2023 Schedule AD Instructions

                                        Additions to Income

 Purpose of Schedule AD
Schedule AD is used to report differences between federal and Wisconsin income. These differences are called modifications 
and may affect the amount you report as an addition modification on line 4 of Form 1.

 Who Must File Schedule AD
Your federal income may include items that aren’t deductible for Wisconsin, or it may not include items that are taxable for 
Wisconsin. You may have to add these items to your federal income to arrive at the correct Wisconsin income. Schedule AD 
must be filed by persons for whom the addition modifications described below apply.

 Line Instructions

 Line 1 – State and Municipal Interest
Fill in the amount of interest you received from state, municipal, and other bonds. This will generally be the amount shown as 
tax-exempt interest on line 2a of your federal Form 1040 or Form 1040-SR. If you were required for federal purposes to allocate 
expenses to this income, reduce the amount to be filled in by such expenses. Include a computation of how you arrived at the 
amount on line 1 if you reduced this amount by allocated expenses.

Exception If you received interest income which is exempt for state and federal tax purposes, do not include this interest 
income on line 1. Interest income which is exempt for federal and Wisconsin tax purposes includes interest from:

(1) Public housing authority or community development authority bonds issued by municipalities located in Wisconsin
(2) Wisconsin Housing Finance Authority bonds
(3) Wisconsin municipal redevelopment authority bonds
(4) Wisconsin Housing and Economic Development Authority bonds issued on or after December 11, 2003, to fund multifamily
affordable housing or elderly housing projects
(5) Wisconsin  Housing  and  Economic  Development  Authority  bonds  issued  before  January  29,  1987,  except  business
development revenue bonds, economic development revenue bonds, and CHAP housing revenue bonds
(6) Public housing agency bonds issued before January 29, 1987, by agencies located outside Wisconsin where the interest
therefrom qualifies for exemption from federal taxation for a reason other than or in addition to section 103 of the IRC
(7) Local exposition district bonds
(8) Wisconsin professional baseball park district bonds
(9) Bonds issued by the Government of Puerto Rico, Guam, the Virgin Islands, or the Northern Mariana Islands, or, for bonds
issued after October 16, 2004, the Government of American Samoa
(10) Local cultural arts district bonds
(11) Wisconsin professional football stadium bonds
(12) Wisconsin Aerospace Authority bonds
(13) Bonds issued on or after October 27, 2007, by the Wisconsin Health and Education Facilities Authority to fund acquisition
of information technology hardware or software
(14) Certain conduit revenue bonds issued by a commission created under sec. 66.0304, Wis. Stats. A listing of the conduit
revenue bonds issued and the tax-exempt status is available on the department’s website at: revenue.wi.gov/Pages/ISE/
Conduit-Revenue-Bonds.aspx.
(15) Wisconsin Housing and Economic Development Authority bonds or notes if the bonds or notes are issued to provide
loans to a public affairs network under sec. 234.75, Wis. Stats.
(16) The Wisconsin Health and Educational Facilities Authority if the bonds or notes are issued for the benefit of a person
who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds
or notes are issued under sec. 231.03(6), Wis. Stats., and the interest income received from the other bonds or notes is
exempt from Wisconsin taxation
(17) A sponsoring municipality borrowing to assist a local exposition district created under subch. II of ch. 229, Wis. Stats.
(18) WHEDA bonds issued under sec. 234.65, Wis. Stats., to fund an economic development loan to finance construction,
renovation, or development of property that would be exempt under sec. 70.11(36), Wis. Stats.

I-0102 (R. 10-23)                                                                            Wisconsin Department of Revenue

(19)  The Wisconsin Health and Educational Facilities Authority under sec. 231.03(6), Wis. Stats., if the bonds or notes are 
    issued in an amount totaling $35,000,000 or less, and to the extent interest income received is not exempt from Wisconsin 
    taxation. Interest from these sources is exempt from Wisconsin income tax whether received by a direct owner of these 
    securities or by a shareholder in a mutual fund which invests in these securities.

 Line 2 – Capital Gain/Loss Addition
If your federal adjusted gross income includes capital gains and/or losses from line 7 of federal Form 1040 or 1040-SR, you 
must complete Schedule WD. Schedule WD determines whether any capital gain/loss addition must be reported on line 2. 

 If the only amount reported on line 7 of federal Form 1040 or 1040-SR is a capital gain distribution from a mutual fund or real 
estate investment trust and you have no Wisconsin capital loss carryover, do not complete line 2. See page 2 of the instructions 
for Schedule SB, Subtractions from Income, line 5.

    If you are a shareholder of a tax-option (S) corporation or partner of a partnership that elected to be taxed at the entity 
level, do not report the amount of capital gain or loss from Schedule 5K-1 or 3K-1 on Schedule WD. In addition, do not include 
the amount of capital gain or loss from the tax-option (S) corporation or partnership in the modification for line 29 or 31. 
These items have already been removed from Wisconsin income when you completed Schedule WD. See the Schedule WD 
instructions for more information.

 Line 3 – Nonqualified Distributions from Edvest and Tomorrow’s Scholar College Savings Account
If you received a distribution from an Edvest or Tomorrow’s Scholar college savings account and the entire distribution was 
not used for qualified higher education expenses, you may have to include all or a portion of the distribution in income. If you 
rolled over an amount from an Edvest or Tomorrow’s Scholar college savings plan into another state’s plan, you may also have 
to include all or a portion of the amount rolled over in Wisconsin income.

Amounts rolled over from an Edvest or Tomorrow’s Scholar college savings account to an ABLE account of the designated 
beneficiary, or a member of the family of the designated beneficiary, is not required to be included in Wisconsin income. The 
amount rolled over cannot exceed $17,000 for 2023. Any amount which exceeds $17,000 may have to be included in Wisconsin 
income.

If you received a distribution within 365 days of contributing an amount to an account, you may have to include the amount 
previously subtracted in income.

Complete Schedule CS, College Savings Accounts, to determine the amount you must include in income. Include Schedule 
CS with Schedule AD.

 Line 4 – Nonqualified Distributions from ABLE Accounts

The owner (beneficiary) of a qualified ABLE account must include in income any amount withdrawn from a qualified ABLE 
account for any reason other than the payment of qualified disability expenses for the account beneficiary. Also, upon termination 
of an account, an addition to income is provided for any amount in the account that is returned to an account owner’s estate.

 Line 5 – Federal Net Operating Loss Deduction

Fill in the amount of the federal net operating loss deduction from line 8a of federal Schedule 1 (Form 1040). See page 10 of 
the instructions for Schedule SB, line 23, for information about the Wisconsin net operating loss deduction.

 Line 6 – Income (Lump-Sum Distributions) Reported on Federal Form 4972
Income from a lump-sum distribution is taxable to Wisconsin. If you reported a lump-sum distribution on federal Form 4972, you 
must also include the distribution in Wisconsin income. Fill in the total of (1) the capital gain part of the lump-sum distribution 
from line 6 of Form 4972 and (2) the taxable amount from line 10 of Form 4972. You may reduce this amount by any federal 
estate tax on line 18 of Form 4972.

 No portion of a lump-sum distribution may be reported as a capital gain on Wisconsin Schedule WD.

 Line 7 – Excess Distribution From a Passive Foreign Investment Company

Fill in the excess distribution from a passive foreign investment company that was not included in federal adjusted gross 
income (see federal Form 8621 or 8621-A).

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 Line 8 – Expenses Paid to or Incurred with Related Entities

Fill in the amount deducted or excluded from your federal income for interest, rental expenses, intangible expenses, and 
management fees paid, accrued, or incurred to a related entity (person or business entity). You must make this addition even 
though you may be eligible to subtract the amount on line 32 of Schedule SB. See sec. Tax 3.01(3), Wis. Adm. Code, for rules 
relating to this required addition.

 Line 9 – Expenses for Moving Business Outside Wisconsin or the United States

Fill in the amount of moving expenses deducted from your federal income to move a Wisconsin business operation to a location 
outside Wisconsin or the United States. Moving expenses means all of the following:

•  Vehicle rentals                                                 •  Loss on the sale of property in Wisconsin
•  Storage rentals                                                 •  Expenses paid or incurred for professional services,
• Moving company expenses for packing, unpacking, and                including legal services
  transportation                                                   •  Utility fees
• Consulting fees and surveys                                      •  Employee wages
• Brokerage commissions or fees                                    •  Reimbursement of an employee’s expenses
• Architecture, design, and remodeling expenses                    •  The cost of meals, lodging, and fuel
• Expenses paid or incurred to sell property in Wisconsin          •  Mileage deductions for vehicle use
• Lease cancellation fees

 Line 10 – Differences in Federal and Wisconsin Basis of Assets

Additions may be necessary if there is a difference between the federal basis and the Wisconsin basis of your property. 
Additions are necessary if:

(1) You acquired property in a taxable year beginning after December 31, 2013, which may be depreciated or amortized (such 
    as buildings and leaseholds), and the federal basis was greater than the Wisconsin basis at the time you acquired the 
    property.
(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 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.”  See Schedule  T, Transitional  Adjustments,  and  Schedule  QI,   Sale  of  Investment  in  a  Qualified 
    Wisconsin Business.

Compute the amount of any addition due to a difference in basis on Wisconsin Schedule T. Include the completed Schedule T 
with your Schedule AD.

Exception  Do not use line 10 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 2022), use     Schedule     I, Adjustments to Convert 2023 
  Federal Adjusted Gross Income and Itemized Deductions to the Amounts Allowable for Wisconsin, 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 Ito 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.

•  If you sold your interest in a partnership and any increases or decreases were made to the federal basis of your partnership 
  interest in taxable years prior to 1975, which resulted from partnership business or property located outside Wisconsin. 
  (Prior to 1975, Wisconsin did not tax income from business or property located outside Wisconsin.) Compute any adjustment 
  due to a difference in basis on Schedule T and net with other capital gains and losses on Wisconsin Schedule WD.

 Line 11 – Reserved for future use

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 Line 12 – Differences in Federal and Wisconsin Reporting of Marital Property (Community) Income

If you are married filing a separate return or married filing as head of household or if you obtained a decree of divorce or 
separate maintenance during 2023, you may have to report a different amount of income on your Wisconsin Form 1 than on 
your federal Form 1040 or 1040-SR. Fill in on line 12 any additional amount which is taxable to you rather than your spouse 
because of any difference in federal and state reporting of marital property (community) income. For further information, get 
Publication 109, Tax Information for Married Persons Filing Separate Returns and Persons Divorced in 2023. See page 11 of 
the Form 1 instructions for information on how to get this publication.

 Line 13 – Farmland Preservation Credit
The total amount of farmland preservation credit from Schedule FC that you received during 2023 must be reported as income. 
Fill in as an addition any portion of your farmland preservation credit that was not included as income on your federal tax return.

 The amount of farmland preservation credit from Schedule FC-A that you received during 2023 must be included in your 
federal adjusted gross income on your 2023 federal income tax return.

  Lines 14 Through 25

If you claimed any of the credits listed below, you must include on lines 14 through 25 the amount of your credit computed 
for 2023. The amount of your credit is income and must be reported on Schedule AD. This is true even if you cannot take the 
full credit this year and must carry part of it forward or if the credit is refundable. Note: Do not include on lines 14 through 25 
any credits passed through to you from a partnership, limited liability company, or tax-option (S) corporation. These will be 
accounted for when you make the adjustments for lines 28 and 30.
•  Development Zones Credits                                    •  Research Credits
•  Enterprise Zone Jobs Credit                                  •  Manufacturing and Agriculture Credit
•  Economic Development Tax Credit                              •  Business Development Credit
•  Jobs Tax Credit                                              •  Electronics and Information Technology Manufacturing
•  Capital Investment Credit                                      Zone Credit
•  Community Rehabilitation Program Credit                      •  Employee College Savings Account Contribution Credit

Exception The amount of manufacturing and/or agriculture credit computed for 2022 must be added to income on your 2023 
Wisconsin income tax return. This is the amount from line 16 of your 2022 Schedule MA-A or MA-M.

 Required Attachments for Subtractions Reported on Lines 28 through 31
For an addition reported on these lines, submit a copy of the related Schedule 2K-1, 3K-1, or 5K-1 and all supplemental schedules 
by attaching them as PDF documents to your electronically filed return. If you cannot attach and submit the PDF documents with 
your e-filed return, you can upload the PDF documents through the department’s website using Form W-RA at https://tap.revenue.
wi.gov/WRA/. If you cannot create PDF documents, you can mail the attachments with Form W-RA to the address listed on the 
form.

 Line 28 – Tax-Option (S) Corporation Adjustments
Fill in any of the following adjustments that apply to you:
(1)  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 tax-option (S) corporation informing you of any adjustments to be 
 made for Wisconsin tax purposes.
(2) 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 loss or deduction included on your federal return and then add your pro 
 rata share of any distributions made by the corporation of earnings and profits. CAUTION  Do not reverse any item of S 
 corporation loss reported on federal Schedule D. These items have already been removed from Wisconsin income when 
 you completed Wisconsin Schedule WD.

Required Attachments See the instructions on page 4 under the section titled Required Attachments for Additions Reported on 
Lines 28 through 31.

Enter the name and Federal Employer Identification Number (FEIN) of the tax-option (S) corporation on the line(s) provided.
If you have more than 2 entries, attach a schedule listing each additional entry. For example, if you have a $1,000 addition from 
tax-option (S) corporation A and a $5,000 addition from tax-option (S) corporation B, enter two separate additions on line 28 
and enter the name and FEIN of corporation A and corporation B on the lines provided.
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See page 14 of the instructions for Schedule SB, line 43, for making adjustments for subtractions.

For more information, get Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their Shareholders. 
See page 11 of the Form 1 instructions for information on how to get this publication.

    If  an  adjustment  listed  on  Schedule  5K-1  is  due  to  a  difference  between  federal  and  Wisconsin  law,  such  as  bonus 
depreciation, this amount should be adjusted on Wisconsin Schedule .     I

 Line 29 – Tax-Option (S) Corporation Entity Level Tax Election Adjustments
If you were a shareholder of a tax-option (S) corporation that elected to be taxed at the entity level, you must compute your 
addition modification due to the entity-level tax election as follows.  Note: If the tax-option (S) corporation made the election, 
the box will be checked on Schedule 5K-1, Part II, Item B, box 3.

1.  Complete Schedule  Ito modify your federal adjusted gross income, using the Internal Revenue Code (IRC) in effect under 
    Wisconsin law, as if the election was not made. 
2.  Complete Schedule AD (line 28) to make any addition modifications as if the election was not made.
3.  Complete Schedule SB (line 43) to make any subtraction modifications as if the election was not made.
4.  For each tax-option (S) corporation, net all tax-option (S) corporation items included in your Wisconsin income (including 
    the adjustments made on Schedules  ,IAD, and SB above) and remove the tax-option (S) corporation items by entering the 
    net amount as either an addition to income on Schedule AD, line 29, or a subtraction from income on Schedule SB, line 46. 
    You must enter the FEIN for each tax-option (S) corporation for which you are removing items from your Wisconsin income.  
    See example below.

Caution: Do not reverse any item of tax-option (S) corporation gain or loss reported on federal Schedule D. These items 
have already been removed from Wisconsin income when you completed Wisconsin Schedule WD. See the              Schedule WD 
instructions for more information.

Caution:  If you are a shareholder of a tax-option (S) corporation that did not make the entity level election but it directly or 
indirectly owned another pass-through entity (lower tier) that made the election, you need to make a similar adjustment to your 
income, except only for your share of that lower tier’s items. Box 4 of Part II, Item B, will be checked on the Schedule 5K-1 if a lower 
tier elected to pay the entity level tax. The tax-option (S) corporation is required to provide you a supplemental statement detailing 
your share of income, gain, loss, and deduction that have been taxed by a lower-tier entity.  
 
Required Attachments    See the instructions on page 4 under the section titled Required Attachments for Additions Reported 
on Lines 28 through 31.

For more information, get Publication 102,  Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their Shareholders. 
See page 11 of the Form 1 instructions for information on how to get this publication.

Example: Shareholder A was a Wisconsin resident for the entire year in 2023 and owns 50 percent of Tax-option (S) Corporation. 
Shareholder A’s only sources of income for 2023 are $15,000 of wages and $10,000 of federal net ordinary business income 
from the tax-option (S) corporation. Tax-option (S) corporation makes an election under sec. 71.365(4m)(a), Wis. Stats., to pay 
tax at the entity level for 2023.

Tax-option (S) Corporation’s $10,000 of federal ordinary business income for 2023 has the following Wisconsin differences:
•  $20,000 of additional Wisconsin depreciation expense because of a different depreciable basis of an asset determined under 
  the IRC in effect for Wisconsin purposes
•  $5,000 of income from related entities whose expenses were disallowed

Shareholder A must file the following forms:
• Schedule I to reduce federal adjusted gross income by $20,000 of additional depreciation
• Schedule SB, line 43, to report the subtraction modification of $5,000 relating to income from related entities whose 
  expenses were disallowed
• Schedule AD, line 29, to report a $15,000 addition modification for Wisconsin income taxed at the entity level of the tax-option 
  (S) corporation

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Computation of the $15,000 addition for Wisconsin income reported by the tax-option (S) corporation

                                               Description                                                     Amount

 Federal ordinary business income from the tax-option (S) corporation                                          $10,000

 Schedule I depreciation difference                                                                            ($20,000)

 Schedule SB (line 43) - subtraction modification relating to income from related entities whose expenses 
 were disallowed                                                                                               ($5,000)
 Schedule AD (line 29) - addition modification for Wisconsin loss reported by the tax-option (S) 
 corporation (enter as a positive amount on Schedule AD)                                                       ($15,000)

 Line 30 – Partnership, Limited Liability Company, Trust, or Estate Adjustments
If you were a member of a partnership or limited liability company (LLC) treated as a partnership, or you received income 
from an estate or trust, you will receive a statement from the partnership, LLC, trust, or estate notifying you of any additions 
or subtractions which you should make on your return. Fill in the amount of any such additions on line 30. See page 15 of the 
instructions for Schedule SB, line 47, for making adjustments for subtractions.

Required Attachments    See the instructions on page 4 under the section titled Required Attachments for Additions Reported 
on Lines 28 through 31.

Enter the name and FEIN of the partnership on the line(s) provided. If you have more than 2 entries, attach a schedule listing 
each additional entry. For example, if you have a $1,000 addition from partnership A and a $5,000 addition from partnership B, 
enter two separate additions on line 30 and enter the name and FEIN of partnership A and partnership B on the lines provided.

    If an adjustment listed on Schedule 2K-1 or 3K-1 is due to a difference between federal and Wisconsin law, such as bonus 
depreciation, this amount should be adjusted on Wisconsin Schedule  . I

  Line 31 – Partnership Entity Level Tax Election Adjustments

If you were a partner or member of a partnership or LLC treated as a partnership that elected to be taxed at the entity level, 
you must compute your subtraction modification due to the entity-level tax election as follows.  Note: If the partnership made 
the election, the box will be checked on Schedule 3K-1, Part C, box 3.

1.  Complete Schedule  Ito modify your federal adjusted gross income, using the Internal Revenue Code (IRC) in effect under 
    Wisconsin law, as if the election was not made. 
2.  Complete Schedule AD (line 30) to make any addition modifications as if the election was not made.
3.  Complete Schedule SB (line 47) to make any subtraction modifications as if the election was not made.
4.  For each partnership, net all partnership items included in your Wisconsin income (including the adjustments made on 
    Schedules I, AD, and SB above) and remove the partnership items by entering the net amount as either an addition to 
    income on Schedule AD, line 31, or a subtraction from income on Schedule SB, line 48. You must enter the FEIN for each 
    partnership for which you are removing items from your Wisconsin income.  See example below.

Caution: Do not reverse any item of partnership gain or loss reported on federal Schedule D. These items have already been 
removed from Wisconsin income when you completed Wisconsin Schedule WD. See the          Schedule WD instructions for more 
information.

Caution: If you are a partner of a partnership that did not make the entity level tax election but it directly or indirectly owned 
another pass-through entity (lower tier) that made the election, you need to make a similar adjustment to your income, except only 
for your share of that lower tier’s items. Box 4 of Part C on Schedule 3K-1 will be checked if a lower tier elected to pay the entity 
level tax. The partnership is required to provide you a supplemental statement detailing your share of income, gain, loss, and 
deduction that have been taxed by a lower-tier entity. Note: This also applies to beneficiaries of an estate or trust that directly or 
indirectly owned a tax-option (S) corporation or partnership that elected to pay the entity level tax. In this instance, Box D of Part 
II on the Schedule 2K-1 will be checked.

Required Attachments    See the instructions on page 4 under the section titled Required Attachments for Additions Reported 
on Lines 28 through 31.

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Example: Partner A was a Wisconsin resident for the entire year in 2023 and owns 50 percent of Partnership. Partner A’s only 
sources of income for 2023 are $15,000 of wages and $10,000 of federal net ordinary business income from the partnership. 
Partnership makes an election under sec. 71.21(6)(a), Wis. Stats., to pay tax at the entity level for 2023.

Partnership’s $10,000 of federal ordinary business income for 2023 has the following Wisconsin differences:

•  $20,000 of additional Wisconsin depreciation expense because of a different depreciable basis of an asset determined under 
  the IRC in effect for Wisconsin purposes
•  $5,000 of income from related entities whose expenses were disallowed

Partner A must file the following forms:
• Schedule I to reduce federal adjusted gross income by $20,000 of additional depreciation
• Schedule SB, line 47, to report the subtraction modification of $5,000 relating to income from related entities whose 
  expenses were disallowed
• Schedule AD, line 31, to report a $15,000 addition modification for Wisconsin income taxed at the entity level of the 
  partnership

Computation of the $15,000 addition for Wisconsin income reported by the partnership

                                                Description                                                 Amount

  Federal ordinary business income from the partnership                                                     $10,000

  Schedule I depreciation difference                                                                        ($20,000)
  Schedule SB (line 47) - subtraction modification relating to income from related entities whose expenses 
  were disallowed                                                                                           ($5,000)
  Schedule AD (line 31) - addition modification for Wisconsin loss reported by the partnership
  (enter as a positive amount on Schedule AD)                                                               ($15,000)

 Line 32 – Other Addition to Income
Fill in any amount deducted in computing your federal adjusted gross income that is not allowed as a deduction for Wisconsin 
or any other addition to income. Enter a description of the addition(s) on the line(s) provided. If you have more than 3 entries, 
attach a schedule listing each additional entry.

Example    You  deducted  a  passive  activity  loss  on  your  federal  return  for  losses  incurred  when  you  were  a  resident  of 
another state. The passive activity losses were not allocable to Wisconsin. The passive activity losses are not deductible for 
Wisconsin and must be included on line 32. Enter “Passive activity loss” on the line provided.

 Additional Information
For more information, you may:
Call:  (608) 266-2486
Email: DORIncome@wisconsin.gov
Write:  Mail Stop 5-77
       Wisconsin Department of Revenue  
       PO Box 8949
       Madison WI 53708-8949

                                                Applicable Laws and Rules
  This document provides statements or interpretations of the following laws and regulations enacted as of October 19, 2023: 
  sec. 265, IRC, ch. 71, Wis. Stats., and sec. Tax 3.01, Wis. Adm. Code.

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