2017 Act 59 created sec. 71.07(5n)(d)3., Wis. Stats., effective for taxable years beginning on or after January 1, 2017. In computing the manufacturing and agriculture credit, the amount of qualified production activities income is reduced by the qualified production activities income taxed by another state upon which the credit for net tax paid to the other state is claimed under sec. 71.07(7), Wis. Stats.
Assuming the shareholder or partner is only eligible for the manufacturing and agriculture credit based on the credit passed through from the tax-option (S) corporation or partnership, Schedule MA-M or MA-A is completed as follows:
The tax-option (S) corporation or partnership does not complete line 15f on Schedule MA-M or MA-A. The tax-option (S) corporation and partnership must provide the shareholders and partners with the amount of qualified production activities income that is taxable to another state and for which the credit for taxes paid to the other state may be claimed. Provide this information on Schedules 5K-1, line 17d or 3K-1, line 20c; or provide a supplement schedule with the Schedule K-1's.
Yes. QPAI is only required to be reduced by the amount of income that is also used to compute the TPOS credit. If the taxpayer elects to not claim the TPOS credit, the limitation in sec. 71.07(5n)(d)3., Wis. Stats., does not apply.
Yes. The taxpayer may compute the manufacturing and agriculture credit using the QPAI, and use the remaining income taxable in the other state to compute the TPOS credit. The instructions for Schedule OS provide notes on lines that must be adjusted to compute the TPOS credit on only the remaining taxable income (non-QPAI) in the other state.
No. Part II of Schedules MA-M and MA-A is only used by individuals and fiduciaries to limit the manufacturing and agriculture credit that may be used to offset tax. Individuals and fiduciaries enter on line 15f of Schedules MA-M and MA-A the amount of qualified production activities income taxed by another state and used to claim the TPOS credit. Shareholders in a tax-option (S) corporation and partners in a partnership enter the recomputed credit on line 17.
No. The apportionment percentage is not an accurate measure of the amount of QPAI taxed in the other state. You will need to contact the pass-through entity to obtain the amount of QPAI income that was included in total pass-through income and taxable in the other states.
Assuming the ratio of QPAI to taxable income is the same for each state, a ratio may be computed as follows to determine the amount of QPAI taxable to the other states:
The shareholder enters the $21,564 manufacturing and agriculture credit on line 17 of Schedule MA-M/MA-A and includes a schedule showing how the QPAI limitation was computed. Note that the $1,271,766 of income taxed at the entity-level in other states does not reduce the QPAI; this income is taxed on the composite individual income tax return and already accounted for in the reduction to QPAI.
If the tax-option (S) corporation provided the total company amounts to the shareholder, the shareholder multiplies the QPAI used to claim the TPOS credit by his or her ownership percentage.
Yes. Schedule OS, Part III, provides the computation of the allowable credit. However, this TPOS credit limitation does not apply to taxes paid to Illinois, Iowa, Michigan, or Minnesota.
WISCONSIN DEPARTMENT OF REVENUE 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
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