructions For 2015 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 taxa-
amount is attributable to overseas operations, the in-
ble year, dividends are treated as paid from all
come from which was not included in combined unitary
income under the water’s edge rules.
E&P earned in that taxable year on a pro rata ba-
sis according to the proportion of net income that
Assume none of the corporations made distributions in
was included in the combined unitary income for
2014. Under the tiering-up rule, G’s total current year
that taxable year.
E&P are $850,000 (= $500,000 + ($400,000 - $50,000
attributed from F)), and F’s current year E&P are
3. Tiering-up Rule: The dividend payer’s E&P 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 mem-
ber’s E&P are adjusted to reflect the undistributed
E&P of any subsidiary that is a member of the
Line-by-Line Instructions
same
combined
group.
However,
s.
Tax
2.61(6)(g), Wisconsin Administrative Code, pro-
First, group the total dividends received by the corpo-
vides that a subsidiary’s E&P can only be “tiered
ration into amounts paid by each payer. If this is a com-
up” to its parent company to the extent it relates to
bined return, group the dividends received by each
income that was (or the case of E&P from taxable
member into amounts paid by each payer.
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” div-
The following examples illustrate these rules:
idend deduction. If this is a combined group, identify
any of the remaining dividends that would qualify for
Example 1:
elimination from combined unitary income.
Combined Group MN consists of Member M and Mem-
■ Lines 1a through 1f. Qualifying Dividends – On
ber N. The combined group was formed when Corpo-
lines 1a to 1f, enter the aggregate totals of qualifying
ration M acquired 60% of Corporation N on June 1,
dividends based on the groupings described above.
2014. Group MN uses a calendar year. During 2015,
Each of these lines represents the total dividends paid
N paid a dividend to M of $500,000. N’s current E&P
from one payer corporation to one payee corporation
for 2015, before accounting for the distribution to M,
during the entire taxable year. You do not need to re-
are $100,000. N’s E&P attributable to its 2014 calen-
port each dividend separately. Instructions for each
dar year are $1,000,000, of which $50,000 (5% of the
field of lines 1a through 1f follow:
total) were earned while N was a member of Group
MN. Assume N had no separate entity items while it
Name of Payer Corporation. Enter the name of the
was a member of Group MN. Also assume M did not
corporation that paid the dividends eligible for the sub-
deduct any foreign taxes attributable to the dividend
traction.
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 the
dividend that qualifies for elimination from Group MN’s
payee obtained the level of voting stock ownership in-
combined unitary income in 2015 is $120,000
dicated in the Payee’s Ownership of Payer field de-
(= $100,000 + (5% x $400,000)). Under the pro rata
scribed below.
rule, 95%, or $380,000, of the dividend paid out of N’s
2014 E&P is considered to be paid from pre-acquisi-
Payee’s Ownership of Payer. Check the appropriate
tion E&P.
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 the
Example 2:
payer’s stock.
Combined Group FGH consists of Member F, Member
G, and Member H. F owns all the stock of G, and G
Dividends Received. Enter the dividends received by
owns of all the stock of H. Group FGH is on a calendar
the payee from the payer to the extent they qualify for
year. During the taxable year 2015, F has current year
either the dividends received deduction or the elimina-
E&P of $300,000 and G has current year E&P of
tion from combined unitary income.
$500,000, both exclusive of any amounts attributed
from subsidiaries. Assume F and G’s E&P amounts
are attributable entirely to items included in Group
FGH’s 2015 combined unitary income. H has current
year E&P of $400,000. However, $50,000 of this
IC-525
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