- 3 -
|
2023 Schedule A-11 Instructions
by members of the combined group, each member with an interest in the pass-through entity must subtract from
its sales factor numerator and denominator any amount that would otherwise be included attributable to the sale.
The example below illustrates:
Example: Combined Group ST consists of Member S and Member T. S owns a 20% interest in Partnership R. T
owns an 80% interest in Partnership R. On October 1, 2023, Partnership R sells a widget to S for $20,000, and
this sale is includable in Group ST’s combined unitary income. In its computation of apportionment factors for
2023, S must subtract an amount of $4,000 (= $20,000 x 20%) from its sales factor denominator and, if applicable,
from its numerator. Similarly, T must subtract an amount of $16,000 (= $20,000 x 80%) from its sales factor
denominator and, if applicable, from its numerator.
■ Line 17. Sales Excluded from Combined Unitary Income (Combined Group Members Only) – If you reported
an amount on Form 6, Part II, line 6 for separately apportioned income, you must exclude the sales attributable
to that amount from the numerator and denominator of the sales factor, as applicable. Report the excluded amount
of these sales on line 17. However, if you already excluded these sales from the amounts you entered on lines
14a through 14l, do not enter any amounts on line 17.
See the instructions to Form N, Wisconsin Nonapportionable, Separately Accounted, and Separately Apportioned
Income, for further details on how to report and apportion separately apportioned income.
■ Line 20. Sales Previously Deferred (Combined Group Members Only) – If a combined group member made
a sale to another member of the combined group in a prior taxable year and gain or loss on the transaction was
deferred under the provisions of sec. 71.255(4)(g), Wis. Stats., the selling member must include the gross receipts
from the sale in its sales factor in the year the gain or loss is recognized, to the extent those gross receipts are
otherwise includable in the sales factor.
NOTE: Section 71.255(4)(g), Wis. Stats., provides that the intercompany deferral provisions of Treas. Reg.
§1.1502-13 apply to a combined group similarly to how they apply to a consolidated group for federal purposes.
See the instructions to Form 6, Part I, line 33, for details.
Report the gross receipts corresponding to any income recognized under sec. 71.255(4)(g), Wis. Stats., on line 20.
If you already included these receipts in the amounts you entered on lines 14a through 14l, do not enter any
amounts on line 20.
Under sec. Tax 2.61(7)(d), Wisconsin Administrative Code, special sourcing rules apply to amounts reported on
line 20. If a combined group member sells an item or service to another combined group member and the
purchaser subsequently resells it to a third party outside of the group, the situs of both sales is determined based
on the situs of the sale from the purchasing member to the third party. Also, the purchasing member must exclude
from its apportionment factors the amount the selling member already included attributable to that same item or
service. The example below illustrates:
Example:
Combined Group YZ consists of Member Y and Member Z. Group YZ is on a calendar year. On December 30,
2022, Y sells a widget with a cost of $400 to Z, for $600. Y ships the widget to Z’s warehouse in Wisconsin. On
January 30, 2023, Z resells the widget to Q, an unrelated third party, for $700. Z ships the widget to Q’s
headquarters in Illinois. Assume both the sale by Y and the sale by Z are includable in combined unitary income
and assume that Z has nexus in Illinois.
In 2022, Y did not recognize any gain on the sale to Z because the gain was deferred under the provisions of sec.
71.255(4)(g), Wis. Stats. Since the gain on the sale was not recognized, Y cannot include the $600 sale in its
apportionment factors for 2022.
In 2023, Y must include its $200 of gain on the sale to Z (= $600 - $400) in combined unitary income. Y must also
include the sale amount of $600 in its sales factor denominator for 2023. Z must include its $100 gain on the sale
to Q (= $700 - $600) in combined unitary income for 2023. However, since $600 of Z’s sales price has already
IC-811 (R. 11-23) 3
|