Pass-Through Entity-Level Tax: Partnership Partner Reporting Questions

Effective for taxable years beginning on or after January 1, 2019

  1. How will making the election impact a partner's adjusted basis in the interest of an electing partnership?

  2. Can partners use the Wisconsin manufacturing and agriculture credit from an electing partnership to offset their Wisconsin individual income tax liability for the same taxable year?

  3. If a partnership makes the entity-level tax election, can an individual Wisconsin resident partner claim a credit for taxes paid to another state on the income from the electing partnership?

  4. If a partnership makes the entity-level tax election, are the individual partners required to file a Wisconsin individual income tax return if they have no income reportable to Wisconsin?

  5. Are partners of an electing partnership required to attach their Schedule 3K-1 to their Wisconsin individual income tax returns?

  6. If a nonresident of Wisconsin is a partner of two partnerships and only one makes the entity-level tax election, can the nonresident partner participate in the Wisconsin composite return, Form 1CNP, of the non-electing partnership?

  7. What items reported on a Schedule 3K-1 from an electing partnership can be claimed on a partner's income tax return?

  8. What items reported on a Schedule 3K-1 from an electing partnership may not be reported on a partner’s income tax return?

  9. If the election is made, how should a partner filing a Wisconsin tax return remove the proportionate share of the electing partnership's income that is taxed at the entity level?

  10. Can the removal of an electing partnership's income from the partner's individual income tax return create a Wisconsin net operating loss (NOL) if the partner does not have a federal NOL?

  11. When an individual partner is determining household income for purposes of claiming the homestead credit, must the individual partner include income from a partnership making the entity-level tax election?


Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations in effect as of January 23, 2020: Sections 71.03, 71.07, 71.21 and 71.28, Wis. Stats., and sec. Tax 2.08, Wis. Adm. Code.

Laws enacted and in effect after January 23, 2020, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to January 23, 2020, that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.

FOR QUESTIONS OR COMMENTS CONTACT:

MS 5-77
WISCONSIN DEPARTMENT OF REVENUE
Customer Service Bureau
PO Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2772
Fax: (608) 267-1030
Email additional questions to DORIncome@wisconsin.gov

Guidance Document Number: 100182

January 23, 2020