Wisconsin Addition or Subtraction From Income - Differences in Federal and Wisconsin Basis of Assets

You may need to add or subtract if there is a difference between the federal basis and the Wisconsin basis of your property.

Additions or subtractions are necessary if:

1. You acquired property after December 31, 2013, which may be depreciated or amortized (such as building and leaseholds), and the federal basis is greater or less than the Wisconsin basis.
2. You sold (or otherwise disposed of) property which may not be depreciated or amortized (such as land, stocks, and bonds) in a taxable transaction, and your basis in the assets was greater or less for federal purposes than for Wisconsin.
3. You sold (or otherwise disposed of) property where the federal basis is greater than the Wisconsin basis due to a previous gain on the sale of an asset being deferred because gain was invested in a "qualified new business venture" or a qualified Wisconsin business."

EXAMPLE:

You sold stock which you acquired by inheritance and your federal basis was greater than your Wisconsin basis. You must make an adjustment for the difference in basis.

Where do I enter it?

Enter the additions in the Addition to Income section and the subtractions in the Subtraction from Income section. Use Code 54 for either entry for prior years not applicable for tax year 2020.

Exception: Do not use Code 54 for the following situations:

• If the difference in basis is due to the difference in the federal and Wisconsin definition of the Internal Revenue Code (for example, Wisconsin did not allow bonus depreciation for tax year 2015), use Schedule I to adjust for the difference in depreciation for each year there is a difference in depreciation due to the difference in basis.
• If the difference in basis is due to using a different federal election for Wisconsin, (for example, electing to claim a different amount of sec. 179 expense), use Schedule I to adjust for the difference in depreciation as a result of the difference in federal and Wisconsin basis, or submit a pro forma federal return based on the election chosen for Wisconsin.

What else do I need to do?

Compute the amount of any addition or subtraction due to a difference in basis on Wisconsin Schedule T Transitional Adjustments. Include this form with your filing. This is not automatically completed within your account. The Schedule T cannot be attached to the return. Therefore, if you need to add this form to your return, you will need to print and mail the return.

Schedule T Instructions can be found here.