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        2024 Wisconsin Schedule 5K-1 Instructions 

Table of Contents 
General Instructions ................................................................................................................... 1 
Federal Schedules K-1 ............................................................................................................... 2 
Limitations on Losses, Deductions and Credits .......................................................................... 3 
Specific Instructions ................................................................................................................... 5 
 Parts I and II – Information about the Tax-Option (S) Corporation and Shareholder ............... 5 
 Part III - Schedule 5K-1, Columns (a) Through (e) .................................................................. 7 
 Shareholders That Are Full-Year Residents of Wisconsin ................................................... 8 
 Shareholders That Are Nonresidents .................................................................................. 8 
 Shareholders That Are Part-Year Residents ....................................................................... 9 
 Line-by-Line Instructions: Part III ...........................................................................................10 
 Example of Schedule 5K-1 ....................................................................................................18 
 Part IV – Shareholder's Pro Rata Share of Additions and Subtractions .................................19 
 Schedule  I      Adjustments .....................................................................................................20 
 Line-by-Line Instructions: Additions....................................................................................20 
 Line-by-Line Instructions: Subtractions ..............................................................................24 
Determining Wisconsin Income of Multistate Tax-Option (S) Corporations ................................27 
 Who Must Use Apportionment? .............................................................................................27 
 What Is the Apportionment Percentage? ...............................................................................28 
 What Is Nonapportionable Income? .......................................................................................28 
 Corporate Partners or LLC Members .....................................................................................28 
 Separate Accounting .............................................................................................................29 
Shareholder Reporting of Schedule 5K-1 Items from a Tax-Option (S) Corporation Electing to Pay 
Tax at the Entity Level ...............................................................................................................29 
 Shareholder Reporting Requirements....................................................................................29 
 Shareholder Basis .................................................................................................................30 
 Schedule 5K-1 Items Allowed to Be Claimed by the Shareholder ..........................................30 
 Schedule 5K-1 Items Not Allowed to Be Claimed By the Shareholder ...................................30 
 Proportionate Share of an Electing Tax-Option (S) Corporation's Income..............................30 
Additional Information, Assistance, and Forms..........................................................................31 
 Web Resources .....................................................................................................................31 
 Contact Information ...............................................................................................................31 
 Obtaining Forms ....................................................................................................................31 
 
General Instructions 
 
Caution: If a tax-option (S) corporation elects to pay tax at the entity level according to sec. 
71.365(4m)(a), Wis. Stats., the shareholders may not include any items of income, gain, loss, or 
deduction from the Schedule 5K-1 on their income tax return. Instead, the entity must compute 
and  pay  the  tax  due  on  Schedule  5S-ET.  See  the  section  titled: Shareholder  Reporting  of 
Schedule 5K-1 Items from a Tax-Option (S) Corporation Electing to Pay Tax at the Entity Level 
later in these instructions. 
 
IC-156 (R. 07-24)

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2024 Wisconsin Schedule 5K-1 Instructions

Schedule 5K-1 shows each shareholder’s share of the corporation’s income, deductions, credits,
etc., which have been summarized on Schedule 5K. Like Schedule 5K, Schedule 5K-1 requires
an entry for the federal amount, adjustment, and amount determined under Wisconsin law of each
applicable share item. In addition, Schedule 5K-1 for a nonresident or part-year resident
shareholder requires a separate entry for the amount of each share item attributable to Wisconsin.

A tax-option (S) corporation must:

• Complete a separate Schedule 5K-1 for each of its shareholders.
• File all Schedules 5K-1 with its Wisconsin Form 5S return.
• Give each shareholder a copy of their Schedule 5K-1 on or before the day Form 5S is
filed.
• Give each shareholder a copy of the instructions for Schedule 5K-1.
• Keep a copy of each shareholder's Schedule 5K-1 as part of the corporation's records.

Similar to federal Schedule K-1, the tax-option (S) corporation uses Schedule 5K-1 to report the
shareholder's pro rata share of the corporation’s income, deductions, credits, etc., for Wisconsin
purposes. Each shareholder should keep a copy of their Schedule 5K-1 for their records and
include a copy of Schedule 5K-1 with their tax return.

Although the tax-option (S) corporation may have to pay a built-in gains tax, a franchise tax
measured by certain federal, state, and municipal government interest income, and/or an
economic development surcharge, generally the shareholder is liable for Wisconsin income tax
on their share of the tax-option (S) corporation's income, whether or not distributed, and the
shareholder must include their share on their Wisconsin income tax return if a return is required.

Federal Schedules K-1

Since the Wisconsin Schedule 5K-1 replaces the federal Schedule K-1, a tax-option (S)
corporation isn't required to file a federal Schedule K-1 for each shareholder with Form 5S.
However, if a tax-option (S) corporation did not make an election to pay tax at the entity level
under sec. 71.365(4m)(a), Wis. Stats., and none of the tax-option (S) corporation's lower-tier
entities made an election to pay tax at the entity level, the tax-option (S) corporation may submit
copies of the federal Schedules K-1 instead of preparing Schedules 5K-1 in the following
situations:

• If the tax-option (S) corporation operates only in Wisconsin, and reports no adjustments
in column (c) and no credits in column (d) of Schedule 5K, the tax-option (S) corporation
may use the federal Schedules K-1 to report the Wisconsin tax-option (S) corporation
items for all shareholders.
• If the tax-option (S) corporation operates in and outside Wisconsin, and, on Schedule 5K,
reports no adjustments in column (c) and no credits in column (d), the tax-option (S)
corporation may use the federal Schedules K-1 for full-year Wisconsin resident
shareholders.

A tax-option (S) corporation that files federal Schedules K-1 instead of Wisconsin Schedules 5K-
1 must state on the shareholder’s federal Schedule K-1 that there aren’t any Wisconsin
adjustments or credits.

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          2024 Wisconsin Schedule 5K-1 Instructions 

Inconsistent Treatment of Items 
 
Generally, each shareholder must report tax-option (S) corporation items shown on their Schedule 
5K-1 and any accompanying schedules the same way that the tax-option (S) corporation treated 
the items on its return. If the shareholder's treatment is (or may be) inconsistent with the tax-
option (S) corporation’s treatment, the shareholder must include a statement with their return to 
identify and explain any inconsistency. 
 
Errors 
 
If a shareholder believes the tax-option (S) corporation has made an error on their Schedule 5K-
1, the shareholder should notify the corporation and ask for a corrected Schedule 5K-1. The 
shareholder must not change any items on their copy and must make sure that the corporation 
sends a copy of the corrected Schedule 5K-1 directly to the Wisconsin Department of Revenue.  
Corrected Schedules 5K-1 that are only received directly from the shareholder, and not from the 
tax-option (S) corporation, will not be accepted as the department would not be able to verify 
whether the tax-option (S) corporation agrees with the changes. 
 
Elections 
 
Generally, the tax-option (S) corporation decides how to figure taxable income from its operations 
(e.g., it chooses the depreciation methods used). However, certain elections are made by the 
shareholder separately on the shareholder's tax return that are not made by the corporation. For 
example,  the  shareholder  may  choose  to  amortize  certain  qualified  expenditures  under  sec. 
59(e)(2),  Internal  Revenue  Code  (IRC). Note:  The  method  of  accounting  used  under  sec. 
59(e)(2), IRC, must also be used for Wisconsin purposes (see secs. 71.30(1) and 71.36(3), Wis. 
Stats.). For more information on elections, see Wisconsin Tax Bulletin 214 (July 2021, page 8). 
 
Limitations on Losses, Deductions and Credits 
 
Caution: The amount of loss and deduction that a shareholder may claim on their Wisconsin 
return  may  be  less  than  the  amount  reported  on  Schedule  5K-1.  It  is  the  shareholder’s 
responsibility to consider and apply any applicable limitations. 
 
There are three separate potential limitations on the amount of tax-option (S) corporation losses 
that a shareholder may deduct on their return. These limitations are as follows: 
 
 •  The basis of the shareholder's stock, 
 •  The at-risk limitations, and 
 •  The passive activity limitations. 
 
Basis of the shareholder's stock 
 
Shareholders are responsible for maintaining records to show the computation of the basis of 
their  stock  in  the  corporation  for  Wisconsin  income  tax  purposes.  Schedule  5K-1  provides 
information to help shareholders make the computation at the end of each corporate taxable year. 
The Wisconsin basis of the shareholder's stock (generally, its cost) is adjusted as follows (this list 
is not all-inclusive): 

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       2024 Wisconsin Schedule 5K-1 Instructions 

 •  Basis is first increased by all income, including tax-exempt income, as computed under 
  Wisconsin law, reported on Schedule 5K-1, column (d). 
  Exception:  Basis  is  not  increased  by  the  corporation's  excluded  discharge  of 
  indebtedness  income  for  discharges  of  indebtedness  after  October  11, 2001, that  are 
  excluded under section 108(a), Internal Revenue Code. 
  Note: The shareholder must report the taxable income on their Wisconsin income tax 
  return (if they are required to file a return) for it to increase their basis. 
 •  Basis is then decreased, but not below zero, by: 
  o  Property  distributions,  including  cash,  made  by  the  corporation,  reported  on 
               Schedule 5K-1, line 16d, that are not includable in income. (Distributions in excess 
               of Wisconsin basis reported on Schedule 5K- 1, line 16d, and dividend distributions 
               reported on Schedule 5K-1, line 17c, don’t decrease basis.) 
  o  Nondeductible  expenditures  not  due  to  timing  differences,  as  computed  under 
               Wisconsin law from Schedule 5K-1, column (d). 
  o  All deductible losses and deductions, as computed under Wisconsin law, reported 
               on Schedule 5K-1, column (d). 
  o  The shareholder's share of the supplement to the federal historic rehabilitation tax 
               credit or early-stage seed investment credit computed. 
 
When figuring the Wisconsin basis in stock of a multistate corporation, the shareholder uses their 
share of the total company amounts as computed under Wisconsin law, from Schedule 5K-1, 
column (d), rather than the Wisconsin source income, losses, and deductions from Schedule 5K-
1, column (e). 
 
The shareholder may elect to decrease their basis by deductible losses and deductions prior to 
decreasing their basis by nondeductible expenses. If the shareholder makes this election, any 
nondeductible expenses that exceed the basis of the shareholder's stock and debt owed to the 
shareholder by the corporation are treated as nondeductible expenses for the following taxable 
year. To make the election, the shareholder includes a statement with their timely filed original or 
amended return, as provided in the federal regulations. Once made, the election applies to the 
year for which it is made and all future taxable years for that corporation, unless the department 
agrees to revoke the election. 
 
At-Risk Limitations 
 
For federal purposes, if a shareholder has a loss or other deduction from any activity carried on 
by the tax-option (S) corporation, either as a trade or business, or for the production of income, 
and the shareholder has amounts in the activity for which they aren’t at risk, the shareholder 
generally will have to figure the allowable loss. The at-risk rules generally limit the amount of loss 
(including loss on disposition of assets) and other deductions (such as the section 179 expense 
deduction) that the shareholder can claim to the amount they could actually lose in the activity. 
The at-risk rules also apply for Wisconsin purposes. 
 
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2024 Wisconsin Schedule 5K-1 Instructions

Passive Activity Limitations

Section 469, IRC, limits the deduction of certain losses. The rules apply to shareholders who are
individuals, estates, trusts, closely held corporations, or personal service corporations, and have
a net passive activity loss for the taxable year. Passive activities include trade or business
activities in which the shareholder didn’t materially participate, and rental activities, as defined in
the federal regulations. Rental real estate activities in which the shareholder materially
participated are not passive activities if the shareholder meets certain eligibility requirements. The
tax-option (S) corporation will identify separately each activity that may be passive to the
shareholder. The shareholder must determine whether their losses are limited by the passive
activity rules.

The passive activity loss limits also apply for Wisconsin purposes. However, if there are
differences between the shareholder's federal and Wisconsin income, the shareholder may have
to recompute the amount of passive activity loss deductible for Wisconsin. There are three types
of differences between federal and Wisconsin income:

• Schedule Iadjustments.
• Differences resulting from making different elections for federal and Wisconsin purposes.
For more information, see Wisconsin Tax Bulletin 214 (July 2021, page 8).
• Wisconsin modifications to federal adjusted gross income prescribed in sec. 71.05(6) to
(12), (19), (20), and (24) to (26) Wis. Stats.

A Schedule I adjustment may arise if a provision of the Internal Revenue Code doesn’t apply for
Wisconsin (e.g., bonus depreciation) or if a federal law change becomes effective at a different
time for Wisconsin than for federal purposes. Modifications to federal adjusted gross income
include the addition of state and local government bond interest income and the subtraction of
the capital gain deduction.

For differences resulting from Schedule Iadjustments or different elections, the shareholder must
recompute the passive activity loss limits for Wisconsin. However, the shareholder may not
recompute the loss limits for Wisconsin modifications. The tax-option (S) corporation should tell
the shareholder the reason for any adjustment in column (c) so that the shareholder will know
whether they must recompute the passive activity loss limits.

Specific Instructions

Parts I and II – Information about the Tax-Option (S) Corporation and Shareholder

The tax-option (S) corporation enters its name, address, and identifying number in Part I.

The tax-option (S) corporation enters the name, address, and identifying number of the
shareholder in Part II. If a qualified Subchapter S trust (QSST) is a shareholder, the QSST's (not
its beneficiary's) name, address, and identifying number should be entered in Part II. The QSST
must file a Wisconsin Form 2 to report its share of the tax-option (S) corporation income. The
beneficiary must file an individual income tax return to report the beneficiary's share of the QSST’s
income.

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2024 Wisconsin Schedule 5K-1 Instructions

If the tax-option (S) corporation is aware that the shareholder is a disregarded entity (other than
a QSST) or grantor trust, it enters in Part II the name, address, and identifying number of the
member or grantor to whom the income on Schedule 5K-1 will be reported. If this information is
entered correctly, it is less likely that the department will need to contact the tax-option (S)
corporation or the shareholder to verify that the proper amount of income is reported.

Item A. The tax-option (S) corporation must check the appropriate box to indicate what type of
entity this shareholder is.

Item B.

• Box 1. The tax-option (S) corporation must check the "Final 5K-1" box if it ceased to exist,
withdrew from Wisconsin, or terminated its tax-option (S) election, or if the shareholder's
interest in the tax-option (S) corporation terminated during the taxable year.
• Box 2. The tax-option (S) corporation must file an amended Schedule 5K-1 and check the
"Amended 5K-1" box to correct an error on a Schedule 5K-1 already filed. The tax-option
(S) corporation must include Schedule AR to explain the reason for the changes.
• Box 3. The tax-option (S) corporation must check this box if it made the election to pay tax
at the entity level.
If this box is checked, shareholders should not include in their Wisconsin adjusted gross
income their proportionate share of all items of income, gain, loss, or deduction of the tax-
option (S) corporation. See the section titled: Shareholder Reporting of Schedule 5K-1
Items from a Tax-Option (S) Corporation Electing to Pay Tax at the Entity Level.
For more information about the entity-level tax election and how it affects Schedule 5K-1,
see the instructions for Schedule 5S-ET.
• Box 4. The tax-option (S) corporation must check this box if it is a member of a multi-tier
pass-through entity structure and any of its lower-tiered entities made an election to pay
tax at the entity level.
If box 4 is checked and box 3 is not checked, the tax-option (S) corporation must provide
each shareholder with a detailed schedule showing the amount of the shareholder's items
of income, gain, loss, and deduction that have been taxed by a lower-tier entity.
Shareholders will use this schedule to complete their Wisconsin income tax returns.
For more information about the entity-level tax election and how it affects Schedule 5K-1,
see the instructions for Schedule 5S-ET.

Item C. The tax-option (S) corporation enters the shareholder’s percentage of stock ownership
for the taxable year. If there was a change in shareholders or in the relative interest in stock the
shareholders owned during the taxable year, each shareholder’s percentage of ownership is
weighted for the number of days in the taxable year that stock was owned.

Item D. The tax-option (S) corporation enters the shareholder’s state of residence (domicile). If
the state of residence changed during the corporation’s taxable year, indicate all states involved.
If the shareholder moved into or out of Wisconsin during the corporation’s taxable year, and the
corporation does business in and outside Wisconsin, the shareholder’s Wisconsin share of the
tax-option items will be affected. See the instructions below for more information.

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2024 Wisconsin Schedule 5K-1 Instructions

Item E. The tax-option (S) corporation checks this box only if the shareholder is a nonresident or
part-year resident of Wisconsin during the corporation’s taxable year and the corporation is a
multistate corporation that would figure its income under the apportionment method if it were a
regular (C) corporation. The tax-option (S) corporation enters its apportionment percentage from
Schedule A-01, A-02, A-03, A-04, A-05, A-06, A-07, A-08, A-09, A-10, or A-11, as appropriate.
The appropriate apportionment schedule must be included with the Form 5S filed with the
department.

Item F. The tax-option (S) corporation checks this box only if the shareholder is a nonresident or
part-year resident of Wisconsin during the corporation’s taxable year and the corporation is a
multistate corporation that would figure its income under the separate accounting method if it were
a regular (C) corporation. Include Form C to show the allocation of the amount under Wisconsin
law in column (d) of each applicable share item on Schedule 5K to Wisconsin and outside
Wisconsin.

Item G. The tax-option (S) corporation checks this box if the shareholder is a nonresident who
filed Form PW-2 and either received an approved Form PW-2 or received a continuous exemption
letter from the department to claim exemption from pass-through entity withholding. Both the tax-
option (S) corporation and shareholder must keep a copy of the exemption letter on file to
substantiate the withholding exemption. However, the tax-option (S) corporation generally must
still report that shareholder on Form PW-1 to disclose that the withholding exemption was claimed.
See the Form PW-1 instructions for further details.

Item H. The tax-option (S) corporation checks this box if a qualifying shareholder elects to be
included on Form 1CNS, Composite Wisconsin Individual Income Tax Return for Nonresident
Tax-Option (S) Corporation Shareholders. The tax-option (S) corporation enters the amount of
Wisconsin composite tax paid on behalf of the qualifying shareholder from Form 1CNS, Schedule
2, Column (G), in the space provided. The composite return (Form 1CNS) replaces the separate
Wisconsin income tax return, Form 1NPR, that otherwise would be filed by the qualifying
shareholder. For more information regarding the composite return, see the instructions for Form
1CNS.

Part III - Schedule 5K-1, Columns (a) Through (e)

Column (a) – Pro rata share items. These item descriptions are substantially identical to the
item descriptions on federal Schedule K-1. However, on the lines for other income, other
deductions, alternative minimum tax (AMT) items, nondeductible expenses, distributions, and
other information, enter the actual description instead of the applicable code from the federal
Schedule K-1.

Column (b) – Federal Amount. The federal amount is the shareholder’s pro rata share of the
amount from Wisconsin Schedule 5K, column (b), and generally should agree with the amount
for that item reported on the shareholder’s federal Schedule K-1.

Column (c) – Adjustment. The adjustment is the shareholder’s pro rata share of the amount
from Wisconsin Schedule 5K, column (c). The tax-option (S) corporation must complete Schedule
5K-1, Part IV for any adjustment in column (c). If the difference arises because a federal law
change has not been adopted by Wisconsin (e.g., bonus depreciation), identify it as a “Schedule
I adjustment.” Individual shareholders must account for this difference on Wisconsin Schedule I .

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2024 Wisconsin Schedule 5K-1 Instructions

Column (d) – Amount Under Wisconsin Law. The amount under Wisconsin law is the
shareholder’s pro rata share of the amount from Wisconsin Schedule 5K, column (d). This is the
amount used in computing Wisconsin income by a full-year resident of Wisconsin. Full-year
Wisconsin resident shareholders, part-year resident shareholders, and nonresident shareholders
also use the information from column (d) to calculate the Wisconsin basis in the corporation’s
stock.

Column (e) – Wisconsin Source Amount. The tax-option (S) corporation fills in this column only
for a nonresident or part-year Wisconsin resident shareholder. The Wisconsin source amount is
the portion of the shareholder’s amount in column (d) that is attributable to Wisconsin. If the tax-
option (S) corporation is doing business in and outside Wisconsin, this generally will be the
amount from column (d) multiplied by the tax-option (S) corporation’s apportionment percentage
from item E.

Caution: Do not fill in column (e) for a shareholder who is a full-year resident of Wisconsin.

Shareholders That Are Full-Year Residents of Wisconsin

Shareholders who are full-year residents of Wisconsin must report to Wisconsin all income or loss
regardless of where it is earned or incurred, unless otherwise exempt (such as United States
government interest).

Therefore, a tax-option (S) corporation that does business in and outside Wisconsin does not
apportion a Wisconsin resident shareholder’s share of its income, loss, and deductions between
Wisconsin and elsewhere. The amount determined under Wisconsin law for each item is the
shareholder’s share, based on their percentage of stock ownership of the amount on Schedule
5K, column (d).

Do not fill in column (e).

Shareholders That Are Nonresidents

Shareholders who are nonresidents of Wisconsin must report to Wisconsin all income or loss that
is earned or incurred in Wisconsin.

If Corporation Does Business Only in Wisconsin. A nonresident shareholder’s share of the
adjustment and amount determined under Wisconsin law of each item is the shareholder’s share,
based on their percentage of stock ownership, of the amounts on Schedule 5K, columns (c) and
(d). Enter the amount from column (d) in column (e).

If Corporation Does Business in and Outside Wisconsin. A nonresident shareholder’s
Wisconsin source amount in column (e) of each item is the shareholder’s amount from column
(d) that is attributable to Wisconsin based on apportionment or separate accounting, as
appropriate.

If the corporation is a unitary, multistate corporation, compute the Wisconsin source amount of
each share item by multiplying the amount in column (d) for that item by the apportionment
percentage from Item E.

If the corporation has nonapportionable income (loss) on Form N, line 14, compute the Wisconsin
source amount in column (e) of any affected item by multiplying the amount of the

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2024 Wisconsin Schedule 5K-1 Instructions

nonapportionable share item from Schedule 5K, column (d), that is attributed to Wisconsin on
Form N by the nonresident shareholder's percentage of stock ownership.

If the corporation is a nonunitary, multistate corporation, compute the Wisconsin source amount
in column (e) of each share item by multiplying the amount from Schedule 5K, column (d), that is
allocated to Wisconsin on Form C by the nonresident shareholder’s percentage of stock
ownership.

Itemized Deduction Amounts. A shareholder may choose to treat items that are deductible on
federal Schedule A in either of the following ways:

• As deductions that may be includable in the Wisconsin itemized deduction credit, or
• As modifications that are subtracted from federal adjusted gross income to arrive at
Wisconsin adjusted gross income.

Itemized Deduction Credit:

Show the amount that would be used in the Wisconsin itemized deduction credit in column (d).
Don't multiply this result by the Wisconsin apportionment percentage or allocate it in and outside
Wisconsin using separate accounting, regardless of the shareholder’s state of residence. The
shareholder uses the amount from column (d) for the itemized deduction credit. Include the
amount that is deductible as a federal itemized deduction in the itemized deduction credit to the
extent permitted under Wisconsin law. If the shareholder's federal itemized deductions were
limited due to their income level, the shareholder uses the allowable deductions after the limitation
is applied.

Subtraction Modification:

For items claimed as subtraction modifications, the Wisconsin amount is limited to the amount
actually allowed as an itemized deduction for federal purposes. The subtraction is limited to the
amount actually deductible for federal purposes. (For example, any limitation when federal
itemized deductions are reduced due to federal adjusted gross income limits also apply to the
subtraction modification). For a nonresident or part-year resident shareholder of a multistate
corporation, the Wisconsin amount is further limited to the portion that is attributable to Wisconsin
based on apportionment or separate accounting, as appropriate. Therefore, for a nonresident or
part-year resident shareholder of a multistate corporation, enter the Wisconsin source amount in
column (e). The shareholder uses the amount from column (e) when completing Form 1NPR.

Shareholders That Are Part-Year Residents

Shareholders who are part-year residents of Wisconsin must report to Wisconsin all income or
loss, regardless of where it is earned or incurred, while they were residents of Wisconsin, and all
income or loss earned or incurred in Wisconsin while they were nonresidents of Wisconsin.

If Corporation Does Business Only in Wisconsin. A part-year resident shareholder’s share of
the adjustment and amount under Wisconsin law of each item is the shareholder’s share, based
on their percentage of stock ownership, of the adjustment and amount determined under
Wisconsin law shown on Schedule 5K, columns (c) and (d), respectively. The tax-option (S)
corporation enters the amount from column (d) in column (e).

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              2024 Wisconsin Schedule 5K-1 Instructions 

If  Corporation  Does  Business  in  and  Outside  Wisconsin.  Compute  a  part-year  resident 
shareholder’s Wisconsin source amount in column (e) of each item in two parts: one for the portion 
of the corporation’s taxable year that the shareholder was a resident of Wisconsin, and another 
for  the  portion  of  the  corporation’s  taxable  year  that  the  shareholder  was  a  nonresident  of 
Wisconsin. 
 
For this purpose, the amount of any share item is determined on a daily basis. That is, every 
share item is allocated between the resident and nonresident status of the shareholder based on 
the number of days during the corporation’s taxable year that the shareholder was a resident or 
nonresident  of  Wisconsin.  The  shareholder’s  share  of  an  item  for  each  period  (resident  or 
nonresident) is determined in the same manner as that of full-year residents and nonresidents, 
respectively. 
 
Line-by-Line Instructions: Part III 
 
Lines 1 through 12, 15, and 17d 
 
The  entries  on these  lines  show  the  shareholder's  share  of the  federal amount  (column  (b)), 
adjustment (column (c)), and amount reportable under Wisconsin law (column (d)) for each of the 
items. For nonresident and part-year resident shareholders, the entries also show their share of 
the amount attributed to Wisconsin (column (e)). 
 
These amounts don't consider limitations on losses or other items that may have to be adjusted 
because of the adjusted basis of the shareholder's stock and debt in the corporation, the at-risk 
limitations, or the passive activity limitations. 
 
If the amount under Wisconsin law for any share item on lines 1 through 12, 15, and 17d differs 
from the federal amount, the shareholder's Schedule 5K-1 will have an amount in column (c). The 
shareholder must account for this difference on their Wisconsin franchise or income tax return. 
How the shareholder accounts for the difference depends on the return they are filing, the share 
item, and the reason for the difference. 
 
If the difference in column (c) arises because a provision of the Internal Revenue Code doesn’t 
apply for Wisconsin (e.g., bonus depreciation) or a federal law change becomes effective for 
Wisconsin at a different time, the shareholder must complete Wisconsin Schedule  I          (Schedule B 
for estates and trusts) before filling in their Wisconsin income tax return. If the difference results 
from the tax-option (S) corporation making different elections for federal and Wisconsin purposes, 
the  shareholder  must  recompute  the  federal  adjusted  gross  income  that  they  report  on  their 
Wisconsin  return.  These  adjustments  are  often  called  “Schedule   Iadjustments”  because 
individuals must report them on Wisconsin Schedule I . For more information, see WisconsinTax 
Bulletin 214 (July 2021, page 8). 
 
The tax-option (S) corporation must identify the adjustments and provide that information to the 
individual shareholders on Schedule 5K-1. 
 
If the difference is a modification allowed in computing Wisconsin adjusted gross income, the 
treatment depends on which share item is affected and the return the shareholder is filing: 
 
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  2024 Wisconsin Schedule 5K-1 Instructions 

Modifications on Lines 1, 2, 3, 5, 6, 10, 11, 12, and 17d: 
 
 •  If the shareholder files Form 1, account for any modification to one of these share items 
  by  combining  the  amount  from  Schedule  5K-1,  column  (c),  with  any  other  Wisconsin 
  modification and entering the total on the appropriate line(s) of Form 1, Schedule AD or 
  Schedule SB. 
 •  If  the  shareholder files Form  1NPR,  include  on  the  appropriate  line of Form  1NPR  or 
  Schedule M, along with any other Wisconsin income or loss, the Wisconsin amount from 
  column (e) of any share item reported on one of these lines. 
 •  If the  shareholder  files Form  2  as  a  full-year  resident  estate  or trust,  account for  any 
  modification to one of these share items by entering the amount from Schedule 5K-1, 
  column (c),  on  Form  2, Schedule  A. If  the  shareholder files  Form  2  as  a  part-year  or 
  nonresident  estate  or  trust,  enter  the  appropriate  amounts  from  Schedule  5K-1  on 
  Schedule NR. 
 
Interest Income Modifications on Lines 4, 16a, and 17a: 
 
Interest income that is exempt from federal income taxes but taxable by Wisconsin, such as state 
and  local  government  bond  interest,  is  shown  as  an  addition  on  line  4,  column  (c)  and  as  a 
subtraction on line 16a, column (c). 
 
 •  If the shareholder files Form 1, combine the interest income amount from Schedule 5K-1, 
  column (c), with any other interest modification and enter the total on the appropriate line 
  of Form 1, Schedule AD or Schedule SB. 
 •  If  the  shareholder files Form  1NPR,  include  on  the  appropriate  line of Form  1NPR  or 
  Schedule  M,  along  with  any  other  Wisconsin  interest  income,  the  Wisconsin  source 
  amount of interest income from Schedule 5K-1, column (e). 
 •  If the  shareholder  files Form  2  as  a  full-year  resident  estate  or trust,  account for  any 
  modification by entering the amount from Schedule 5K-1, column (c), on Form 2, Schedule 
  A. If the shareholder files Form 2 as a part-year or nonresident estate or trust, enter the 
  appropriate amounts from Schedule 5K-1 on Schedule NR. 
 
Capital Gain Modifications on Lines 7 and 8: 
 
Resident shareholders enter the Wisconsin law amounts of these share items from column (d) on 
the  appropriate  lines  of  Wisconsin  Schedule  WD  (Schedule  2WD  for  estates  and  trusts). 
Nonresidents and part-year residents enter the Wisconsin source amounts from column (e).  
 
Section 1231 Gain/Loss Modifications on Line 9a: 
 
Individual shareholders, see the instructions for Part II of Wisconsin Schedule T and submit a 
recomputed federal Form 4797 as instructed. 
 
Estate  and  trust  shareholders,  see  the  instructions  for  Form  2  and  complete  the  adjustment 
worksheet as instructed. 
 
                                            11

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2024 Wisconsin Schedule 5K-1 Instructions

Portion of the amount on Line 9a attributable to gains on sales of farm assets on Line 9b:

Tax-option (S) corporations enter on line 9b the portion of the net gain attributable to the sales of
farm assets included on line 9a held more than one year. Do not include amounts treated as
ordinary income for federal income tax purposes because of recapture of depreciation or for any
other reason, nor amounts treated as capital gain for federal income tax purposes from the sale
or exchange of a lottery prize. “Farm assets” means livestock, farm equipment, farm real property,
and farm depreciable property.

Other income (loss) on line 10

Tax-option (S) corporations use a separate line for each type of income (loss).

If there are more than two types of other income (loss), the tax-option (S) corporation enters "See
Attached" on line 10a, column (a), and the appropriate totals in columns (b), (c), (d), and (e). The
tax-option (S) corporation submits a separate attachment listing each type and amount of other
income (loss).

Itemized Deduction Modifications on Lines 12 and 17b:

Individual shareholders adjust the deduction items from federal Schedule A when figuring the
Wisconsin itemized deduction credit (Form 1, Schedule 1, or Form 1NPR, Schedule 1). Increase
or decrease, as appropriate, the amount from federal Schedule A by the amount on Schedule 5K-
1, column (c).

Note: Rather than including the tax-option items deductible on federal Schedule A in the
Wisconsin itemized deduction credit, the shareholder may treat these items as subtraction
modifications to arrive at Wisconsin adjusted gross income. Their modification is limited to the
amount actually deductible for federal purposes.

Include the amount that is deductible as a federal itemized deduction in the itemized deduction
credit to the extent permitted under Wisconsin law. If the shareholder's federal itemized
deductions were limited due to income level, the shareholder uses the allowable deductions after
the limitation is applied.

The subtraction is limited to the amount actually deductible for federal purposes. (For example,
any limitation when federal itemized deductions are reduced due to federal adjusted gross income
limits also apply to the subtraction modification).

If the shareholder is a nonresident of Wisconsin for any part of the corporation’s taxable year,
their modification is further limited to that portion of the deductible amount which is attributable to
Wisconsin based on apportionment or separate accounting, as appropriate.

Line 13a through 13h. Credits

Tax-option (S) corporations compute the credits on lines 13a through 13h in the same manner for
shareholders who are full-year, part-year, or nonresidents of Wisconsin.

Note: Do not multiply the shareholder's proportionate or specially allocated share of credits by
the shareholder's apportionment percentage. Nonresidents and part-year residents are eligible
for the full amount of credits similar to a full-year resident. (Only the early-stage seed investment

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              2024 Wisconsin Schedule 5K-1 Instructions 

credit and supplement to the federal historic rehabilitation credit may be specially allocated. See 
the Schedule VC and HR instructions for details.) 
 
For each credit, the tax-option (S) corporation enters the shareholder’s proportionate or specially 
allocated  share  of  the  amount  on  Schedule  5K.  The  tax-option  (S)  corporation  enters  the 
abbreviation of the credit being claimed next to the word "schedule" on line 13. The abbreviation 
for each credit is shown in the upper left-hand corner of each respective credit schedule, as well 
as in parentheses next to the description of the credit from the Schedule 5K instructions. See 
exceptions below. 
 
For the following credits, the tax-option (S) corporation enters the code indicated below 
instead of the abbreviation from the credit schedule: 
 
 •  Angel Investment Credit – VCA 
 •  Early-Stage Seed Investment Credit – VCE 
 •  Regular Research Credit –  R
 •  Research credit related to designing internal combustion engines for vehicles, including 
    expenses related to designing vehicles that are powered by such engines and improving 
    production processes for such engines and vehicles – RIC 
 •  Research  credit  related  to  the  design  and  manufacturing  of  energy  efficient  lighting 
    systems,  building  automation  and  control  systems,  or  automotive  batteries  for  use  in 
    hybrid−electric vehicles, that reduce the demand for natural gas or electricity or improve 
    the efficiency of its use - REE 
 
The tax-option (S) corporation uses a separate line for each credit being claimed. For example, if 
the tax-option (S) corporation is claiming the enterprise zone jobs credit, it enters "EC" next to the 
"Schedule" line. 
 
Line 13i. Credit for Tax Paid to Other States  
 
Tax-option (S) corporations complete this line only for full-year Wisconsin resident shareholders 
and part-year Wisconsin resident shareholders. Enter zero for shareholders who are nonresidents 
of Wisconsin. 
 
For a full-year resident, enter in column (d) the shareholder’s proportionate share or specifically 
allocated share of the amount of the tax credits on Form 5S, Schedule 5K, line 13i.  
 
For a part-year resident, enter in column (d) the shareholder's proportionate share or specifically 
allocated share of the amount of the tax credits on Form 5S, Schedule 5K, line 13i, multiplied by 
the  ratio  of  days  that  the  shareholder  was  a  resident  of  Wisconsin  during  the  tax-option  (S) 
corporation’s taxable year to the total days in the tax-option (S) corporation’s taxable year. 
 
If a tax-option (S) corporation, limited liability company, or partnership filed its own income or 
franchise tax return with another state and paid tax on its income to that state, an individual 
shareholder generally uses Part III of Schedule OS to calculate their credit for net taxes paid to 
other states. The amount of income to include in the computation of Part III would generally be 
the individual's pro rata share of the amount of income the entity paid tax to the other state. The 
entity should provide this information to the individual so that they may compute the appropriate 
amount of credit for net tax paid to other states. 

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             2024 Wisconsin Schedule 5K-1 Instructions 

Note:  The  amount  of  eligible  qualified  production  activities  income  that  may  be  claimed  in 
computing the manufacturing and agriculture credit is reduced by the amount of the qualified 
production activities income taxed by another state upon which a credit for taxes paid to the other 
state is claimed. The tax-option (S) corporation will need to provide the shareholders with the 
amount of eligible qualified production activities income upon which their share of the credit for 
tax paid to another state was computed so they may use this information when completing their 
tax returns. 
 
Caution: If the tax-option (S) corporation makes an election to be taxed at the entity level under 
sec. 71.365(4m)(a), Wis. Stats., it must leave line 13i blank. The shareholder may not claim a 
credit for net tax paid to another state on income taxed on the electing tax-option (S) corporation's 
Wisconsin tax return or taxes paid on the shareholder's behalf on a composite return. A resident 
shareholder may not claim a credit for taxes the shareholder paid to another state on income 
taxed at the entity level in Wisconsin. If the tax-option (S) corporation paid a tax to another state 
on a corporate return or on a composite return on behalf of the shareholders, the entity may claim 
a credit on Schedule ET-OS. See the instructions for this schedule for information on computing 
the credit. 
 
Line 13j. Wisconsin Tax Withheld 
 
Shareholders enter the amount from line 13j, column (d), on the “Wisconsin income tax withheld” 
line of their Wisconsin income or franchise tax return. Unless the shareholder elects to be included 
in a composite return (Form 1CNS), the shareholder must include a complete copy of Schedule 
5K-1 with their Wisconsin income or franchise tax return if they claim this credit. 
 
If the tax-option (S) corporation was required to file Form PW-1 to withhold tax on behalf of its 
nonresident shareholders, it enters in column (d) the tax withholding allocated to the shareholder. 
 
Caution: Shareholders do not enter their share of pass-through entity withholding as an estimated 
tax payment on their Wisconsin return. 
 
Line 14.  
 
Federal Schedule K-3: If the tax-option (S) corporation has items of international tax relevance, 
check this box, and include federal Schedule K-3 with Schedule 5K-1. If there are differences 
between the federal and Wisconsin amounts reported on Schedule K-3, include a statement to 
explain the differences. 
 
The shareholder must account for the differences appropriately on the shareholder's Wisconsin 
franchise or income tax return. 
 
Line 15. 
 
Alternative Minimum Tax Items – Wisconsin does not have an alternative minimum tax for taxable 
years beginning on or after January 1, 2019. 
 
Tax-option (S) corporations fill in column (b) with the amount from federal Schedule K-1. Do not 
report any amounts under columns (c), (d), and (e). 
 
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2024 Wisconsin Schedule 5K-1 Instructions

Lines 16a through 16c. Tax-Exempt Interest and Non-deductible Expenses

Differences in the amount of income that is exempt for federal and Wisconsin purposes are shown
on lines 16a and 16b, column (c). Increases or decreases in the amount of nondeductible
expenses are shown on line 16c, column (c). Shareholders use the amount from column (d) when
computing the Wisconsin basis of their stock.

Line 16d. Property Distributions

Shareholders reduce their Wisconsin basis in stock of the corporation by the Wisconsin
distributions on line 16d, column (d). If these distributions exceed the shareholder's Wisconsin
basis in stock and they were a Wisconsin resident when they received the distributions, the
shareholder treats the excess as a Wisconsin gain from the sale or exchange of property. Enter
any Wisconsin gain on the appropriate line of Wisconsin Schedule WD.

Line 16e. Repayment of Loans from Shareholders

If the repayments on line 16e are made on indebtedness with a reduced Wisconsin basis and the
shareholder received the repayments while they were a Wisconsin resident, the repayments result
in income to the shareholder to the extent the repayments are more than the adjusted Wisconsin
basis of the loan.

If the shareholder is filing Form 1, enter the amount of Wisconsin income realized on Wisconsin
Schedule WD, if the loan was a capital asset. If the loan wasn’t a capital asset, enter the difference
between federal income and Wisconsin income on Schedule AD or Schedule SB, as appropriate.

If the shareholder is filing Form 1NPR, enter the amount of Wisconsin income realized on
Wisconsin Schedule WD, if the loan was a capital asset, or on the appropriate line on Form 1NPR
or Schedule M, if the loan wasn’t a capital asset.

Line 16f. Foreign Taxes Paid or Accrued

The tax-option (S) corporation enters the shareholder's proportionate share of the federal amount,
adjustment, and amount determined under Wisconsin law from Schedule 5K.

Lines 17a Through 17c. Investment Income/Expense and Dividend Distributions

Enter the shareholder’s proportionate share of the federal amount, adjustment, and amount
determined under Wisconsin law from Schedule 5K for each of these items.

Line 17c. Dividend Distributions

The shareholder must report the amount from column (d) or (e), as appropriate, as dividend
income if they were a Wisconsin resident on the date they received it. The federal amount of the
dividend distribution should have been reported to the shareholder on Form 1099-DIV.

If the shareholder is filing Form 1, enter the amount from line 17c, column (c), on Schedule AD or
Schedule SB, as appropriate. If the shareholder is filing Form 1NPR and the dividend distribution
is reportable to Wisconsin, enter the amount from line 17c, column (e), on the appropriate line of
Form 1NPR or Schedule M, along with any other dividend income reportable to Wisconsin.

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2024 Wisconsin Schedule 5K-1 Instructions

Line 17d. Other Items and Amounts

If applicable, the corporation provides supplemental information or lists in the space provided the
shareholder's pro rata share of items not included on lines 1 through 17c. This listing should
include the federal amount, adjustment, amount under Wisconsin law, and Wisconsin source
amount, if applicable, for each item. The shareholder accounts for any other share items listed on
line 17d as necessary to include the taxable or deductible amount of each item as computed
under Wisconsin law in the shareholder's Wisconsin income.

If interest income from United States government obligations is listed, the shareholder must make
an adjustment on their Wisconsin return since this income is taxable for federal income tax
purposes, but not for Wisconsin purposes. If the shareholder is filing Form 1, include the federal
amount of this interest income on Schedule SB. If a shareholder is filing Form 1NPR, include this
interest income on the appropriate lines of Form 1NPR and Schedule M.

Include the following items on line 17d:

• The amount of interest income from United States government obligations that is included
on Schedule 5K-1, line 4. Full-year residents use the amount from column (d) and
nonresidents and part-year residents of Wisconsin use the amount from column (e).
• Information on the sale, exchange, or other disposition of property for which the section
179 expense deduction was claimed.
• If the tax-option (S) corporation is engaged in both farming and some other business
activity, indicate the portion of each of the share items that is attributable to the farm
operations. The shareholders use this information in applying the farm loss limitations.
• The amount deducted under the Internal Revenue Code as moving expenses, as defined
in sec. 71.01(8j), Wis. Stats., paid or incurred during the taxable year to move the
taxpayer's Wisconsin business operations, in whole or in part, to a location outside
Wisconsin or to move the taxpayer's business operations outside the United States, must
be added back to Wisconsin income.
• Any information needed by a shareholder to determine why the Wisconsin amount of any
item differs from the federal amount.

Note: Tax-option (S) corporations whose Wisconsin shareholders may qualify for the farmland
preservation credit should provide a copy of the farmland property tax bill with the Schedule 5K-
1 given to each Wisconsin shareholder. It isn’t necessary for the tax-option (S) corporation to
submit the property tax bill with the Schedules 5K-1 sent to the department. Shareholders will
compute their allowable credits based on their proportionate shares of the tax-option (S)
corporation’s property taxes. For additional information about the farmland preservation credit,
see the Wisconsin Schedule FC or FC-A instructions. If the tax-option (S) corporation is a member
of one or more other pass-through entities, gross income includes the gross income attributable
to those other pass-through entities.

Manufacturing and agriculture credit information: If the tax-option (S) corporation computed
the manufacturing and agriculture credit on Schedule MA-M and/or MA-A, include on line 17d the
amount of income that was used to compute the manufacturing and/or agriculture credit so that
the shareholders can use this information when completing Schedule MA-M or MA-A, Part II,
Computation of Business Income Limitation for individuals and fiduciaries, if required.

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2024 Wisconsin Schedule 5K-1 Instructions

The amount of eligible qualified production activities income that may be claimed in computing
the manufacturing and agriculture credit is reduced by the amount of the qualified production
activities income taxed by another state upon which a credit for taxes paid to the other state is
claimed. The tax-option (S) corporation will need to provide the shareholders with the amount of
eligible qualified production activities income upon which their share of the credit for tax paid to
another state was computed so they may use this information when completing their tax returns.

Caution: If a tax-option (S) corporation makes an election to pay tax at the entity-level under sec.
71.365(4m)(a), Wis. Stats., the shareholder may only use the credit to offset tax liability resulting
from the shareholder's prorated share of taxable income from the tax-option (S) corporation for a
future year, in which the election is not made.

Lines 18a and 18b. Related Entity Expenses

If the tax-option (S) corporation paid, accrued, or incurred management fees or interest, rental or
intangible expenses to a related person or entity, the corporation completes lines 18a and 18b,
as appropriate, to separately disclose the modifications it made to those items under the
Wisconsin law requiring “addback” of related entity expenses. Shareholders should verify that any
amounts on lines 18a and 18b are included in column (d). If they are not, the shareholder should
enter the modifications from lines 18a and 18b on the appropriate lines of Form 1, Form 1NPR,
or Form 2, as applicable.

Note: The shareholder must make separate addition and subtraction modifications on their return
for related entity interest and rental expenses, even if the modifications offset one another.

Line 19. Income (Loss)

For each of columns (d) and (e), combine lines 1 through 10. From the result, subtract the sum of
lines 11 through 12. Add or subtract, as appropriate, any income or deductions reported on line
17d that affect the computation of taxable income.

Line 20. Gross Income

Individuals combine the amount from column (d) or (e), as appropriate, with gross income from
other sources (if any) that is reportable to Wisconsin to determine whether they must file a
Wisconsin income tax return. See the instructions for Form 1 or Form 1NPR for information about
the filing requirements.

Enter the shareholder’s share, based on the percentage of stock ownership, of the corporation’s
gross income that is reportable to Wisconsin. The shareholder will use this information to
determine whether they must file a Wisconsin income tax return.

A full-year Wisconsin resident shareholder’s share of the gross income is the shareholder’s share,
based on their percentage of stock ownership, of the amount shown on Schedule 5K, line 20,
column (d).

A nonresident or part-year resident shareholder’s share of the gross income of a corporation that
does business only in Wisconsin is the shareholder’s share, based on their percentage of stock
ownership, of the amount shown on Schedule 5K, line 20, column (d). Enter the result in both
column (d) and column (e).

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 2024 Wisconsin Schedule 5K-1 Instructions 

Compute  a  nonresident  shareholder’s  share  of  the  gross  income  of  a  unitary,  multistate 
corporation by multiplying the amount from Schedule 5K, line 20, column (d), by the nonresident 
shareholder’s percentage of stock ownership and entering the result in column (d). Multiply that 
amount by the apportionment percentage and enter the result in column (e). 
 
Compute  a  nonresident  shareholder’s  share  of  the  gross  income  of  a  nonunitary,  multistate 
corporation by multiplying the amount from Schedule 5K, line 20, column (d), by the nonresident 
shareholder’s percentage of stock ownership and entering the result in column (d). Allocate that 
amount in and outside Wisconsin and enter the portion allocated to Wisconsin in column (e). 
 
Compute a part-year resident shareholder’s share of the gross income of a multistate corporation 
in two parts: one for the portion of the corporation’s taxable year that the shareholder was a 
resident of Wisconsin and one for portion of the corporation’s taxable year that the shareholder 
was a nonresident of Wisconsin. Enter the result in column (e). 
 
Example of Schedule 5K-1 
 
Corporation  S  is  a  calendar-year  multistate  corporation  with  a  60%  Wisconsin  apportionment 
percentage and no nonapportionable income. Its two shareholders, A and B, each own 50% of 
the  stock  of  Corporation  S.  Shareholder  A  was  a  Wisconsin  resident  during  all  of  2024. 
Shareholder B was a resident of Wisconsin until moving to Illinois on April 1, 2024. Therefore, 
Shareholder B was a part-year resident of Wisconsin for 2024, having been a resident for 90 days 
and a nonresident for 275 days. 
 
Schedule 5K for 2024 shows the following amounts on the lines indicated: 
 
Schedule 5K 
 
 (a) Distributive        (b) Federal  (c) Adjustments  (d) Amt. under 
       share items            amount                      WI law 
 1 Ordinary Income       $10,000     ($1,000)                   $9,000 
 4 Interest Income       200                    500              700 
 16a Tax-exempt          500            (500)                    0 
         interest income 
 
The tax-exempt interest income is state and local government bond interest that is exempt from 
federal income taxes but taxable by Wisconsin. The adjustments in column (c) on lines 4 and 16a 
become part of the amount taxable by Wisconsin. 
 
For Shareholder A, Schedule 5K-1 would show the following: 
 
 (a) Distributive        (b) Federal  (c) Adjustments  (d) Amt. under  (e) WI source 
       share items            amount                      WI law               amount 
 1 Ordinary Income       $5,000      ($500)                     $4,500                 
 4 Interest Income       100                    250              350                   
 16a Tax-exempt          250            (250)                    0                     
         interest income 
 
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       2024 Wisconsin Schedule 5K-1 Instructions 

These amounts are determined by multiplying the amounts on Schedule 5K by Shareholder A’s 
50%  stock  ownership  percentage.  Column  (e)  is  blank  because  shareholder  A  is  a  full-year 
Wisconsin resident. 
 
For Shareholder B, Schedule 5K-1 would show the following: 
 
 (a) Distributive        (b) Federal  (c) Adjustments  (d) Amt. under  (e) WI source 
       share items            amount                         WI law           amount 
 1 Ordinary Income       $5,000               ($500)         $4,500       $3,144 
 4 Interest Income       100                     250                350   244 
 16a Tax-exempt          250                     (250)              0                 
         interest income 
 
The amounts in columns (b), (c), and (d) are computed by multiplying the amount on Schedule 
5K  by  Shareholder  B’s  50%  stock  ownership  percentage.  The  Wisconsin  source  amounts  in 
column (e) are computed in two parts: one for the 90-day period that Shareholder B was a resident 
of Wisconsin, and one for the 275-day period that Shareholder B was a nonresident of Wisconsin. 
The computations of Shareholder B’s amounts in column (e) are shown next: 
 
       Shareholder B's Line 1: Ordinary Income 
 Period of residence     $4,500 x 90/365               =     $1,110 
 Period of nonresidence  $4,500 x .6 x 275/365         =     $2,034 
 Total                                                 =     $3,144 
 
       Shareholder B's Line 4: Interest Income 
 Period of residence     $350 x 90/365                 =            $86 
 Period of nonresidence  $350 x .6 x 275/365           =     $158 
 Total                                                 =     $244 
 
This example involves a multistate tax-option (S) corporation that would file its return using the 
apportionment  method. If the  corporation  were  required to file  using  the  separate  accounting 
method, the calculations would be similar. The calculations for Shareholder A and for the period 
that  Shareholder  B  was  a  Wisconsin  resident  are  the  same  as  in  the  example  above.  The 
calculations for the period that Shareholder B was a nonresident of Wisconsin differ in that the 
Wisconsin amount from Form C (as discussed earlier) is used instead of the Wisconsin amount 
from Schedule 5K and the Wisconsin apportionment percentage. 
 
Part IV – Shareholder's Pro Rata Share of Additions and Subtractions 
 
The purpose of this schedule is to provide detail for the amounts entered on Schedule 5K-1, Part 
III, lines 1 through 12d, column (c). The net amount from this schedule should equal the  net 
amount of the adjustments reported on Schedule 5K-1, Part III, lines 1 through 12d, in column (c). 
 
For many situations, the amounts from the additions/subtractions schedule will be entered in line 
1 or 2, column (c), of Schedules 5K and 5K-1. 
 
If  a  tax-option  (S)  corporation  only  has  ordinary  income,  the  net  addition/subtraction  will  be 
entered  on  line  1,  column  (c)  of  Schedules  5K  and  5K-1.  Conversely,  if  the  tax-option  (S) 
corporation only has rental real estate income, the net addition/subtraction will be entered on line 
2, column (c) of those schedules. 

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2024 Wisconsin Schedule 5K-1 Instructions

If the tax-option (S) corporation has both ordinary business income and rental real estate income,
but no other income, the net addition/subtraction should be allocated between lines 1 and 2,
column (c), of Schedules 5K and 5K-1.

For situations where a tax-option (S) corporation has multiple sources of income and is required
to make numerous adjustments in column (c), the appropriate addition/subtraction adjustment
should be made on each income/expense line in column (c) of Schedules 5K and 5K-1. The total
adjustments made to column (c) should equal the total adjustment on the addition/subtraction
schedule.

Schedule IAdjustments

If the amounts entered on Part IV are the result of a federal law change that has not been adopted
by Wisconsin (e.g., bonus depreciation), identify it as a Schedule Iadjustment. The individual
shareholders will account for the adjustment on Schedule I instead of a Schedule AD or Schedule
SB adjustment.

Line-by-Line Instructions: Additions

Line 1. State Taxes

Enter all taxes imposed by Wisconsin, any other state, and the District of Columbia that are value-
added taxes, single business taxes, or taxes on or measured by net income, gross income, gross
receipts, or capital stock that were deducted in computing federal taxable income.

Line 2. Related Entity Expenses

A corporation must make an addition modification to “add back” expenses attributable to
transactions with related parties. The expenses that must be added back include the following, if
paid, accrued, or incurred to a related entity:

• Interest expenses
• Rent expenses
• Management fees
• Intangible expenses

Corporations that are members or beneficiaries of pass-through entities must include on line 2
their share of the pass-through entity’s related entity expenses shown on line 18a of Schedule
5K-1, Part III.

Note: If the corporation meets one of the specific conditions provided in the Wisconsin Statutes,
the corporation may take a subtraction modification on line 11 for some or all of the amount added
back on this line. See the instructions for line 11 for details.

Definitions Applicable to Line 2. In determining whether an addback of related entity expenses
is necessary, the following definitions apply:

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   2024 Wisconsin Schedule 5K-1 Instructions 

 •  “Related entity” – A related person under one of the following sections of the Internal 
  Revenue Code (IRC): 
  o  Section  267(b),  which  defines  relationships  through  which  taxpayers  would  be 
   considered  “related”  for  purposes  of  the  disallowance  of  deduction  or  loss  on 
   transactions between related taxpayers 
  o  Section 1563, relating to controlled groups of corporations, which is incorporated 
   into section 267 by reference 
  o  Section 707(b), relating to partners of partnerships, which is also incorporated into 
   section 267 by reference 
  A "related entity" also includes certain real estate investment trusts (REITs) if they are not 
  "qualified REITs." For more on qualified REITs, see Wisconsin          Tax Bulletin #158, page 
  17, Questions A2 and A3. 
 •  “Interest expenses” – Interest that would otherwise be deductible under sec. 163, IRC, 
  and otherwise deductible in the computation of Wisconsin income. 
 •  “Rent expenses” – Gross amounts that would otherwise be deductible under the IRC, as 
  modified for Wisconsin purposes, for the use of, or the right to use, real property and 
  tangible personal property in connection with real property, including services rendered in 
  connection  with  such  property,  regardless  of  how  reported  for  financial  accounting 
  purposes and regardless of how computed. 
 •  “Management fees” – Expenses and costs, not including interest expenses, pertaining to 
  accounts receivable, accounts payable, employee benefit plans, insurance, legal matters, 
  payroll, data processing, purchasing, taxation, financial matters, securities, accounting, or 
  reporting on compliance matters or similar activities, to the extent that the amounts would 
  otherwise  be  deductible  in  determining  net  income  under  the  IRC  as  modified  for 
  Wisconsin purposes. 
 •  “Intangible expenses” – Any of the following, to the extent the amounts would otherwise 
  be  deductible  in  determining  net  income  under  the  IRC  as  modified  for  Wisconsin 
  purposes: 
  o  Expenses, losses, or costs for, related to, or directly or indirectly in connection with, 
   the acquisition, use, maintenance, management, ownership, sale, exchange, or 
   any other disposition of intangible property 
  o  Losses related to, or incurred in connection directly or indirectly with, factoring 
   transactions or discounting transactions 
  o  Royalty, patent, technical, and copyright fees 
  o  Licensing fees 
  If  a  corporation  purchases  an  amortizable  intangible  asset  from  a  related  entity,  the 
  amortization expenses on that asset are considered intangible expenses and should be 
  added back. 
 
Schedule RT Filing Requirement for Amount on Line 2. If the amount a corporation reports on 
line  2  exceeds  $100,000,  the  corporation  must  file  Schedule  RT, Wisconsin  Related  Entity 
Expenses Disclosure Statement, with its return. However, corporations using apportionment may 
multiply  the  amount  on  line  2  by  the  apportionment  percentage  for  purposes  of  determining 
whether they meet the $100,000 threshold for filing Schedule RT. 

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2024 Wisconsin Schedule 5K-1 Instructions

Line 3. Expenses Related to Nontaxable Income

Enter expenses included in federal taxable income that are directly or indirectly related to
nontaxable income. Include a schedule with your return showing the payers and amounts of
nontaxable income and explaining why that income isn’t taxable.

Interest, dividends, and capital gains from the disposition of intangible assets are nontaxable if
both of the following are true:

• The operations of the payer are not unitary with those of the payee, and
• The payer and payee are not related as parent company and subsidiary or affiliates and
the investment activity from which the income is received is not an integral part of a unitary
business.

Income may also be nontaxable under the principles of the U.S. Supreme Court decision in Allied-
Signal v. Director, Div. of Taxation, 504 U.S. 768 (1992), if the investment is passive and does
not serve an operational function.

For corporations subject to the Wisconsin income tax rather than the franchise tax, nontaxable
income also includes interest on United States government obligations.

Examples of expenses related to nontaxable income include taxes, interest, and administrative
fees related to the production of nontaxable income.

Also enter on this line any losses included in federal taxable income from disposing of assets if
gains from disposing those assets would have been non-taxable income if the assets were
disposed of at a gain.

Line 4. Section 179, Depreciation, Amortization Differences

• Section 179 expenses:
Enter the amount by which the Wisconsin section 179 expense exceeds the federal
section 179 expense.
For taxable years beginning on or after January 1, 2014, sections 179, 179A, 179B, 179C,
179D, and 179E of the Internal Revenue Code, related to expensing of depreciable
business assets, apply for Wisconsin tax purposes. "Internal Revenue Code" means the
federal Internal Revenue Code in effect for the year in which the property is placed in
service.
For further information about the differences between the limitations for federal and
Wisconsin purposes, see the section titled: Conformity with Internal Revenue Code and
Exceptions in the Form 5S instructions.
• Depreciation/Amortization (not section 179 expense):
Enter the amount by which the federal deduction for depreciation or amortization exceeds
the Wisconsin deduction. Include a schedule showing the computation details.
These differences can happen because of IRC sections not adopted for Wisconsin
purposes and also because of differences that existed between Wisconsin and federal law
for assets placed in service before January 1, 1987.

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2024 Wisconsin Schedule 5K-1 Instructions

For 2014 and beyond, bonus depreciation was reinstituted by the federal government, and
an adjustment is required to account for the depreciation difference because Wisconsin
has not adopted federal bonus depreciation provisions. For Wisconsin purposes,
depreciation, depletion, and amortization is computed based on the Internal Revenue
Code in effect on January 1, 2014, and bonus depreciation was not in effect on that date.

Line 5. Amount by Which the Federal Basis of Assets Disposed of Exceeds the Wisconsin
Basis

Enter the amount by which the federal basis of assets disposed of exceeds the Wisconsin basis.
If more than one asset is disposed of, you may combine the bases of the assets so that you need
only one entry on this line. Provide a schedule showing the computation details.

For example, assume a corporation sold the following assets during the current taxable year:

Federal Basis Wisconsin Basis Difference
Equipment $1,500 $500 $1,000
Machinery 1,000 2,000 (1,000)
Building 20,000 10,000 10,000
Totals $22,500 $12,500 $10,000

The amount to enter would be $10,000. If the Wisconsin bases of the assets had exceeded the
federal bases, an entry would be made on line 14.

The modification may also apply in cases where a parent corporation disposes of subsidiary stock
for which the basis is determined under Treas. Reg. §1.1502-32. See sec. Tax 2.61(6)(f), Wis.
Adm. Code, for details.

Line 6. Addition for Credits Computed

The corporation enters the total amount of credits from the following list that it computes on its
2024 return. Note: The manufacturing and agriculture credit is the credit computed in 2023.

• Line 6a. Business development credit (Schedule BD)
• Line 6b. Community rehabilitation program credit (Schedule CM)
• Line 6c. Development zones credits (Schedule DC)
• Line 6d. Economic development credit (Schedule ED)
• Line 6e. Electronics and information technology manufacturing zone credit (Schedule EIT)
• Line 6f. Employee college savings account contribution credit (Schedule ES)
• Line 6g. Enterprise zone jobs credit (Schedule EC)
• Line 6h. Reserved for future use
• Line 6i. Manufacturing and agriculture credit (2023 Schedule MA-M and MA-A)
• Line 6j. Reserved for future use
• Line 6k. Research credits (Schedule R)

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2024 Wisconsin Schedule 5K-1 Instructions

Line 7. Adjustment for Built-In Gains Tax

Section 1366(f), IRC, relating to the reduction in pass-through income for taxes at the S-
corporation level, is modified by substituting the Wisconsin built-in gains tax for the taxes imposed
under secs. 1374 and 1375, IRC. Thus, for Wisconsin purposes, the gain on the sale of an asset
is reduced by any Wisconsin built-in gains tax paid by the corporation on that asset. For federal
purposes, however, the gain is reduced by the federal built-in gains tax.

Line 8. Addition for Federal Capital Gains and Excess Net Passive Income Taxes

If the tax-option (S) corporation reduced net long-term capital gain by an amount of federal capital
gains tax or reduced items of passive investment income by an amount of federal excess net
passive income tax, those tax amounts must be reported as additions on line 8.

Line 9. Other Additions

Enter any other additions that have not been accounted for in the preceding lines. List each
addition separately with a title showing what the addition is for. Do not simply total the amounts
in one entry titled "Other Additions."

Line-by-Line Instructions: Subtractions

Line 11. Related Entity Expenses Eligible for Subtraction

If the corporation made an addition modification for related entity expenses on line 2, this is where
the corporation reports the amount that qualifies for a deduction. Enter the amount of the
expenses from line 2, that are deductible using the criteria described in Conditions for Deducting
Related Entity Expenses, below.

For corporations that are members or shareholders of pass-through entities, also include the
amount of allowable related entity expense reported on line 18b of Schedule 5K-1, Part III.

Conditions for Deducting Related Entity Expenses. Section 71.80(23)(a)3., Wis. Stats.,
provides that a related entity expense that was added back on line 2, qualifies for a deduction if
all of the following conditions are met:

• The primary motivation for the transaction was one or more business purposes other than
the avoidance or reduction of state income or franchise taxes;
• The transaction changed the economic position of the taxpayer in a meaningful way apart
from tax effects; and
• The expenses were paid, accrued, or incurred using terms that reflect an arm’s length
relationship.

Factors that may indicate that the expense does not qualify for a deduction include the following:

• There was no actual transfer of funds from the taxpayer to the related entity, or the funds
were substantially returned to the taxpayer, either directly or indirectly.
• If the transaction was entered on the advice of a tax advisor, the advisor’s fee was
determined by reference to the tax savings.

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2024 Wisconsin Schedule 5K-1 Instructions

• The related entity does not regularly engage in similar transactions with unrelated parties
on terms substantially similar to those of the subject transaction.
• The transaction was not entered into at terms comparable to arm’s length as determined
by Treas. Reg. 1.482-1(b).
• There was no realistic expectation of profit from the transaction apart from the tax benefits.
• The transaction resulted in improper matching of income and expenses.
• An expense for the transaction was accrued under FIN 48.

The statutes (sec. 71.80(23)(a)1. and 2., Wis. Stats.) provide some additional conditions under
which a related entity expense may qualify for a deduction, subject to some important exceptions.
Those conditions are:

• If the expense was paid to a related entity that is merely acting as a conduit between the
taxpayer and an unrelated entity, or
• If the related entity was subject to a tax measured by net income or receipts and the net
income or receipts of the transaction were included in its tax base.

More Information on Related Entity Expenses. For more information on the deductibility of
related entity expenses, see the Schedule RT instructions. Even if you weren’t required to file
Schedule RT for the expenses, the instructions to Schedule RT provide helpful information
regarding deductibility of related entity expenses.

Line 12. Income from Related Entities Whose Expenses Were Disallowed

If the corporation has income from a related entity which paid, accrued, or incurred expenses to
the corporation, and that related entity could not deduct those expenses according to the
instructions for line 2, the corporation may subtract the corresponding income from its taxable
income. In order to claim a subtraction on line 12, the corporation must obtain Schedule RT-1
from the related entity and submit Schedule RT-1. See the Schedule RT-1 instructions for further
details.

Line 13. Section 179, Depreciation Difference, Amortization of Assets

• Section 179 expenses:
Enter the amount by which the federal section 179 expense exceeds the Wisconsin
section 179 expense. For taxable years beginning on or after January 1, 2014, sections
179, 179A, 179B, 179C, 179D, and 179E of the Internal Revenue Code, related to
expensing of depreciable business assets, apply for Wisconsin tax purposes. "Internal
Revenue Code" means the federal Internal Revenue Code in effect for the year in which
the property is placed in service.
For further information about the differences between the limitations for federal and
Wisconsin purposes, see the section titled: Conformity with Internal Revenue Code and
Exceptions in the Form 5S instructions.

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           2024 Wisconsin Schedule 5K-1 Instructions 

  •  Depreciation/Amortization: 
       Enter  the  amount  by  which  the  Wisconsin  deduction  for  depreciation  or  amortization 
       exceeds  the  federal  deduction  for  depreciation  or  amortization.  Include  a  schedule 
       showing the computation details. 
       These  differences  can  happen  because  of  IRC  sections  not  adopted  for  Wisconsin 
       purposes and electing a different depreciation method under the Internal Revenue Code 
       in effect for Wisconsin purposes. 
 
Line 14. Amount by Which the Wisconsin Basis of Assets Disposed of Exceeds the Federal 
Basis 
 
Sales of assets with different Wisconsin basis than federal basis will also require the corporation 
to make adjustments in column (c). For example, a corporation sold the following assets, which 
had been held more than one year: 
 
           Selling Price        Wisconsin Basis         Federal Basis 
 Equipment $1,000                          $1,500                  $500 
 Machinery 15,000                          5,000             17,500 
 Building  200,000                       150,000           120,000 
 
The gains (losses) realized on these transactions are – 
 
           Wisconsin Gain (Loss)         Federal Gain (Loss) 
 Equipment                      ($500)                     $500 
 Machinery               10,000                            (2,500) 
 Building                50,000                            80,000 
 Total                   $59,500                        $78,000 
 
The corporation must recompute a federal Form 4797, substituting the Wisconsin depreciation 
allowed or allowable and Wisconsin basis of the assets for the federal amounts. 
 
For federal purposes, the $500 gain on the sale of the equipment is determined to be depreciation 
recapture, which is treated as ordinary gain and included in the corporation’s ordinary income or 
loss on Form 5S, Schedule 5K, line 1, column (b). 
 
For Wisconsin purposes, $5,000 of the gain on the sale of the machinery is determined to be 
depreciation recapture, which is treated as ordinary gain. 
 
The corporation enters $4,500 ($5,000 Wisconsin ordinary gain minus $500 federal ordinary gain) 
on Schedule 5K, line 1, column (c).  
 
The corporation makes the following entries on Schedule 5K, line 9a: $77,500 in column  (b), 
$(23,000) in column (c), and $54,500 in column (d). 
 
Line 15. Adjustment for Built-In Gains Tax 
 
Section  1366(f),  IRC,  relating  to  the  reduction  in  pass-through  income  for  taxes  at  the  S-
corporation level, is modified by substituting the Wisconsin built-in gains tax for the taxes imposed 
under secs. 1374 and 1375, IRC. Thus, for Wisconsin purposes, the gain on the sale of an asset 

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2024 Wisconsin Schedule 5K-1 Instructions

is reduced by any Wisconsin built-in gains tax paid by the corporation on that asset. For federal
purposes, however, the gain is reduced by the federal built-in gains tax.

Line 16. Federal Wage Credits

Enter wages that aren’t deductible in computing federal income because they are being used in
computing federal wage tax credits.

Line 17. Federal Research Credit Expenses

Enter research expenses that aren’t deductible in computing federal income because they are
being used in computing the federal credit for increasing research activities.

Line 18. Commercial Loans

If the conditions of sec. 71.05(1)(i), Wis. Stats., are met, then certain income derived from a
commercial loan may be exempt from Wisconsin tax. Enter the appropriate amount of the
shareholder's share of tax-exempt income from commercial loans on line 18.

Line 19. Other Subtractions

Enter any other subtractions that have not been accounted for in the preceding lines. List each
subtraction separately with a title showing what the subtraction is for. Do not simply total the
amounts in one entry titled "Other Subtractions."

Determining Wisconsin Income of Multistate Tax-Option (S)
Corporations

Who Must Use Apportionment?

Under the apportionment method, a corporation shows all income and deductions for the
corporation as a whole and then assigns a part to Wisconsin according to a formula that
determines Wisconsin net income. A corporation engaged in business in and outside Wisconsin
is required to report a portion of its total company net income to Wisconsin using the
apportionment method if its Wisconsin operations are a part of a unitary business, unless the
department gives permission to use separate accounting.

A unitary business is one that operates as a unit and can’t be segregated into independently
operating divisions or branches. The operations are integrated, and each division or branch is
dependent upon or contributory to the operation of the business as a whole. It isn’t necessary that
each division or branch operating in Wisconsin contribute to the activities of all divisions or
branches outside Wisconsin.

To use the apportionment method, a corporation must have business activity sufficient to create
nexus in Wisconsin and at least one other state or foreign country.

“Nexus” means that a corporation’s business activity is of such a degree that the state or foreign
country has jurisdiction to impose an income tax or franchise tax measured by net income. Under
Public Law 86- 272, a state can’t impose an income tax or franchise tax based on net income on
a corporation selling tangible personal property if the corporation’s only activity in the state is the

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           2024 Wisconsin Schedule 5K-1 Instructions 

solicitation of orders, which are approved outside the state and are filled by delivery from a point 
outside the state. 
 
What Is the Apportionment Percentage? 
 
For  unitary,  multistate  businesses  (except  direct  air  carriers,  interstate  air  freight  forwarders 
affiliated  with  a  direct  air  carrier,  motor  carriers,  railroads,  pipeline  companies,  financial 
institutions,  brokers-dealers,  investment  advisers,  investment  companies,  underwriters,  and 
telecommunications  companies  whose  incomes  are  apportioned  by  special  rules  of  the 
department), the apportionment percentage is determined by the ratio of Wisconsin sales to total 
company (corporation) sales. 
 
For most companies, the apportionment percentage is computed on Schedule A-01. However, 
the following apportionment schedules should be used by the specialized industries listed below: 
 
 •  Schedule A-02: Interstate Financial Institutions 
 •  Schedule A-03: Interstate Motor Carriers 
 •  Schedule A-04: Interstate Telecommunications Companies 
 •  Schedule A-05: Insurance Companies 
 •  Schedule A-06: Interstate Brokers-Dealers, Investment Advisors, Investment Companies, 
  and Underwriters 
 •  Schedule A-07: Interstate Air Carriers 
 •  Schedule A-08: Broadcasters 
 •  Schedule A-09: Interstate Railroads 
 •  Schedule A-10: Interstate Pipeline Companies 
 •  Schedule A-11: Interstate Air Freight Forwarders Affiliated with a Direct Air Carrier 
 
What Is Nonapportionable Income? 
 
Nonapportionable income is that income which is allocable directly to a particular state. It includes 
income or loss derived from the sale of nonbusiness real or tangible personal property or from 
rentals and royalties from nonbusiness real or tangible personal property. This income is assigned 
to the state where the property is located. 
 
All income that is realized from the sale of or purchase and subsequent sale or redemption of 
lottery  prizes  if  the  winning  tickets  were  originally  bought  in  Wisconsin  shall  be  allocated  to 
Wisconsin. 
 
Total  nonapportionable  income  (loss)  is  removed  from  total  company  net  income  before  the 
apportionment  percentage  is  applied.  The  Wisconsin  nonapportionable  income  (loss)  is  then 
combined with the Wisconsin apportionable income to arrive at Wisconsin net income. 
 
Corporate Partners or LLC Members 
 
A  corporation  that  is  a  general  or  limited  partner  includes  its  share  of  the  numerator  and 
denominator of the partnership’s apportionment factors in the numerator and denominator of its 

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2024 Wisconsin Schedule 5K-1 Instructions

apportionment factors. A corporation that is a member of a limited liability company (LLC) treated
as a partnership for federal tax purposes includes its share of the numerator and denominator of
the LLC’s apportionment factors in the numerator and denominator of its apportionment factors.
The corporation should request a detailed breakdown of the partnership’s or LLC’s items and
amounts to be included in the computation of its apportionment factors.

Note: Income from a partnership or LLC may be nontaxable under the principles of the U.S.
Supreme Court decision in Allied-Signal v. Director, Div. of Taxation, 504 U.S. 768 (1992), if the
investment is passive and does not serve an operational function. In this case, the corporation
would not include its share of the partnership’s or LLC’s apportionment factors in the numerator
and denominator of its apportionment factors.

Separate Accounting

A corporation engaged in a nonunitary business in and outside Wisconsin must determine the
amount of income attributable to Wisconsin by separate accounting. A nonunitary business is one
in which the operations in Wisconsin aren’t dependent upon or contributory to the operations
outside Wisconsin. Under separate accounting, the corporation must keep separate records of
the sales, cost of sales, and expenses for the Wisconsin business.

A unitary business may use separate accounting only with the approval of the department. A
request for such approval must set forth, in detail, the reasons why separate accounting will more
clearly reflect the corporation’s Wisconsin net income. It should be mailed to:

Audit Bureau, Mail Stop 6-81
Wisconsin Department of Revenue
PO Box 8906
Madison, WI 53708-8906

before the end of the taxable year for which the use of separate accounting is desired.

A tax-option (S) corporation uses Form C and Form N, as appropriate, to determine its income
attributable to Wisconsin.

Shareholder Reporting of Schedule 5K-1 Items from a Tax-Option
(S) Corporation Electing to Pay Tax at the Entity Level

Shareholder Reporting Requirements

According to sec. 71.365(4m)(b), Wis. Stats., shareholders of a tax-option (S) corporation do not
include in their Wisconsin adjusted gross income their proportionate share of all items of income,
gain, loss, or deduction of the tax-option (S) corporation. Instead, the tax-option (S) corporation
must report the items and pay tax on the income.

For example, a resident of Wisconsin removes the items from the electing tax-option (S)
corporation by completing the appropriate lines of Schedule AD and/or Schedule SB when filing
Wisconsin Form 1.

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          2024 Wisconsin Schedule 5K-1 Instructions 

Shareholder Basis 
 
The shareholder's adjusted basis in the stock and indebtedness of the tax-option (S) corporation 
is determined as if the election was not made as provided in sec. 71.365(1)(b), Wis. Stats. 
 
Schedule 5K-1 Items Allowed to Be Claimed by the Shareholder 
 
 •  Credits passed through from the tax-option (S) corporation reported on Schedule 5K-1, 
     Part III, lines 13a through 13h 
     Caution: 
     o  The tax-option (S) corporation may not pass through a credit for taxes paid to other 
          states and shareholders may not use taxes paid by the tax-option (S) corporation 
          to compute a credit for taxes paid to other states. 
     o  A shareholder may only use the manufacturing and agriculture credit to offset their 
          tax liability resulting from their prorated share of the tax-option (S) corporation's 
          income as provided in sec. 71.07(5n)(c)3., Wis. Stats. Since a shareholder of an 
          electing tax-option (S) corporation does not have income and resulting tax from 
          the tax-option (S) corporation in the year of the election, the shareholder cannot 
          use the credit to offset their income tax liability from other sources of income. The 
          shareholder may carry forward the credit for 15 years and use the credit to offset 
          tax liability resulting from the shareholder's prorated share of taxable income from 
          the tax-option (S) corporation for a future year, in which the election is not made. 
 •  Wisconsin tax withheld passed through from the tax-option (S) corporation reported on 
     Schedule 5K-1, line 13j 
     Note: The shareholder may only claim the Wisconsin withholding if the tax-option (S) 
     corporation did not claim a refund of the withholding or submit a written request to apply 
     the withholding against tax liability at the entity level. 
 
Schedule 5K-1 Items Not Allowed to Be Claimed By the Shareholder 
 
All items reported on Schedule 5K-1 other than the items mentioned under Schedule 5K-1 Items 
Allowed to Be Claimed By the Shareholder above. 
 
Proportionate Share of an Electing Tax-Option (S) Corporation's Income 
 
Shareholders must report their federal adjusted gross income using the Internal Revenue Code 
in effect under Wisconsin law on their Wisconsin income tax return. 
 
Shareholders must add back to federal adjusted gross income the amount of net loss reported by 
the tax-option (S) corporation that is included in the federal adjusted gross income. 
 
Shareholders must subtract from federal adjusted gross income the amount of income reported 
by the tax-option (S) corporation that is included in federal adjusted gross income. 
 
Note:  The  department  has  created  some  examples  in  the   common  questions  to  assist 
shareholders with reporting Schedule 5K-1 items from an electing tax-option (S) corporation. 
 
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          2024 Wisconsin Schedule 5K-1 Instructions 

Additional Information, Assistance, and Forms 
 
Web Resources 
 
The department's website, available at www.revenue.wi.gov has a number of resources to provide 
additional information and assistance, including: 
 
  •  Related forms and their instructions 
  • Common questions 
  • Publications on specific tax topics 
  •  The Wisconsin Tax Bulletin 
  •  Links to the Wisconsin Statutes and Administrative Code 
 
Contact Information 
 
If  you  cannot  find  the  answer  to  your  question  on  the  department’s  website,  contact  the 
department using any of the following methods: 
 
  •  E-mail your question to: DORAuditPassThrough@wisconsin.gov  
  •  Call  (608)  266-2772  (Telephone  help  is  also  available  using  TTY  equipment.  Call  the 
    Wisconsin Telecommunications Relay System at 711 or, if no answer, (800) 947-3529). 
  •  Send a fax to (608) 267-0834 
  •  Write to:  
    Customer Service Bureau, Mail Stop 5-77  
    Wisconsin Department of Revenue  
    PO Box 8949  
    Madison, WI 53708-8949 
  •  Call or visit any Department of Revenue office 
 
Obtaining Forms 
 
If you need forms or publications, you may: 
 
  •  Download or request them from the department’s website at www.revenue.wi.gov  
  •  Call (608) 266-1961 
  •  Call or visit any Department of Revenue office 

                              Applicable Laws and Rules 
  
 This document provides statements or interpretations of the following laws and regulations 
 enacted as of July 19, 2024: chs. 71 and 77,  Wis. Stats., and chs. Tax 1, 2, and 3, Wis. 
 Adm. Code. 

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