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

1. If the election is made, are Schedules 3K-1 required to be issued to the partners?
   
   
2. If the partnership is a member of a multi-tier pass-through entity structure and any of the lower-tiered entities made an election to pay tax at the entity level, how does the partnership complete Schedule 3K-1?
   
   

1. If the election is made, are Schedules 3K-1 required to be issued to the partners?

   Yes, an electing partnership must provide each partner with a Schedule 3K-1, Partner's Share of Income, Deductions, Credits, etc., and include a supplemental statement detailing the items of income, gain, loss, and deduction that are included on the partnership's Schedule 3-ET, Form 3 Entity-Level Tax Computation.

   Amounts should be reported on Schedule 3K-1 in the same manner as if an election were not made.

   Exceptions:

   • An electing partnership may not pass through a credit for taxes paid to other states and partners may not use taxes paid by the partnership to compute a credit for taxes paid to other states.
     
     
   • An electing partnership may not pass through Wisconsin withholding if the partnership claimed a refund of the pass-through withholding or submitted a written request to apply the pass-through withholding against the tax liability at the entity level.
     
     
   • An electing partnership must provide a supplemental statement with each partner's Schedule 3K-1 detailing the items of income, gain, loss, deduction, and tax paid as a result of the election that are included on the electing partnership's Schedule 3-ET.
     
     

   If Box 3 in Part II, Item C of the Schedule 3K-1 is check (i.e., the election is made), the partners should not report the income, gain, loss, and deductions on their Wisconsin income tax return.

   See the Schedule 3K-1 instructions for more information.

2. If the partnership is a member of a multi-tier pass-through entity structure and any of the lower-tiered entities made an election to pay tax at the entity level, how does the partnership complete Schedule 3K-1?
   
   
   • If the member partnership is also making the election to pay tax at the entity level, the member partnership must check Boxes 3 and 4 in Part II, Item C of Schedule 3K-1 and provide each partner with a Schedule 3K-1 as explained in question 1 above.
     
     
   • If the member partnership is not making the election to pay tax at the entity level, the member partnership must check Box 4 in Part II, Item C of Schedule 3K-1 and provide a supplemental statement with each partner's Schedule 3K-1 detailing the items of income, gain, loss, and deduction that have been taxed by a lower-tier entity.

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of March 19, 2024: secs. 71.20 and 71.21, Wis. Stats.

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

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100180

March 19, 2024