What is this?
Refer to the following Tax-Option (S) Corporation adjustments as they apply to you.
- If you were a shareholder of a tax-option (S) Corporation which is required to file a Wisconsin franchise or income tax return, you will receive a Wisconsin Schedule 5K-1 from the S Corporation informing you of any adjustments to be made for Wisconsin tax purposes.
- If you are a shareholder of a federal S Corporation that elects not to be treated as a Wisconsin tax-option (S) corporation, you must reverse all items of S corporation income, loss or deduction included on your federal return and then add your pro rate share of any distributions made by the corporation of earning and profits. (CAUTION Do NOT reverse any item of S corporation income or loss reported on federal Schedule D. These items have already been removed from Wisconsin income when you completed Wisconsin Schedule WD)
- Instead of using tax-option (S) corporation items deductible on federal Schedule A to compute the Wisconsin itemized deduction credit, you may elect to treat these items as subtraction modifications. Your subtraction is limited to the amount actually deductible for federal purposes.
Where do I enter it?
If the adjustment is an addition to income for Wisconsin, enter it in the Additions to Income Section. If it is a subtraction, enter it in the Subtractions from Income Section. Use Code 51 for either entry in prior years not applicable for tax year 2020. If you have adjustments for more than on entity, enter each entity adjustment separately.
What else do I need to do?
You are required to attach a copy of the 5K-1 to your return. To attach a copy of your K-1 to your return, visit the Credits section of your state return. You can also download it on the state website.
For more information, get Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their Shareholders.