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                                2024 Wisconsin Schedule ESBT  Instructions 

   Purpose of Schedule                                                                                 
 
 A trust that makes the election to be an electing small business trust (ESBT) and has Wisconsin 
 sourced income from one or more tax-option (S) corporations  must use Schedule ESBT to 
 compute the Wisconsin tax on  the  Wisconsin sourced income from the tax-option (S) 
 corporation(s). 
 
 Note: If the trust is an ESBT, check the appropriate box on page 1 of the trust's Form 2, Wisconsin 
 fiduciary income tax for estates or trusts, under the information section indicating the trust is an 
 electing small business trust. 
 
   Result of Making the Election                                                                       
 
 Electing small business trusts must separate the income from tax-option (S) corporations and 
 treat it as a separate trust from  other trust income. The net income  for the tax-option (S) 
 corporation portion is determined under federal law, as  modified by Wisconsin  addition  and 
 subtraction items as provided on Schedule A of Form 2 and Schedule 2M. The separate trust is 
 taxed on its Wisconsin taxable income at the highest rate for fiduciaries (7.65%). 
 
 The ESBT  must include with Form  2 a copy of the Schedule 5K 1 from  the tax-option (S) 
                                                                 ‑
 corporation (or the Schedule K 1 from the federal S corporation if the tax-option (S) corporation 
                                ‑
 was not required to file a Wisconsin tax return) that includes the name and federal employer 
 identification number (FEIN) of the tax-option (S) corporation. 
 
 Caution: If the ESBT receives a Schedule 5K-1 with box 3 in Part B checked, indicating the tax- 
 option (S) corporation made the entity-level tax election according to sec. 71.365(4m)(a), Wis. 
 Stats., the following reporting requirements apply: 
 
 •  All items of income, gain, loss, or deduction from the electing tax-option (S) corporation must 
  be removed from the ESBT’s Wisconsin income or loss. 

 •  The ESBT may not claim a credit for taxes paid to another state on income taxed on the 
  electing tax-option (S) corporation’s Wisconsin tax return. In addition, a resident ESBT may 
  not claim a credit for taxes  paid  to  another state  on income taxed at the tax-option (S) 
  corporation's entity level in Wisconsin. 

 •  The manufacturing and agriculture credit can only be used to offset tax liability for the tax 
  imposed on a shareholder's prorated share of a tax-option 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 (ESBT) cannot use the credit to offset income tax liability from other 
  sources of income. The ESBT may carry forward the credit for 15 years and use the credit to 
  offset tax liability resulting from the ESBT's prorated share of taxable income from the tax- 
  option (S) corporation for a year in which the election is not made. 

 •  The ESBT  may not claim  Wisconsin pass-through withholding from  a tax-option (S) 
  corporation if the corporation elected to be taxed at the entity level and claimed a refund of 
  the pass-through withholding or submitted  a written request to  apply the pass-through 
  withholding against the tax liability at the entity level. 

 I-037 (R. 12-24)                          1 



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                                2024 Wisconsin Schedule ESBT  Instructions 

   When and Where to File                                                                                 
 
 Include Schedule ESBT with the trust's Form 2, Wisconsin fiduciary income tax for estates or 
 trusts. 
 
   Part I Computation of Wisconsin ESBT Income                                                            

 Column (a) – Federal ESBT Amount 

 Fill in the amounts from the tax-option (S) corporation portion of the trust that are taxable for 
 federal purposes. 
 
 The federal ESBT amount is the trust's share of the amount from Wisconsin Schedule 5K-1, 
 column (b), and should agree with the  amount for that item reported  on the  trust's Federal 
 Schedule K-1 (Form 1120S). 
 
 Column (b) – Wisconsin ESBT Amount 
 
 Fill in amounts from the tax-option (S) corporation portion of the trust that are taxable to Wisconsin. 
 According to sec. 71.125(2), Wis. Stats., an ESBT's income is computed under sec. 641 of the 
 Internal Revenue Code, as modified by sec. 71.05(6) to (12), (19) and (20), Wis. Stats. For 
 information about the addition and subtraction modifications, see Schedule A on page 4 of Form 
 2 and Schedule 2M. 
 
 Residents – In general, the amounts entered in column (b), should agree with the amounts from 
 Wisconsin Schedule 5K-1, Part III, column (d). If the trust received a federal Schedule K-1 (Form 
 1120S) from a tax-option (S) corporation that is a resident asset of Wisconsin according to sec. 
 71.14(3m)(a), Wis. Stats., but did not issue the trust a Wisconsin Schedule 5K-1, the trust must 
 include in column (b) the amounts from the federal Schedule K-1 (Form 1120S) adjusted for 
 Wisconsin. 
 
 Nonresidents or part-year residents – In general, the amounts entered in column (b), should agree 
 with the amounts from Wisconsin Schedule 5K-1, Part III, column (e). If the trust received a federal 
 Schedule K-1 (Form 1120S) from a tax-option (S) corporation that is a resident asset of Wisconsin 
 according to sec. 71.14(3m)(a), Wis. Stats., but did not issue the trust a Wisconsin Schedule 5K- 
 1, the trust must include in column (b) the amounts from the federal Schedule K-1 (Form 1120S) 
 adjusted for Wisconsin. 
 
 If the ESBT is a shareholder of a tax-option (S) corporation making the entity-level tax election 
 according to sec. 71.365(4m)(a), Wis. Stats., see the Caution under Result of Making the Election 
 earlier in these instructions. 
 
 Column (c) – Non-Wisconsin ESBT Amount 
 
 Residents – Leave column (c) blank. This also applies to a nonresident or part-year resident trust 
 with a tax-option (S) corporation portion of the trust that is a resident asset of Wisconsin according 
 to sec. 71.14(3m)(a), Wis. Stats. 

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                              2024 Wisconsin Schedule ESBT  Instructions 

 Nonresidents or part-year residents – Fill in amounts from the tax-option (S) corporation portion 
 of the trust that are not from Wisconsin sources. In general, the amounts entered in column (c), 
 should agree with the difference between Wisconsin Schedule 5K-1, Part III, columns (d) and (e). 
 
 If the trust has ownership in multiple tax-option (S) corporations, the trust must include in column 
 (c) the amounts received on  a federal Schedule K-1 (Form 1120S) from a  tax-option (S) 
 corporation that did not have Wisconsin sourced income and is not a resident asset of the trust 
 according to sec. 71.14(3m)(a), Wis. Stats. 
 
 Line 4b – Net long-term capital gain (loss): 

 The Wisconsin 30-percent and/or 60-percent long-term capital gain exclusion applies for the ESBT's 
 net long-term capital gains. 
 
 Line 8 – Other income: 

 Submit a supplemental statement with Schedule ESBT identifying each additional item 
 of income and enter the total income from the supplemental statement on line 8.      
 
 Line 15 – Qualified business income deduction: 

 Wisconsin did not adopt section 199A of the Internal Revenue Code, as created in the 
 federal Tax  Cuts and Jobs Act of 2017, which provides a taxpayer, other  than a 
 corporation, a federal deduction of up to 20 percent of qualified business income. Any 
 federal qualified business income deduction claimed according to sec. 199A, IRC, is not 
 allowed for Wisconsin. 
 
 Line 16 – Other deductions: 

 Submit a supplemental statement with Schedule  ESBT identifying each additional 
 deduction item and enter the total deduction amount from the supplemental statement 
 on line 16. 
 
 Line 17 – Net operating loss deduction: 

 If the tax-option (S) corporation portion of the trust is claiming a Wisconsin net operating 
 loss deduction, include a schedule similar to Wisconsin Schedule NOL1, Wisconsin Net 
 Operating Loss Deduction, reflecting the computation of the Wisconsin net operating loss 
 deduction. 
 
  Part II Computation of Wisconsin Tax                                                                 

 Line 20 – Total Wisconsin ESBT income (from line 19, column b):          

 If line 18, column (b) is greater than line 9, column b, enter 0 (zero) on line 20. 
 
 Line 22 – Wisconsin ESBT credits: 

 Credits from the tax-option (S) corporation portion of the trust may only be used to offset 
 tax imposed on the tax-option (S) corporation portion of  the trust.    Note: Wisconsin 
 income tax withheld and passed through from the tax-option (S) corporation portion of 
 the trust is included on Form 2, line 12, and not on Schedule ESBT, line 22. 

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                         2024 Wisconsin Schedule ESBT  Instructions  

 If the ESBT is a shareholder of a tax-option (S) corporation making the entity-level tax 
 election according to sec. 71.365(4m)(a), Wis. Stats., see the      Caution under Result of 
 Making the Election earlier in these instructions. 
 
 Nonrefundable  Credits 
 
 Report the nonrefundable credits related to the tax-option (S) corporation portion of the 
 trust from Schedule CR, Other Credits, line 34, on Schedule ESBT, line 22. 
 
 Refundable  Credits 
 
 Report the refundable credits related to the tax-option (S) corporation portion of the trust 
 from Schedule CR, line 40, on Form 2, line 15. 
 
 Credit Carryforward 
 
 Include a schedule similar to Wisconsin Schedule CF, Carryforward of Unused Credits, 
 reflecting the carryforward of unused credits of the tax-option (S) corporation portion of 
 the trust. 
  
 Line 23 – Net tax paid to another state credit: 
  
 The ESBT portion of the credit for net tax paid to another state from Schedule OS, line 41, must be 
 reported on Schedule ESBT, line 23. The ESBT portion of the credit cannot be claimed on Form 2, 
 line 8. 
 
   Part III Source of Tax-Option (S) Corporation ESBT Income                                            
 
 Provide the legal name and FEIN of each tax-option (S) corporation included on the 
 Schedule ESBT. If the ESBT holds shares in more than three tax-option (S) corporations, 
 attach a schedule listing the legal name and FEIN of each tax-option (S) corporation 
 included on the Schedule ESBT. 
 
   Additional Information and Assistance                                                                
 
 Contact Information 
 o Email your questions to DOREstateandFiduciary@wisconsin.gov 

 o Call (608) 266-2772 
 o Call or visit any Department of Revenue office listed on the department's website at 
   https://www.revenue.wi.gov/Pages/FAQS/ise-address.aspx 
 
 Applicable Laws and Rules 

 This  document  provides  statements  or  interpretations  of  the  following  laws  and  regulations 
 enacted as of November 29, 2024: ch. 71, Wis. Stats. 

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