Manufacturing and Agriculture Credit - D. Cost of Goods Sold, Direct and Indirect Costs

  1. What are examples of direct costs?

  2. What are examples of indirect costs?

  3. The Wisconsin Statutes indicate that direct and indirect costs include all of the claimant's ordinary and necessary expenses paid or incurred during the taxable year in carrying on the trade or business that are deductible as business expenses under the Internal Revenue Code. Is depreciation included as a direct or indirect cost when computing the credit?

  4. Are guaranteed payments to partners considered a direct expense when calculating the manufacturing and agriculture credit?

  5. Are state taxes a direct or indirect cost?

  6. Are charitable donations/contributions a direct or indirect cost?

  7. I was subject to LIFO recapture (or similar change in accounting method) and as a result my cost of goods sold increased. How does this affect the computation of the manufacturing and agriculture credit?

  8. Is the five-year subtraction modification for the difference in basis of assets considered a depreciation expense for the MA credit?

  9. The amount of depreciation expense for federal and Wisconsin franchise/income tax purposes is different. Is the federal or Wisconsin depreciation expense used when computing the credit?


Corporation Franchise/Income Tax Assistance
PO Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
Email additional questions to

February 1, 2019