2024 Wisconsin Schedule IInstructions                           

  General Instructions                                                                                                                       
Introduction     – The computation of taxable income on the 2024 Wisconsin income tax return is based on the Internal Revenue 
Code (IRC) enacted as of December 31, 2022, with the following exceptions: 
• Certain provisions enacted into federal law prior to December 31, 2022, do not apply for Wisconsin 
• Only certain provisions enacted into federal law after December 31, 2022, apply for Wisconsin 
For example, Wisconsin law has not adopted the federal bonus depreciation provisions for certain business assets or the exclusion 
from gross income for income from discharge of indebtedness on a qualified principal residence. These differences are a result of 
Wisconsin adopting a definition of “Internal Revenue Code” that is different than what is in effect for federal income tax purposes. 
This is also referred to as Wisconsin’s definition of the IRC. 
As a result, certain income and deduction items may be different for Wisconsin and federal purposes. These differences must be 
adjusted on Schedule Iand are described beginning on the next page.      

Who Must File       – If the computation of your federal adjusted gross income (FAGI), itemized deductions, or a federal credit for 
Wisconsin purposes reflects any of the differences in Wisconsin and federal law for 2024, you must complete this schedule and 
attach it to your Wisconsin income tax return, Form 1 or Form 1NPR. 
Schedule Iadjustments made in a prior year may require a Schedule  adjustmentI   in 2024. For example, if you claimed federal 
bonus depreciation on your 2023 return, you must recompute depreciation using the Wisconsin depreciable basis of the asset. 
The difference between the amount of bonus depreciation claimed on your federal return and the amount of depreciation allowed 
for Wisconsin purposes must be adjusted on Schedule  forI 2023. An additional adjustment on Schedule  isIrequired each year 
until the asset is fully depreciated for federal and Wisconsin purposes. 
An adjustment may also be required on Schedule Ito adjust for differences in the amount of gain or loss reportable from sales or 
dispositions of assets during 2024. For example, an adjustment is required on Schedule  ifIthe Wisconsin adjusted basis of the 
asset differs from the federal adjusted basis due to Wisconsin’s definition of the IRC, which results in a difference in gain or loss. 

Using a Different Federal Election for Wisconsin – Various elections are available under the federal IRC. When an election 
is available under the IRC adopted for Wisconsin, a taxpayer may choose one election for federal tax purposes and a different 
election for Wisconsin. For example, a taxpayer may elect to claim different amounts of IRC sec. 179 expense for federal and 
Wisconsin tax purposes. For additional information, see Wisconsin Tax Bulletin 214. 
Exception:       A taxpayer must use the same method of accounting used for federal income tax purposes if that method is autho-
rized under the IRC in effect for Wisconsin. 
Either of the following two methods may be used to claim a different election for Wisconsin and federal tax purposes. 
• Prepare a pro forma federal return based on the election chosen for Wisconsin. This pro forma return is to be attached to the 
  Wisconsin Form 1 or Form 1NPR instead of the actual return filed for federal tax purposes. 
• Make the election using Wisconsin Schedule I,  Adjustments to Convert Federal Adjusted Gross Income, Itemized Deductions, 
  and Credits to the Amounts Allowable for Wisconsin. 
Example:         For federal tax purposes you claim the credit under sec. 45E of the IRC for 50 percent of the startup costs of a small 
employer pension plan. When claiming the credit, you must reduce your deduction for that portion of the startup costs equal to the 
credit. However, sec. 45E(e)(3) of the IRC, provides an election to not claim the credit. Because an election is available, you may 
elect to not claim the credit for purposes of computing federal adjusted gross income on your Wisconsin return (i.e., deduct the 
eligible  startup costs  for Wisconsin). Use either of the two methods listed above to make a different election  for Wisconsin 
purposes. 
Be sure to also adjust any other items on your federal return that are affected by the election. For example, if you claim a different 
election for sec. 179 expensefor Wisconsin purposes, you must also make a Schedule Iadjustment to account for any difference 
in depreciation expense computed for Wisconsin purposes. 

Schedule IAdjustment May Require Recomputing Federal Forms and Schedules for Wisconsin Purposes                         
Any federal forms or schedules affected by Schedule  adjustmentsI must be recomputed and attached to the Wisconsin return. 
Mark these recomputed federal forms or schedules “Revised for Wisconsin” at the top. For example, federal Form 8582, Passive 
Activity Loss Limitations, must be recomputed for Wisconsin purposes if there is a Schedule  adjustmentI for the difference in 
depreciation expense for federal and Wisconsin purposes that pertains to a passive activity. 

Partners, Beneficiaries of Estates and Trusts, and Shareholders of Tax-Option (S) Corporations  
Individuals that report their distributive share of income and deductions from Wisconsin returns of partnerships, estates and trusts, 
and tax-option (S) corporations may be required to use Schedule  toI adjust for differences between Wisconsin and federal law 
computed on the entity’s return. Such partners, beneficiaries, and shareholders should receive Schedule 2K- 1, Schedule 3K-1, 
I-128 (R. 12-24)                                                                                          Wisconsin  Department  of  Revenue 

or Schedule 5K-1 from the entity which shows the adjustments between federal and Wisconsin income and the total amounts 
reportable for Wisconsin purposes. 
Caution:   If the partnership or tax-option (S) corporation made an election to be taxed at the entity level, differences in federal and 
Wisconsin law reported on Schedule 3K-1 or 5K-1 must be reported on Schedule I; however, all items of income, gain, loss, and 
deduction from these entities that would be included in Wisconsin income are removed on the individual’s Wisconsin return as an 
addition or subtraction modification on line 29 or 31 of Schedule AD, Additions to Income (Form 1), line 46 or 48 of Schedule SB, 
Subtractions from Income     (Form 1), or line 30, 32, 80, or 82 of Schedule M, Additions to and Subtractions from Income (Form 
1NPR). 
Note: Adjustments made on Schedule  I    may affect other computations on the return. For example, an adjustment for the difference 
in federal and Wisconsin depreciation allowed to a partnership changes the amount of income or loss from the partnership. If the 
partnership is subject to the passive activity limitations, federal Form 8582 must be recomputed for Wisconsin tax purposes to 
substitute the amount determined for federal tax purposes. Any difference in the amount of passive activity loss allowed for federal 
tax purposes and Wisconsin tax purposes must also be reported as a Schedule I    adjustment. Any other federal schedules or forms 
affected by a Schedule Iadjustment must also be recomputed (for example, federal       Schedule E) and attached to the Wisconsin 
return. Mark these recomputed forms or schedules “Revised for Wisconsin.” 

  Part I – Line Instructions                                                                                                        
   An adjustment made on a line below may affect the computation of an adjustment amount on another line. For example, if an 
adjustment is made on line 1a to add to income the discharge of indebtedness on a principal residence (i.e., FAGI computed for 
Wisconsin purposes changes), the amount of social security includable in FAGI may also change. Any additional social security 
includable in FAGI must be reported on one of the “other” lines (line 1h or 1i). 

 Line 1    
Enter  any  additions  to  income  due  to  the  difference  between  federal  and  Wisconsin  law  on  the  corresponding  line  for  the 
adjustments below. 

 Line 1a - Discharges of Indebtedness on Principal Residence            
(a)   Federal – Gross income does not include any amount which would be includable in gross income by reason of discharge of 
      indebtedness if the indebtedness discharged is qualified principal residence indebtedness which is discharged before January 
      1, 2026, under sec. 108, IRC. (Section 114 of division EE of Public Law 116-260). 
(b)   Wisconsin – The exclusion from gross income for income from discharge of indebtedness does not apply for Wisconsin. 

 Lines 1b and 2b - Depreciation      
Complete these lines only if there is a difference in the amount of depreciation allowed for federal income tax purposes and for 
Wisconsin tax purposes based on the Wisconsin definition of the IRC. For example, you would have a difference in depreciation 
if you claimed the federal special depreciation allowance (bonus depreciation) for assets placed in service in 2024. 
In addition, if you had a depreciation difference on Schedule  forI property placed in service on or after January 1, 2014, or the 
first day of your taxable year beginning in 2014, you will continue to have a difference in depreciation to report on Schedule I each 
year until the property is fully depreciated or until you sell or otherwise dispose of the property. 
To adjust for any difference, you must first add back your federal depreciation by entering the federal amount on line 1b of Schedule 
I. You may then subtract the revised depreciation allowed for Wisconsin on line 2b. Complete a revised federal        Form 4562, 
Depreciation and Amortization, and any accompanying forms and schedules. Mark these revised forms and schedules “Revised 
for Wisconsin.” 
Certain differences in the Wisconsin and federal definition of the IRC that apply for 2024 related to depreciation can be found later 
in these instructions under the section Other Differences Between Federal and Wisconsin Law. 

 Lines 1c, 1e, 2c, and 2e - Capital Gains and Losses from Line 7 of Federal Form 1040                 
Complete these lines only if there is a difference in the amount of capital gains or losses allowed for federal and Wisconsin income 
tax purposes based on the Wisconsin definition of the IRC. 
   If you sold or disposed of a depreciable or amortizable asset in tax year 2024 that was placed in service before January 1, 
2014, no adjustment is required on Schedule  toI  account for a difference in federal gain or loss as a result of depreciation or 
amortization differences claimed on Schedule Iin prior years. The Wisconsin basis of all depreciable or amortizable assets placed 
in service before January 1, 2014, is the same as the federal basis. 
To properly report differences in gain or loss on your Wisconsin return, you must first remove all federal gain or loss included on 
line 7 of your federal Form 1040 or 1040-SR. If the amount on line 7 of federal Form 1040 or 1040-SR is a gain, fill in that amount 
on line 2e of Schedule I. If the amount on line 7 of federal Form 1040 or 1040-SR is a loss, fill in that amount as a positive number 
on line 1c of Schedule  .I  
                                                                [ 2 ] 

Next, complete a revised federal Schedule D, federal Form 8949, and any accompanying forms and schedules. Mark these revised 
forms and schedules “Revised for Wisconsin.” 
If the revised forms show a capital gain on line 7 of federal Form 1040 or 1040-SR, fill in the revised gain on line 1e of Schedule 
I. If the revised forms show a capital loss on line 7 of federal Form 1040 or 1040-SR, fill in the revised loss on line 2c of Schedule 
I as a positive number. 
Attach the revised federal Schedule D, federal Form 8949, and any accompanying forms and schedules with Form 1 or Form 
1NPR. 
CAUTION    The amount on line 1e must also be included on Wisconsin Schedule WD, line 29a. The amount on line 2c must also 
be included on Wisconsin Schedule WD, line 29e. 
Certain differences in the Wisconsin and federal definition of the IRC that apply for 2024 related to capital gains and  losses can 
be found later in these instructions under the section Other Differences Between Federal and Wisconsin Law. 

 Lines 1d, 1f, 2d, and 2f - Ordinary Gains and Losses from Line 4 of Federal Schedule 1 (Form 1040)                 
Complete these lines only if there is a difference in the amount of ordinary gain or loss allowed for federal and Wisconsin income 
tax purposes based on the Wisconsin definition of the IRC. 
To properly report such gain or loss on your Wisconsin return, you must first remove all ordinary gain or loss reported on line 4 of 
your federal Schedule 1 (Form 1040). This is done by filling in line 1d or 2f. If the amount on line 4 of federal Schedule 1 (Form 
1040) is a gain, fill in that amount on line 2f of Schedule I. If the amount on line 4 of federal Schedule 1 (Form 1040) is a loss, fill 
in that amount as a positive number on line 1d of Schedule  .I  
Next, complete a revised federal Form 4797, federal Form 4684, and any accompanying forms and schedules. Mark these revised 
forms and schedules “Revised for Wisconsin.” 
If the revised forms show an ordinary gain for Wisconsin on line 4 of federal Schedule 1 (Form 1040), fill in the revised gain on 
line 1f. If the revised forms show an ordinary loss for Wisconsin, fill in the revised loss on line 2d as a positive number. 
Include the revised federal Form 4797, federal Form 4684, and any accompanying forms and schedules with Form 1 or Form 
1NPR. 

  Line 1g - Certain Student Loan Forgiveness        
(a) Federal – Certain student loans discharged under sec. 108(f)(5), IRC, after December 31, 2020, and before January 1, 2026, 
    are not included in federal adjusted gross income. (Section 9675 of Public Law 117-2). Note: Public Law 117-2 repealed the 
    exclusion for student loans discharged on account of death or total and permanent disability of the student. 
(b) Wisconsin – Student loans discharged under IRC sec. 108(f)(5) after December 31, 2020, and before January 1, 2026, are 
    included in federal adjusted gross income. Student loans discharged on account of death or total and permanent disability of 
    the student are excluded from federal adjusted gross income. 
    In addition, certain student loans under sec. 108(f)(1), IRC, are excluded from federal adjusted gross income for both federal 
    and Wisconsin purposes if the student loan was discharged according to a provision of the loan under which all or part of the 
    indebtedness of the individual would be discharged if the individual worked for a certain period of time in certain professions 
    for any of a broad class of employers. Student loans discharged under the Public Service Loan Forgiveness (PSLF) program 
    may qualify for this exclusion.  
    See the Student Loan Forgiveness common question for more information.  

 Lines 1h and i and 2g, h, and i - Other         
These lines are used to report any other differences between the amounts allowed for federal and Wisconsin income tax purposes 
based on the Wisconsin definition of the IRC. They are also used to report other items that need to be adjusted because of 
adjustments made on other lines of Schedule  .IFor example, passive activity losses may have to be adjusted on these lines 
because of a depreciation adjustment made on lines 1b and 2b. Enter a description of the item being adjusted on the lines provided. 
Enter adjustments for the difference between amounts allowed for federal and Wisconsin income tax purposes as follows: 
• If the difference between the federal amount and the Wisconsin amount results in an increase in Wisconsin income, enter the 
  amount of the difference as an addition to income on line 1h or i. Enter the amount as a positive number. 
• If the difference between the federal amount and the Wisconsin amount results in a decrease in Wisconsin income, enter the 
  amount of the difference as a subtraction from income on line 2g, h, or i. Enter the amount as a positive number. 
Descriptions of certain differences in the Wisconsin and federal definition of the IRC that apply for 2024 can be found later in these 
instructions under the section Other Differences Between Federal and Wisconsin Law. 

                                                                  [ 3 ] 

 Line 1j   
Add the amounts on lines 1a through 1i. Fill in the total on line 1j . 

 Line 2   
Enter, as a positive amount, any subtraction from income due to the difference between federal and Wisconsin law on the 
corresponding line for the adjustments listed below. 

 Line 2a - Health Savings Accounts Adjustment            
(a) Federal – Certain individuals may establish health savings accounts (HSAs) under sec. 223, IRC. A deduction is allowed for 
    contributions to the account. Amounts contributed by an employer to an employee’s account are excluded  from the 
    employee’s gross income. (Section 307 of Public Law 109-432). 
(b) Wisconsin –    The federal provisions relating to HSAs apply for Wisconsin for 2011-2024. However, an adjustment may be 
    required if you withdrew from the account in 2024, you had an HSA prior to 2011 for which you were not allowed a deduction 
    for Wisconsin for contributions to that account, and you reported the earnings on the account as income on your Wisconsin 
    return. If this is the case, complete the worksheet below. 

                                                       2024 HSA Worksheet 
 1.  Balance of HSA as of December 31, 2010, less amount distributed in 2011-2023. (This is the amount 
    from line 3 of the worksheet in the 2023 Schedule  Iinstructions    .............................................................. 1.                          
 2.  2024 distributions from the HSA. Do not fill in more than the amount on line 1 ........................................ 2.                                    
 3.  Subtract line 2 from line 1 .......................................................................................................................... 3.     
 4.  Portion of the distribution on line 2 that was used for medical expenses. This amount can be used 
    as an itemized deduction for medical expenses. See "Medical Expense Deduction" in Part II ................. 4.                                                 
 5.  Portion of the distribution on line 2 that was not used for medical expenses and is included in federal 
    income. This amount would be taxable for federal purposes but not for Wisconsin. Include on line 
    2a of Schedule I* ....................................................................................................................................... 5.   
    *This amount may also be subject to a federal penalty, but would not be subject to a Wisconsin penalty. 
    Note: An adjustment will be required each year until the amount shown on line 3 is zero. Distributions from HSAs are to be 
    allocated first to the pre-2011 balance. 

 Line 2b - Wisconsin Depreciation        
See the instructions for lines 1b and 2b on page 2. 

 Line 2c - Wisconsin Capital Losses           
See the instructions for lines 1c, 1e, 2c, and 2e on page 2. 

 Line 2d - Wisconsin Ordinary Losses           
See the instructions for lines 1d, 1f, 2d, and 2f on page 3. 

 Line 2e - Federal Capital Gains     
See instructions for lines 1c, 1e, 2c, and 2e on page 3. 

 Line 2f - Federal Ordinary Gains     
See the instructions for lines 1d, 1f, 2d, and 2f on page 3. 

 Line 2g, h, and i  
See the instructions for lines 1h and i and lines 2g, h, and i on page 3. 

 Line 2j   
Add lines 2a through 2i. Fill in the total on line 2j. 

 Line 3   
Complete line 3 as follows: 
                                                               [ 4 ] 

• If line 1j is greater than line 2j, subtract line 2j from line 1j and fill in the result as a positive number on line 3. 
• If line 2j is greater than line 1j, subtract line 1j from line 2j and fill in the result as a negative number on line 3. 

 Other Differences Between Federal and Wisconsin Law                                                                           
Following are brief explanations of certain differences between federal and Wisconsin law. 
The “Federal” explanation indicates how an item is to be treated for federal income tax purposes as of December 31, 2024. The 
“Wisconsin” explanation indicates how the item is to be treated for Wisconsin. 
If you need additional information regarding these items, contact any Wisconsin Department of Revenue office. 

 1. Federal Farm Loss Limitations 
    (a)  Federal – The amount of farm losses that may be used to reduce other non-farming business income is limited under 
        sec. 461, IRC, to the greater of $300,000 or the net farm income for the previous five years if the taxpayer receives any 
        direct or counter-cyclical payments under Title I of the Food, Conservation, and Energy Act of 2008 or Commodity Credit 
        Corporation loans. Any disallowed loss is treated as a deduction of the taxpayer attributable to farming business in the 
        next taxable year. (Section 15351 of Public Law 110-246). 
    (b)  Wisconsin – This farm loss limitation does not apply for Wisconsin. 

 2. Nonqualified Deferred Compensation from Certain Tax Indifferent Parties 
    (a)  Federal – Nonqualified deferred compensation plans maintained by foreign corporations will generally become taxable, 
        unless the compensation is deferred 12 months or less after the end of the year that the compensation vests under sec. 
        457A, IRC. The tax can also apply to partnerships with foreign partners. Deferred compensation will be taxable when 
        the amount is determinable. (Section 801 of division C of Public Law 110-343). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. 

 3. Income Sourcing of Guarantees 
    (a)  Federal – Amounts received for guarantees of indebtedness is U.S. source income if paid by a U.S. person or by a 
        foreign person and the amount is connected with income which is effectively connected to the conduct of a trade or 
        business in the U.S. under sec. 861, IRC. (Section 2122 of Public Law 111-240). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. 

 4. District of Columbia Investments 
    (a)  Federal – Gross income does not include qualified capital gain from the sale or exchange of any DC Zone asset acquired 
        after January 1, 1998, and before January 1, 2012, and held for more than five years under sec. 1400A(b), IRC. (Section 
        754 of Public Law 111-312). 
    (b)  Wisconsin – Capital gain from the sale or exchange of DC Zone assets is included in Wisconsin income. 

 5. Depreciation of Race Horses (over 2 years old) 
    (a)  Federal – A race horse placed in service after December 31, 2016, and which is more than 2 years old at the time placed 
        in service by the purchaser, is treated as 3-year property under sec. 168, IRC (Section 165 of division Q of Public Law 
        114-113). In addition, race horses placed in service before January 1, 2022, are treated as three-year property. (Section 
        137 of division EE of Public Law 116-260). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. Depreciation is determined under the provisions of the IRC in 
        effect on January 1, 2014. 

 6. Bonus Depreciation for Certain Business Assets 
    (a)  Federal – For property placed in service after September 27, 2017, various percentages of expensing is allowed under 
        sec. 168(k), IRC, for qualified property, qualified property with longer production periods, and plants bearing fruit and 
        nuts. (Section 13201 of Public Law 115-97). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. Depreciation is determined under the provisions of the IRC in 
        effect on January 1, 2014. 

 7. Excess Business Loss Limitation 
    (a) Federal – Excess business losses of a taxpayer determined under sec. 461(l), IRC, are not allowed. The disallowed loss 
        is treated as a net operating loss carryover. (Section 11012 of Public Law 115-97). The excess business loss limitation 

                                                        [ 5 ] 

        is extended to taxable years beginning before January 1, 2029. (Section 9041 of Public Law 117-2 and Section 13903(b) 
        of Public Law 117-169). 
    (b)  Wisconsin – The excess business loss limitation does not apply for Wisconsin. 

 8. Film and Television Production and Live Theatrical Production 
    (a)  Federal – The definition of qualified property for purposes of the special depreciation allowance (bonus depreciation), 
        under sec. 168, IRC, includes film or television production and live theatrical production. (Section 13201 of Public Law 
        115-97). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. Depreciation is determined under the provisions of the IRC in 
        effect on January 1, 2014. 

 9. Accrual Method Income Recognition 
    (a)  Federal – Accrual method taxpayers must recognize income no later than the tax year in which the item is recognized 
        as revenue on an applicable financial statement under sec. 451, IRC. (Section 13221 of Public Law 115-97). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. 

10. Business Interest Expense Deduction Limitation         
    (a) Federal – The deduction for business interest expense is limited to the sum of business interest income, 30% of adjusted 
        taxable income, and floor plan financing interest under sec. 163, IRC. Any amount disallowed is carried forward to the 
        next taxable year. (Section 13301 of Public Law 115-97). 
    (b)  Wisconsin – The business interest expense deduction limitation does not apply for Wisconsin. 

11. Entertainment, Amusement, and Recreation Expenses 
    (a)  Federal – No deduction is allowed for entertainment, amusement, or recreation expenses described under sec. 274, 
        IRC. (Section 13304 of Public Law 115-97). 
    (b)  Wisconsin – A deduction is allowed for entertainment, amusement, and recreation expense equal to 50% of the amount 
        of qualified expenses. 

12. Meal Expenses 
    (a)  Federal – The 50% limitation on the deduction for food and beverage expenses under sec. 274(n), IRC, also applies to 
        certain meals provided by an employer to an employee as a nontaxable de minimis fringe benefit described in IRC sec. 
        132(e). (Section 13304(b) of Public Law 115-97). 
    (b)  Wisconsin – The 50% limitation does not apply to certain meals provided by an employer to an employee as a nontaxable 
        de  minimis  fringe  benefit  described  in  sec. 132(e),  IRC.  These  meal  expenses  are 100%  deductible  for  Wisconsin 
        because the changes made by sec. 13304(b) of Public Law 115-97 have not been adopted. 

13. Federal Deposit Insurance Corporation Premiums Limitation 
    (a) Federal – A limitation under sec. 162(r), IRC, applies to the deduction for premiums paid or incurred as the result of an 
        assessment by the Federal Deposit Insurance Corporation. (Section 13531 of Public Law 115-97). 
    (b)  Wisconsin – This limitation does not apply for Wisconsin. 

14. Deduction Limitation for Highly-Paid Employees 
    (a) Federal  –  A  publicly-held  corporation  may  not  deduct  more  than  $1,000,000  of  compensation  paid  to  any covered 
        employee for the performance of services as provided in sec.  162(m), IRC. The definition of a covered employee is 
        expanded to include the principal executive officer and principal financial officer. Compensation subject to the limitation 
        includes commission and performance-based pay (Section 13601 of Public Law     115-97). For taxable years beginning 
        after December 31, 2026, the definition of a covered employee is expanded to include an employee that is among the 
        next 5 highest compensated employees for the taxable year. (Section 9708 of Public Law 117-2). 
    (b)  Wisconsin – The changes to sec. 162(m), IRC, made by Public Laws 115-97 and 117-2 do not apply for Wisconsin. 

15. Global Intangible Low-Taxed Income Inclusion 
    (a)  Federal – A United States shareholder of a controlled foreign corporation must include in income its “global intangible 
        low-taxed income” as provided in sec. 951A, IRC. (Section 14201 of Public Law 115-97). 
    (b)  Wisconsin – This inclusion does not apply for Wisconsin. 

                                                                [ 6 ] 

16. Definition of United States Shareholder 
    (a)  Federal – The definition of a United States shareholder in sec. 951(b), IRC, includes a United States person who owns 
          at least 10% of the value of the shares of the foreign corporation. (Section 14214 of Public Law 115-97). 
    (b)  Wisconsin – This change in definition does not apply for Wisconsin. 

17. Related Party Transactions 
    (a)   Federal – The deduction for any disqualified related-party amount paid or accrued pursuant to a hybrid transaction or 
          by, or to, a hybrid entity is disallowed under sec. 267A, IRC. (Section 14222 of Public Law 115-97). 
    (b)  Wisconsin – This disallowance does not apply for Wisconsin. 

18. Unused Overall Domestic Loss 
    (a)  Federal – A taxpayer may elect to recapture a pre-2018 unused overall domestic loss for any applicable tax year by 
          substituting a percentage greater than 50% under section 904(g), IRC. (Section 14304 of Public Law 115-97). 
    (b)  Wisconsin – This recapture provision does not apply for Wisconsin. 

19. Qualifying Small Power Production Facility 
    (a)  Federal – A 5-year recovery period applies for qualifying small power production facilities under sec. 168, IRC. (Section 
          302 of division U of Public Law 115-141). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. Depreciation is determined under the provisions of the IRC in 
          effect on January 1, 2014. 

20. Motorsports Racing Track Facility      
    (a)   Federal  – The  seven-year  cost  recovery  period  under  sec. 168,  IRC,  for  motorsports  entertainment  complexes  is 
          extended through December 31, 2025. (Section 115 of division EE of Public Law 116-260). 
    (b)  Wisconsin – This provision does not apply for Wisconsin. Depreciation is determined under the provisions of the IRC in 
          effect on January 1, 2014. 

21. Film and Television Productions 
    (a)  Federal – For productions commencing before January 1, 2026, a taxpayer may elect under sec. 181, IRC, to treat the 
          cost of any qualified film or television production as an expense which is not chargeable to a capital account. (Section 
          116 of division EE of Public Law 116- 260). 
    (b)  Wisconsin – The federal expensing of a film or television production does not apply for Wisconsin. 

22. Empowerment Zone Tax Incentives 
    (a)  Federal – The empowerment zone tax incentives under sec. 1391, IRC, are extended through December 31, 2025. This 
          includes a wage credit, increased section 179 expensing, expanded tax-exempt financing, elective rollover of capital 
          gain from the sale or exchange of any qualified empowerment zone asset, and partial exclusion of capital gains on 
          certain small business stock. (Section 118 of division EE of Public Law 116-260). 
    (b)  Wisconsin – The extension for empowerment zone tax incentives does not apply for Wisconsin. 

23. Amortization of Research Expenses 
    (a)  Federal – Under sec. 174, IRC, research and experimental expenditures are required to be amortized over a 5-year 
          period for research conducted in the United States. (Section 13206 of Public Law 115-97). 
    (b)  Wisconsin – Research and experimental expenditures are not required to be amortized over a 5-year period and may 
          be deducted in the year paid or incurred. Taxpayers may elect to amortize the expenses over a 5-year period if the 
          election is made by the extended due date of the return. 

  Part  IIInstructions                                                                                                   
Whenever adjustments to FAGI have been made in Part I of Schedule I , itemized deductions which are computed using FAGI (for 
example, medical expenses and charitable contributions) may require adjustment. The deductible amounts of any such items used 
to compute the Wisconsin itemized deduction credit must be determined by using the FAGI computed on line 3 of Form 1 or line 
31 of Form 1NPR. 
Enter the amount for federal income tax purposes in Col. I and the amount determined under Wisconsin’s definition of the IRC in 
Col. II. For example, if there is a difference in gifts to charity allowed for federal and Wisconsin purposes, enter the federal amount 
                                                              [ 7 ] 

in Col. I and the Wisconsin amount in Col. II on line 1c. If the itemized deduction allowable for Wisconsin purposes is not listed on 
lines 1a through 1c, enter a brief description on lines 1d and 1e and enter the federal and Wisconsin amounts in Col. I and Col. II. 
The amounts in Col. II are used to compute your Wisconsin itemized deduction credit on Schedule 1 of Form 1 or Form 1NPR. 
In addition to adjustments required as a result of differences in FAGI computed in Part 1 of Schedule  , adjustmentsI  may be 
required for the following itemized deduction differences between federal and Wisconsin law. 
 1. Medical Expense Deduction 
    (a)    Federal – Any payment or distribution out of an HSA for qualified medical expenses shall not be treated as an expense 
           paid for medical care for purposes of claiming an itemized deduction for medical and dental expenses under sec. 223, 
           IRC. (Section 307 of Public Law 109-432). 
    (b)    Wisconsin – Wisconsin follows the federal treatment of distributions from an HSA for 2011-2024. However, if a portion 
           of your distribution was allocated to the balance in your HSA as of December 31, 2010, you may be able to treat all or 
           part of the distribution as a medical expense. See the Worksheet for line 2a earlier in these instructions. 
           Amounts paid for medical expenses from a health savings account are allowed as an itemized deduction, if the amount 
           is otherwise deductible, for purposes of Wisconsin’s itemized deduction credit if the contribution is included in federal 
           adjusted gross income for failure of the health plan to be treated as a high deductible health plan. 

  Part  IIIInstructions                                                                                                         
Whenever adjustments to income have been made to income in Part I of Schedule I    , certain federal credits upon which a Wisconsin 
credit is based may require adjustment. For example, the amount of federal earned income credit is dependent on your earned 
income and federal adjusted gross income (FAGI). 

Enter the amount of credit for federal income tax purposes in Col. I and the amount determined under Wisconsin's definition of the 
IRC in Col. II. Fill in the amount from line 1a, Col. II as your 'Federal credit' on line 30 for Form 1 or line 60 for Form 1NPR, as 
appropriate.  If  the  credit  allowable  for  Wisconsin  purposes  is  something  other  than  the  earned  income  credit,  enter  a  brief 
description on line 1b and enter the federal and Wisconsin amounts in Col. I and Col. II. 

If you are recomputing your federal earned income credit on line 1a, complete lines i) and ii). On line i), check whether the amount 
in Col. I of line 1a is based on earned income or FAGI and enter the related amount of income. On line ii), check whether the 
amount in Col. II on line 1a is based on earned income or FAGI and enter the related amount of income. These lines are for 
informational purposes only to aid the department in determining any computational errors should your return be reviewed. These 
lines do not represent an election of how your credit was computed since no such election exists. 

                                                   Applicable Laws and Rules 
  This document provides statements or interpretations of the following laws and regulations enacted as of December 13, 2024:  
  secs. 108, 162, 163, 168, 174, 181, 223, 267A, 274, 451, 457A, 461, 861, 904, 951, 951A, 1391, and 1400A, IRC, and ch. 71,  
  Wis. Stats. 
                                                                                                                                
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