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                  2024 Wisconsin Form 5S Instructions 

Table of Contents 
General Instructions ................................................................................................................... 2 
 Definitions .............................................................................................................................. 2 
 Franchise or Income Tax ........................................................................................................ 3 
 Termination of Tax-Option (S) Treatment ............................................................................... 3 
 Election Out of Wisconsin Tax-Option Treatment ................................................................... 4 
 Additional Information on Wisconsin Treatment of Tax-Option (S) Corporations ..................... 4 
 Who Must File? ...................................................................................................................... 5 
 When and Where to File ......................................................................................................... 6 
 Corporations and Shareholders Subject to Wisconsin Tax-Option (S) Law ............................. 7 
 Period Covered by Return ...................................................................................................... 7 
 Accounting Methods and Elections ......................................................................................... 8 
 Payment of Estimated Tax ...................................................................................................... 9 
 Disclosure of Related Entity Expenses and Reportable Transactions ..................................... 9 
 IRS Adjustments, Amended Returns, Claims for Refund, and Final Returns .........................11 
 Other Types of Taxes and Returns ........................................................................................12 
 Penalties for Not Filing or Filing Incorrect Returns .................................................................14 
 Obtaining Forms and Assistance ...........................................................................................14 
 Interest Charge Domestic International Sales Corporations (IC-DISCs) ................................15 
Conformity with Internal Revenue Code and Exceptions ...........................................................15 
 How to Report Differences .....................................................................................................22 
Specific Instructions for Form 5S...............................................................................................23 
 Items A Through J .................................................................................................................23 
 Part I – Calculation of Tax Due or Refund .............................................................................26 
 Schedule Q – Additional Tax on Certain Built-In Gains ......................................................29 
 Schedule S – Economic Development Surcharge ..............................................................31 
 Additional Information, Answer Questions, Pass-Through Entity Representative, Third Party 
 Designee, Signatures, and Supplemental Schedules ............................................................34 
 Part II Schedule 5K – Shareholder's Pro Rata Share Items ...................................................36 
 Part II Schedule 5K, Columns (b) Through (d) ...................................................................36 
 Adjustments Reportable on Schedule 5K, Column (c) ........................................................37 
 Part III – Schedule 5M – Analysis of Wisconsin Accumulated Adjustments Account and Other 
 Adjustments Account .............................................................................................................44 
 Part IV – Schedule 5K - Shareholder's Pro Rata Share of Additions and Subtractions ..........47 
Determining Wisconsin Income of Multistate Tax-Option (S) Corporations ................................55 
 Who Must Use Apportionment? .............................................................................................55 
 What Is the Apportionment Percentage? ...............................................................................55 
 What Is Nonapportionable Income? .......................................................................................56 
 Corporate Partners or LLC Members .....................................................................................56 
 Separate Accounting .............................................................................................................57 
 
IC-154 (R. 07-24)

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2024 Wisconsin Form 5S Instructions

General Instructions

Definitions

Corporation includes corporations, joint stock companies, associations, common law trusts, and
all other entities treated as corporations under sec. 7701, Internal Revenue Code (“IRC”).

S Corporation. Under federal law, an S corporation is one that has an election in effect for a
taxable year under Subchapter S of the IRC which generally permits the corporation’s income to
be taxed to its shareholders rather than to the corporation itself. If the corporation incurs a loss,
the loss is treated as the shareholders’ loss.

To qualify for federal S corporation treatment under the IRC, a corporation must meet certain
requirements. These requirements include, but are not limited to:

• It must be created or organized in the United States under federal or state law.
• It must have no more than 100 shareholders.
• It must have as shareholders only individuals, estates, certain tax-exempt organizations,
and certain trusts; it cannot have another corporation or a tax-option (S) corporation as a
shareholder.
• It must not have a nonresident alien as a shareholder.
• It must have only one class of stock.

This is a very brief summary of the federal requirements. For further details of the federal
requirements, refer to sec. 1361(b), IRC, as amended to December 31, 2022. Also refer to
Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their
Shareholders.

Tax-Option (S) Corporation. For Wisconsin purposes, a “tax-option (S) corporation” is a
corporation which is treated as an “S corporation” under Subchapter S of the IRC as adopted for
Wisconsin purposes, and has not elected out of tax-option corporation status under sec.
71.365(4)(a), Wis. Stats., for the current taxable year.

Qualified Subchapter S Subsidiary. A qualified subchapter S subsidiary (also called a “QSub”
or a “QSSS”) is a corporation that meets all of the following requirements:

• It is created or organized in the United States or under the laws of the United States or
any state.
• It is not an ineligible type of corporation, as defined in sec. 1361(b)(2), IRC.
• 100% of its stock is held by an S corporation.
• The S corporation elects to treat the corporation as a QSub.

If a federal S corporation elects to treat a subsidiary as a qualified subchapter S subsidiary (QSub)
for federal purposes, that election automatically applies for Wisconsin purposes. The QSub is
disregarded as a separate corporation for Wisconsin purposes, and its assets, liabilities, and
items of income, deduction, and credit are treated as those of the parent tax-option (S)
corporation.

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2024 Wisconsin Form 5S Instructions

Franchise or Income Tax

Franchise tax applies to –

• All domestic corporations (those organized under Wisconsin law) and
• Foreign corporations (those not organized under Wisconsin law) doing business in
Wisconsin or buying or selling lottery prizes if the winning tickets were originally bought in
Wisconsin, except where taxation is exempted by statute or barred by federal law.

The tax rate is 7.9%. Income from obligations of the United States government and its
instrumentalities is included in income under the franchise tax law.

Income tax applies only to foreign corporations which are not subject to the franchise tax and
which own property in Wisconsin or whose business in Wisconsin is exclusively in foreign or
interstate commerce. The tax rate is 7.9%. Income from obligations of the United States
government and its instrumentalities is not included in income under the income tax law.

Certain urban transit companies are subject to a special tax under sec. 71.39, Wis. Stats.
Contact the department for further information.

Termination of Tax-Option (S) Treatment

A corporation ceases to qualify for Wisconsin tax-option (S) treatment for any year for which its S
corporation election ceases to apply, regardless of whether the termination is voluntary or
involuntary, or whether termination is discovered as the result of an audit after a return has been
filed.

Voluntary Termination. Under the IRC as adopted by Wisconsin, a corporation may voluntarily
revoke its S election at any time after the initial election is made. The revocation may be effective
for the entire taxable year if made on or before the 15th day of the 3rd month of that taxable year.
Otherwise, it may be effective for the following taxable year. In either case, the revocation may
specify that it is to be effective on a date during the current year that is on or after the day of
revocation.

Involuntary Termination. A corporation’s Subchapter S status under the IRC as adopted by
Wisconsin will be involuntarily terminated if either of the following is true:

• The corporation had accumulated Subchapter C earnings and profits at year-end and its
passive investment income exceeded 25% of gross receipts for each of 3 consecutive
taxable years. The election is terminated as of the first day of the taxable year beginning
after the third consecutive taxable year in which there is excess passive investment
income.
• The corporation ceases to be a qualifying Subchapter S corporation. The IRS may waive
inadvertent termination and this waiver also applies for Wisconsin.

Split Taxable Year Caused by Termination. If the revocation date causes the corporation’s
taxable year to be split, the corporation must file two short period returns for federal and Wisconsin
purposes. One covers the period it is an S corporation, and one covers the period it is a C
corporation. Both returns are due on the 15th day of the 3rd month following the close of the
corporation’s normal taxable year, subject to the regular rules for extensions. The net income for

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2024 Wisconsin Form 5S Instructions

each period may be computed under the daily proration method as provided in sec. 1362(e)(2),
IRC, or under normal tax accounting rules if the affected shareholders consent as provided in sec.
1362(e)(3), IRC. The corporation must use the normal tax accounting rules if there was a sale or
exchange of 50% or more of the corporation’s stock during the year.

Election Out of Wisconsin Tax-Option Treatment

A corporation may elect, under sec. 71.365(4)(a), Wis. Stats., not to be a tax-option (S)
corporation for Wisconsin tax purposes even though its federal S election remains in effect.

Making the Wisconsin “Opt-Out” Election. Generally, a corporation that is an S corporation for
federal tax purposes may elect not to be a tax-option (S) corporation for Wisconsin tax purposes.
However, if an S corporation has a QSub for federal income tax purposes, neither the S
corporation nor the QSub may opt out of Wisconsin tax-option treatment.

The “opt-out” election requires the consent of persons who hold more than 50% of the shares of
the tax-option (S) corporation on the day on which the “opt-out” election is made. To be effective
for the current taxable year, the election must be made on or before the due date or extended
due date of the corporation’s current Wisconsin franchise or income tax return. To make the “opt-
out” election, the corporation must file Wisconsin Form 5E, Election by an S Corporation Not to
Be Treated as a Tax-Option Corporation.

The “opt-out” election is completed by filing a Wisconsin franchise or income tax return in
accordance with the election. For more information, see the tax release in Wisconsin Tax Bulletin
91 (April 1995, page 18). Corporations that make the “opt-out” election must file Form 4 or Form
6 for Wisconsin rather than Form 5S.

Revoking the Wisconsin “Opt-Out” Election. Except as explained below, once the election not
to be a tax-option (S) corporation is completed, the corporation and its successors may not claim
Wisconsin tax-option status for the next 4 taxable years after the taxable year to which the “opt-
out” election first applies. At any time after this 5-taxable-year period, the corporation may revoke
the “opt-out” election by filing Wisconsin Form 5R, Revocation of Election by an S Corporation
Not to Be a Tax-Option Corporation.

Revoking the “opt-out” election requires the consent of persons who hold more than 50% of the
shares of the S corporation on the day the revocation is made. The corporation must file Form 5R
on or before the due date, including extensions, of the Wisconsin franchise or income tax return
for the first taxable year affected by the revocation.

Automatic Revocation of Wisconsin “Opt-Out” Election. The “opt-out” election is
automatically revoked for the taxable year in which a federal S corporation acquires a QSub.
Wisconsin tax-option (S) treatment applies to the S corporation and its QSub. If the corporation
subsequently disposes of the QSub, it could again elect not to be treated as a Wisconsin tax-
option (S) corporation for the taxable year following the disposition by filing Form 5E.

Additional Information on Wisconsin Treatment of Tax-Option (S) Corporations

For more information on Wisconsin taxation of tax-option (S) corporations and their shareholders,
see Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their
Shareholders.

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2024 Wisconsin Form 5S Instructions

Who Must File?

Form 5S is the Wisconsin franchise or income tax return applicable to corporations that elect to
be treated as tax-option (S) corporations for Wisconsin purposes. Tax-option (S) corporations use
Form 5S to report their income, gains, losses, deductions, and credits, and to compute their
Wisconsin franchise or income tax, built-in gains tax, and economic development surcharge
liability.

The following corporations are required to file a Wisconsin corporation franchise or income tax
return:

• Corporations organized under Wisconsin law.
• Foreign corporations licensed to do business in Wisconsin.
• Unlicensed corporations doing business in Wisconsin.
• Foreign corporations engaged in buying or selling lottery prizes if the winning tickets were
originally bought in Wisconsin.
• Foreign corporations issuing credit, debit, or travel and entertainment cards to customers
in Wisconsin.
• Foreign corporations regularly selling products or services of any kind or nature to
customers in Wisconsin that receive the product or service in Wisconsin.
• Foreign corporations regularly soliciting business from potential customers in Wisconsin.
• Foreign corporations regularly performing services outside Wisconsin for which the
benefits are received in Wisconsin.
• Foreign corporations regularly engaging in transactions with customers in Wisconsin that
involve intangible property and result in receipts flowing to the taxpayer from within
Wisconsin.
• Foreign corporations holding loans secured by real or tangible personal property located
in Wisconsin.
• Foreign corporations owning, directly or indirectly, a general or limited partnership interest
in a partnership that does business in Wisconsin, regardless of the percentage of
ownership.
• Foreign corporations owning, directly or indirectly, an interest in a limited liability company
treated as a partnership that does business in Wisconsin, regardless of the percentage of
ownership.
• Foreign corporations that are the sole owner of an entity that is disregarded as a separate
entity under IRC section 7701 and does business in Wisconsin, or of a qualified
subchapter S subsidiary that does business in Wisconsin.

The following entities are not required to file a Wisconsin corporation franchise or income tax
return:

• A single-owner entity that is disregarded as a separate entity under sec. 7701, IRC.
Instead, the owner of the disregarded entity is subject to the tax on or measured by the

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             2024 Wisconsin Form 5S Instructions 

  entity’s  income  and  must  file  a  Wisconsin  franchise  or  income  tax  return  if  otherwise 
  required. 
 •  Corporations and associations exempt under sec. 71.26(1), Wis. Stats., except those with 
  (a) unrelated business taxable income as defined in sec. 512, IRC, (b) income derived 
  from a health maintenance organization or a limited service health organization, or (c) 
  income realized from the sale of or purchase and subsequent sale or redemption of lottery 
  prizes if the winning tickets were originally bought in Wisconsin. Exempt entities include 
  insurers exempt from federal income taxation under sec. 501(c)(15), IRC, town mutuals 
  organized under    Chapter 612, Wis. Stats., foreign insurers, domestic insurers engaged 
  exclusively in life insurance business, domestic mortgage insurers, some cooperatives, 
  and religious, scientific, educational, benevolent, or other corporations or associations of 
  individuals not organized or conducted for profit. 
 •  Corporations that are completely inactive in and outside Wisconsin and have filed Form 
  4H. 
 •  Credit unions that don’t act as a public depository for state or local government funds and 
  have filed Form CU. 
 
When and Where to File 
 
Generally, a corporation must file its franchise or income tax return by the 15th day of the 3rd 
month following the close of its taxable year. 
 
Short Period Returns. Returns for short taxable years (periods of less than 12 months) are due 
on or before the federal due date. A corporation that becomes, or ceases to be, a member of an 
affiliated group and as a result must file two short period returns for federal purposes must also 
file two short period returns for Wisconsin. The Wisconsin returns are due at the same time as 
the  federal  returns.  Each  short  period  is  considered  a  taxable  year,  the  same  as  for  federal 
purposes. 
 
Be sure to use the correct year's tax return when filing for a short period. If the tax returns are not 
yet available, wait until the returns become available and file under extension. For example, if a 
taxpayer has a short period from January 1, 2024 through March 31, 2024, the 2024 Form 5S will 
not be ready by June 15, 2024 (unextended due date for a March 31 year-end). Wisconsin law 
provides for an automatic 7-month extension to file the return, so filing under extension will allow 
the correct year's return to be filed when the 2024 Form 5S is available (typically November 1). 
 
Extensions. Any extension allowed by the Internal Revenue Service (“IRS”) for filing the federal 
return automatically extends the Wisconsin due date to 30 days after the federal extended due 
date. You don’t need to submit either a copy of the federal extension or an  application for a 
Wisconsin extension to the department by the original due date of your return. However, you must 
submit a copy of the federal extension with the Wisconsin return that you file. 
 
If you aren’t requesting a federal extension, Wisconsin law provides an automatic extension of 7 
months or until the original due date of the corporation’s corresponding federal return, whichever 
is later. 
 
Disaster Relief Extension. If you are filing under extension because of a federal or state disaster, 
include a statement indicating which disaster extension you are using and attach it to your return. 
The fee for filing a late return after the extension date is $150. 

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                  2024 Wisconsin Form 5S Instructions 

Caution: An extension for filing the return doesn’t extend the time to pay the franchise or income 
tax. Interest will be charged on the tax not paid by the 15th day of the 3rd month following the 
close of the taxable year. You can avoid interest charges during the extension period by paying 
the tax due by the unextended due date. See Wisconsin    Form Corp-ES,    Corporation Estimated 
Tax Voucher. 
 
Filing  Methods.  Corporations  are  required  to  file  tax  returns  electronically  and  may  file 
electronically through the Federal/State E-Filing Program. If the requirement to file electronically 
causes an undue hardship, a taxpayer may request an electronic filing waiver by filing Form EFT-
102, Electronic Filing or Electronic Payment Waiver Request. Note: If the corporation has 10 or 
fewer shareholders and the corporation's gross income on Form 5S, Part II, Schedule 5K, Line 
20, column (d) is $20,000 or less, the corporation does not need to file Form EFT-102 to request 
an electronic filing waiver and may file a paper return using the instructions below. 
 
If the waiver is approved, file your return on paper using these mailing instructions: 
 
 •  Do not fasten, staple, or bind the pages of your return. Use paper clips instead. 
 •  Mail your return to:  
      
     Wisconsin Department of Revenue  
     PO Box 8965  
     Madison WI 53708-8965 
 
Corporations and Shareholders Subject to Wisconsin Tax-Option (S) Law 
 
Corporations that are required to file Wisconsin franchise or income tax returns and are included 
in  the  definition  of  a  “tax-option  (S)  corporation”  are  subject  to  Wisconsin's  tax-option  (S) 
corporation law. 
 
Wisconsin’s  tax-option  (S)  corporation  law  applies  to  all  shareholders  of  a  tax-option  (S) 
corporation that is subject to Wisconsin tax-option (S) corporation law, regardless of whether the 
shareholders  are  Wisconsin  residents.  Therefore,  all  shareholders  who  meet  the  applicable 
Wisconsin filing requirements, based on their pro rata shares of the corporation’s gross income 
for Wisconsin purposes, must file Wisconsin income tax returns and report their pro rata shares 
of the tax-option (S) corporation’s items of income, loss, and deduction. 
 
For example, residents and nonresidents of Wisconsin are subject to Wisconsin tax-option (S) 
corporation law if they are – 
 
 •  Shareholders  of  a  tax-option  (S)  corporation  which  is  organized  under  the  laws  of 
     Wisconsin  and  engaged  in  business  (1)  completely  in  Wisconsin,  (2)  in  and  outside 
     Wisconsin, or (3) completely outside Wisconsin. 
 •  Shareholders  of  a  tax-option  (S)  corporation  which  isn’t  organized  under  the  laws  of 
     Wisconsin, but which is authorized to transact business in Wisconsin or is engaged in 
     business in Wisconsin and required to file a Wisconsin franchise or income tax return. 
 
Period Covered by Return 
 
The return must cover the same period as the corporation’s federal income tax return. A 2024 
Wisconsin return must be filed by a corporation for calendar year 2024 or a fiscal year that begins 

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             2024 Wisconsin Form 5S Instructions 

in 2024. A fiscal year may end only on the last day of a month. The period covered by the return 
can’t exceed 12 months. 
 
Example: Corporation A has a fiscal year beginning March 1, 2024 and ending February 29, 
2025. Corporation A files a 2024 Form 5S for the period of March 1, 2024 through February 29, 
2025. 
 
Corporations reporting on a 52-53 week period for federal tax purposes must file on the same 
reporting period for Wisconsin. A 52-53 week taxable year is deemed to begin on the first day of 
the calendar month beginning nearest the first day of the 52-53 week taxable year. The taxable 
year is deemed to end on the last day of the calendar month closest to the last day of the 52-53 
week  taxable  year  for  purposes  of  due  dates,  extensions,  and  assessments  of  interest  and 
penalties. 
 
Any change in accounting period made for federal purposes must also be made for Wisconsin 
purposes. For the first taxable year for which the change applies, file with the Wisconsin return a 
copy of the IRS’s notice of approval of accounting period change if such approval is required or 
an explanation of the change if the IRS’s approval isn’t required. 
 
If a tax-option (S) corporation elects, under sec. 444, IRC, to have a taxable year other than the 
required taxable year, that election also applies for Wisconsin. Unlike the federal requirement, the 
corporation doesn’t have to make required payments of Wisconsin tax. 
 
Accounting Methods and Elections 
 
In computing net income, the method of accounting must be the same method used in computing 
federal net income. However, if the method used for federal purposes isn’t authorized under the 
Internal Revenue Code (IRC) in effect for Wisconsin, use a method authorized under the IRC in 
effect for Wisconsin. 
 
Change in Accounting Method. A change in accounting method made for federal purposes must 
also be made for Wisconsin purposes, unless the change isn’t authorized under the IRC in effect 
for  Wisconsin.  Adjustments  required  on  the  federal  return  due  to  change(s)  made  while  the 
corporation is subject to Wisconsin taxation must also be made for Wisconsin purposes, except 
that in the last year a corporation is subject to taxation by Wisconsin, it must include all remaining 
adjustments required. 
 
For the first taxable year for which the change applies, file with the Wisconsin return either a copy 
of the application for change in accounting method filed with the IRS and a copy of the IRS’s 
consent, if applicable, or an explanation of the change if the IRS’s approval isn’t required. 
 
Elections.  As  explained  above,  a  corporation  can’t  make  different  elections  for  federal  and 
Wisconsin  purposes  with  respect  to  accounting  periods  and  accounting  methods,  unless  the 
federal  method  isn’t  permitted  under  the  IRC  in  effect  for  Wisconsin.  In  situations  where  a 
corporation has an option under the IRC and the IRS doesn’t consider that option to be a method 
of  accounting,  a  different  election  may  be  made  for  Wisconsin  than  that  made  for  federal 
purposes. If federal law specifies the manner or time period in which an election must be made, 
those requirements also apply for Wisconsin purposes. For more information, see Wisconsin Tax 
Bulletin 214 (July 2021, page 8). 
 
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               2024 Wisconsin Form 5S Instructions 

Payment of Estimated Tax 
 
If the total of a corporation’s franchise or income tax and economic development surcharge due 
is $500 or more, it generally must make quarterly estimated tax payments. See the department's 
Make a Payment webpage for information about making payments. Failure to make required 
estimated tax payments may result in an interest charge. 
 
Quick Refund. A corporation that overpaid its estimated tax may apply for a refund before filing 
its tax return if its overpayment is (1) at least 10% of the expected Wisconsin tax liability and (2) 
at  least  $500.  To  apply,  file  Wisconsin  Form  4466W, Corporation  or  Pass-Through  Entity 
Application for Quick Refund of Overpayment of Estimated Tax, after the end of the taxable year 
and before the corporation files its tax return. Do not file Form 4466W at the same time as your 
tax return. 
 
A corporation that has tax due when filing its tax return because it received a “quick refund” will 
be charged 12% annual interest on the amount of unpaid tax from the date the refund is issued 
to the earlier of the 15th day of the 3rd month after the close of the taxable year, or the date the 
tax liability is paid. Any tax that remains unpaid after the unextended due date of the tax return 
continues to be subject to 18% or 12% annual interest, as appropriate. 
 
Electronic  Funds  Transfer  Required  for  Certain  Payments.  Section  Tax  1.12,  Wis.  Adm. 
Code,  requires  the  payment  of  certain  taxes  by  EFT.  A  corporation  must  pay  its  estimated 
franchise  or  income  taxes  and  economic  development  surcharge  by  EFT  if  its  net  tax  less 
refundable  credits  on  its  prior  year  return  was  $1,000  or  more.  The  department  will  notify  a 
corporation  when  EFT  payments  are required.  The  corporation  will  have  90  days  after  being 
notified to register for EFT. The first EFT payment is due on the first tax due date following the 
end of the 90-day registration period. 
 
Corporations not required to pay by EFT may elect to do so. For more information: 
 
 •  Visit the department’s website at revenue.wi.gov/Pages/FAQS/pcs-eft.aspx, 
 •  Send an e-mail to DORSalesandUse@wisconsin.gov, 
 •  Call (608) 266-2776, or 
 •  Write to  Electronic Funds Transfer Assistance 
              Wisconsin Department of Revenue 
              PO Box 8949 
              Madison, WI 53708-8949. 
 
Disclosure of Related Entity Expenses and Reportable Transactions 
 
A corporation may be required to separately disclose certain expenses paid, accrued, or incurred 
to  a  related  entity.  A  corporation  or  corporation’s  material  advisor  may  also  be  required  to 
separately disclose reportable transactions. 
 
Caution: Wisconsin law provides that certain related entity expenses shall not be allowed as 
deductions if they are not timely disclosed as required by the department. Also, penalties may 
apply for failure to disclose reportable transactions to the department. 
 
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Disclosure of Related Entity Expenses. If the corporation will be deducting more than $100,000
(after considering the effect of apportionment) of interest, rent, management fees, or intangible
expenses paid, accrued, or incurred to a related person or entity, the corporation must generally
file Schedule RT, Wisconsin Related Entity Expenses Disclosure Statement, with its franchise or
income tax return. The Schedule RT instructions explain the reporting requirements.

However, even if you are not required to file Schedule RT, if you are taking deductions for interest,
rent, management fees, or intangible expenses, paid, accrued, or incurred to related entities, you
must add those expenses back to federal income as a Wisconsin modification on Schedule 5K,
line 18a. If the expenses meet the tests for deductibility, you may make an adjustment on
Schedule 5K, line 18b.

Corporation’s Disclosure of Reportable Transactions. If a corporation was required to include
any form with its federal tax return to disclose a “reportable transaction,” as defined under sec.
71.81(1)(c), Wis. Stats., it must file a copy of that form with the department within 60 days of the
date it is required to file it for federal income tax purposes, provided that it is otherwise required
to file a Wisconsin return.

This includes federal Form 8886, Reportable Transaction Disclosure Statement. To file this form
for Wisconsin purposes, check the "yes" box for question 6 on page 2 of Form 5S under
"Additional Information Required", and submit the form with your return.

See the instructions to federal Form 8886 to determine if you are required to file the form for
federal purposes.

Material Advisor’s Disclosure of Reportable Transactions. A “material advisor” means any
person who provides any material aid, assistance, or advice with respect to organizing, managing,
promoting, selling, implementing, insuring, or carrying out any reportable transaction (as defined
in the U.S. Treasury Regulations) and who, directly or indirectly, derives gross income from
providing such aid, assistance, or advice in an amount that exceeds the threshold amount.

For a material advisor providing advice to an entity and not an individual, the “threshold amount”
is any of the following:

• $25,000 if the reportable transaction is a listed transaction (as defined in the U.S. Treasury
Regulations).
• $250,000 if the reportable transaction is not a listed transaction.

For a material advisor providing advice to an individual, the “threshold amount” is any of the
following:

• $10,000 if the reportable transaction is a listed transaction (as defined in the U.S. Treasury
Regulations).
• $50,000 if the reportable transaction is not a listed transaction.

A material advisor that is required to disclose a reportable transaction to the IRS must file a copy
of the disclosure with the department within 60 days of the date it is required for federal income
tax purposes, if the reportable transaction affects the taxpayer’s Wisconsin income or franchise
tax liability. For federal purposes, the form required for this disclosure is Form 8918, Material
Advisor Disclosure Statement.

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               2024 Wisconsin Form 5S Instructions 

If  you  are  required  to  file  Form  8918  for  federal  income  tax  purposes  and  the  reportable 
transaction to which the form relates affects the taxpayer’s Wisconsin income or franchise tax 
liability, you can either: 
 
 1.  Send a paper copy, separate from the Wisconsin return, to the following address:  
  
 Tax Shelters Program  
 Wisconsin Department of Revenue  
 PO Box 8906  
 Madison, WI 53708-8906.  
  
 Include a listing of the names and identification numbers of each Wisconsin taxpayer for 
 whom the advisor provided services to. 
 OR 
 2.  Include an electronic version of Form 8918 with your electronically filed Wisconsin return. 
 
IRS Adjustments, Amended Returns, Claims for Refund, and Final Returns 
 
IRS  Adjustments.  If  a  corporation’s  federal  tax  return  is  adjusted  by  the  IRS  and  such 
adjustments affect the Wisconsin net tax payable, the amount of a Wisconsin credit, a Wisconsin 
net operating loss carryforward, or a Wisconsin capital loss carryforward of a shareholder, you 
must report such adjustments to the department within 180 days after they become final by either 
filing an amended Wisconsin franchise/income tax return or mailing a copy of the final federal 
audit report. 
 
Include a copy of the final federal audit report with the electronically filed amended return. If 
submitting a federal audit report without an amended return, mail it to the following address: 
 
Audit Bureau, Mail Stop 6-81 
Wisconsin Department of Revenue 
PO Box 8906 
Madison, WI 53708-8906 
 
Don’t include these items with the tax return for the current year. 
 
Amended Returns. After you have filed a complete, original tax return, you may file an amended 
return to correct a tax return as you originally filed it or as it was later adjusted by an amended 
return, a claim for refund, or an office or field audit. 
 
If you file an amended federal return and the changes affect the Wisconsin net tax payable, the 
amount of a Wisconsin credit, a Wisconsin net business loss carryforward, or a Wisconsin capital 
loss carryforward, you must file an amended Wisconsin return with the department within 180 
days after filing the amended federal return. 
 
To file an amended Wisconsin return, put a check mark in the space next to item A1 on the front 
of the return, complete the return, and include Schedule AR to provide an explanation of any 
changes made.  Show  computations  in  detail,  including  any  applicable  supplemental forms  or 

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2024 Wisconsin Form 5S Instructions

schedules. Also show how you figured your refund or additional amount owed. Do not attach a
copy of the original return.

For tax-option (S) corporations, if the change affects any amounts reportable by your
shareholders, you must file amended Schedules 5K-1 and provide a copy of the amended
Schedule 5K-1 to each shareholder.

File your amended return electronically by using one of the third-party software providers.

Claims for Refund. A claim for refund must be filed within 4 years of the unextended due date of
the return. However, a claim for refund to recover all or part of any tax or credit paid as a result of
an office or field audit must be filed within 4 years after such an assessment. That assessment
must have been paid and must not have been protested by filing a petition for redetermination.
See sec. Tax 2.12, Wis. Adm. Code, for more information.

Final Returns. If the corporation liquidated during the taxable year, put a check mark in the space
next to item A3 on the front of the return. Enter the date of liquidation as the taxable year ending
date at the top of the return. Submit a copy of your plan of liquidation along with a copy of federal
Form 966, Corporate Dissolution or Liquidation, with your Wisconsin return.

Generally, the final return is due on or before the federal due date. In most cases, this is the 15th
day of the 3rd month after the date the corporation dissolved. The tax is payable by the 15th day
of the 3rd month after the date of dissolution, regardless of the due date of the final return.

Other Types of Taxes and Returns

Pass-Through Entity Withholding. A tax-option (S) corporation that has one or more
nonresident shareholders is generally required to pay pass-through entity withholding.
Additionally, the tax-option (S) corporation may file a composite individual income tax return on
behalf of qualifying nonresident individual shareholders. A tax-option (S) corporation is generally
required to pay withholding tax on its distributable income which is allocable to a nonresident
shareholder. A nonresident shareholder includes:

• An individual who is not domiciled in Wisconsin, or
• An estate or trust that is a nonresident under sec. 71.14(1) to (3m), Wis. Stats.

However, withholding is not required on behalf of the following nonresident shareholders:

• A shareholder who is not otherwise subject to Wisconsin income or franchise tax (such as
a 501(c)(3) organization with no unrelated business taxable income).
• A shareholder whose share of income from the tax-option (S) corporation is less than
$1,000.
• A shareholder who completes Form PW-2, Wisconsin Nonresident Partner, Member,
Shareholder, or Beneficiary Pass-Through Withholding Exemption Affidavit , and provides
the exemption letter received from the department to the tax-option (S) corporation. See
the Form PW-2 instructions for details.
• A shareholder who provides an exemption letter to the tax-option (S) corporation.

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          2024 Wisconsin Form 5S Instructions 

Pass-through withholding is not required if a tax-option (S) corporation makes an election under 
sec. 71.365(4m)(a), Wis. Stats., to pay tax at the entity level and does not pass through any 
withholding to its shareholders on Schedule 5K-1. 
 
Pass-Through  Withholding  Estimated  Payments.  A  pass-through  entity  is  required  to  pay 
quarterly estimated withholding tax on a nonresident member’s share of income attributable to 
Wisconsin. The pass-through entity must make quarterly payments of withholding tax on or before 
the 15th day of the 3rd, 6th, 9th, and 12th month of the taxable year. You must make the estimated 
withholding  tax  payments  electronically.  See  the  department's Make  a  Payment  webpage  for 
information about making payments. 
 
Pass-Through Withholding Tax Return. The tax-option (S) corporation must also file Form PW-
1, Wisconsin Nonresident Income or Franchise Tax Withholding on Pass-Through Entity Income, 
annually to report estimated withholding tax paid and to pay any additional withholding tax due on 
behalf of its nonresident shareholders. Form PW-1 is due with payment by the 15th day of the 3rd 
month following the close of the tax-option (S) corporation’s taxable year. See the Form PW-1 
instructions for details of the filing procedures. 
 
Composite Return for Nonresident Individual Shareholders. A tax-option (S) corporation that 
has two or more nonresident individual shareholders who derive no taxable income or deductible 
loss from Wisconsin other than their distributive shares from the tax-option (S) corporation may 
file a composite individual income tax return on behalf of those shareholders. The tax-option (S) 
corporation files on Form 1CNS, Composite Individual Income Tax Return for Nonresident Tax-
Option (S) Corporation Shareholders. 
 
Individuals that are fiscal year filers or part-year Wisconsin residents, and individuals who have 
other  sources  of  Wisconsin  income/loss  or  who  wish  to  file  their  own  Form  1NPR  may  not 
participate in the composite return. No tax credits are allowed on the composite return other than 
a credit for pass-through entity withholding tax paid on behalf of each participating shareholder. 
 
Shareholders  that  do  not  qualify  to  participate  in  the  composite  return  must  file  a  separate 
Wisconsin return to report the income from the tax-option (S) corporation. 
 
For more information on composite filing, see the Form 1CNS instructions. 
 
Information Returns. Miscellaneous Income. If the tax-option (S) corporation paid $600 or more 
in rents, royalties, or certain nonwage compensation to one or more individuals, the corporation 
must file an information return to report those payments. For more information, see Wisconsin 
Form 9b, Miscellaneous Income. 
 
Wisconsin Use Tax.   The corporation may be liable for use tax. Use tax is the counterpart of 
sales tax. Tangible personal property, certain coins and stamps, certain leased properties affixed 
to real estate, certain digital goods, and select services, taxable under Wisconsin’s sales tax law, 
which are stored, used, or consumed in Wisconsin, are subject to use tax if the proper sales tax 
is not paid. Examples of purchases that frequently result in a use tax liability include the following: 
 
   •  Mail order and internet purchases. You owe Wisconsin use tax if you buy taxable products 
     such as computers, furniture, or office supplies from a seller who is not registered to collect 
     Wisconsin tax. 

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              2024 Wisconsin Form 5S Instructions 

 •  Inventory. If you purchase inventory items without tax for resale, and use the items instead 
  of selling them, you owe use tax. 
 •  Giveaways. Generally,  if  you  purchase  items  without  tax  and  then  give them  away  in 
  Wisconsin, you owe use tax. 
 
If you hold a seller’s permit, use tax certificate, or consumer’s use tax certificate, report your use 
tax on your sales and use tax return, using My Tax Account . If you are not registered to report 
use tax and do not make purchases subject to use tax on a regular basis, report use tax on Form 
UT-5. For more information: 
 
 •  Visit the department’s  Sales and Use Tax website, 
 •  Review Fact Sheet 2104, Wisconsin Use Tax 
 •  Call (608) 266-2776, 
 •  E-mail DORSalesandUse@wisconsin.gov, or 
 •  Write to Customer Service, Mail Stop 5-77 
             Wisconsin Department of Revenue 
             PO Box 8949 
             Madison, WI 53708-8949 
 
Penalties for Not Filing or Filing Incorrect Returns 
 
If you don’t file a franchise or income tax return that you are required to file, or if you file an 
incorrect return due to negligence or fraud, interest and penalties may be assessed against you. 
The interest rate on delinquent taxes is 18% per year. Civil penalties may be as much as 100% 
of the amount of tax not reported on the return. Criminal penalties for filing a false return include 
a fine of up to $10,000 and imprisonment. Further, if you fail to disclose reportable transactions, 
you may be subject to the penalties described in sec. 71.81, Wis. Stats., including a $30,000 
penalty for failure to disclose a listed transaction. 
 
Obtaining Forms and Assistance 
 
If you need forms or publications, you may download them from the department’s website, call 
(608) 266-1961, or visit any Department of Revenue office. 
 
If you need help in preparing a corporation tax return, you may: 
 
 •  E-mail your question to DORAuditPassThrough@wisconsin.gov. 
 •  Send a FAX to (608) 267-0834 
 •  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.  These 
  numbers are to be used only when calling with TTY equipment. 
 •  Call or visit any Department of Revenue office. 
 
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2024 Wisconsin Form 5S Instructions

Interest Charge Domestic International Sales Corporations (IC-DISCs)

IC-DISCs have no special status for Wisconsin tax purposes. An IC-DISC that is a viable
corporation with substance and has nexus in Wisconsin is taxed like any other corporation.
However, if an IC-DISC doesn’t carry on any substantial business activities and does nothing to
earn the income that it reports, its net income is allocated to the corporation that earned the
income.

Conformity with Internal Revenue Code and Exceptions

The Wisconsin income and franchise tax law applicable is based on the federal Internal Revenue
Code (IRC). The IRC generally applies for Wisconsin purposes at the same time as for federal
purposes. For taxable years beginning on or after January 1, 2024, Wisconsin's definition of the
IRC is the IRC as of December 31, 2022, with the following exceptions listed below.

Note: The exceptions and provisions adopted by Wisconsin listed below are those in effect as of
the publication date of these instructions. It is possible that subsequent changes in Wisconsin law
may add or eliminate some exceptions applicable to taxable years beginning in 2024.

Provisions of the Internal Revenue Code Adopted by Wisconsin:

Changes made by the following public laws apply for Wisconsin purposes for taxable years
beginning after December 31, 2010:

• Section 1201 of P.L. 108-173, relating to health savings accounts.
• Section 307 of P.L. 109-432, relating to the exclusion from gross income of a one-time
distribution from individual retirement accounts to fund health savings accounts.

Changes made by the following public laws apply for Wisconsin purposes for taxable years
beginning after December 31, 2022:

• The following sections of P.L. 117-2:
o Section 5001, relating to the addition of certain nonprofit entities and internet
publishing organizations to the list of eligible entities to receive a paycheck
protection program loan.
o Section 5002, relating to additional appropriations for targeted economic injury
disaster loan advances.
o Section 5005, relating to additional appropriations for shuttered venue operator
grants and a reduction in the amount of a paycheck protection program loans
received.
o Section 9623, relating to allowing a married individual who files as married filing
separate and lives apart from their spouse for the last 6 months of the year or has
a divorce or separation instrument with the other spouse by the end of the tax year
to claim the earned income credit.
o Section 9624, relating to permanently raising the investment income limit to
$10,000, and allowing adjustments for inflation in subsequent years for purposes
of claiming the earned income credit.

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2024 Wisconsin Form 5S Instructions

o Section 9672, relating to targeted economic injury disaster loan advances received
under sec. 331 of Division N of P.L. 116-260 not being included in gross income,
allowing deductions, not reducing tax attributes, and allowing basis increases. For
partnerships and S corporations, any amounts forgiven are treated as tax-exempt
for purposes of sec. 705 and 1366, IRC.
• Section 2 of P.L. 117-6, relating to the extension of paycheck protection program loan
funding to June 30, 2021.
• The following sections of Division H of P.L. 117-58:
o Section 80401, relating to the addition of qualified broadband projects to the list of
federal exempt facility bonds.
o Section 80402, relating to the addition of qualified carbon dioxide capture facilities
to the list of federal exempt facility bonds.
o Section 80601, relating to including certain contributions received by a regulated
public utility which provides water or sewerage disposal services in the definition
of a "contribution to the capital of the taxpayer" for purposes of excluding the
contribution from gross income of a corporation.

Provisions of the Internal Revenue Code Not Adopted by Wisconsin:

• Sections 1, 3, 4, and 5 of P.L. 106-519, which repealed foreign sales corporation
provisions and replaced with extraterritorial income provisions.
• Sections 101, 102, and 422 of P.L. 108-357, which repealed the exclusion for
extraterritorial income, domestic production activities deduction, and the creation of sec.
965 – incentives to reinvest foreign earnings in the U.S.
• Sections 1310 and 1351 of P.L. 109-58, which provides for the modification to special
rules for nuclear decommissioning costs, repeal of the limitation on contract research
expenses paid so small businesses, universities, and federal laboratories.
• Section 11146 of P.L. 109-59, the tax treatment of state ownership of railroad real estate
investment trust.
• Section 403(q) of P.L. 109-135, which provides incentives to reinvest foreign earnings
from controlled foreign corporations in the U.S.
• Section 513 of P.L.109-222, which repeals foreign sales corporation/extraterritorial
income exclusion binding contract relief.
• Section 104 of P.L. 109-432, which increases the rates of the alternative incremental credit
and provides a new alternative simplified credit.
• Sections 8233 and 8235 of P.L. 110-28, which created a special rule for banks required
to change from the reserve method of accounting in becoming tax-option (S) corporations
and the elimination of all earnings and profits attributable to pre-1983 years.
• Section 11(e) and (g) of P.L. 110-172, which provides clerical amendments to research
credits for controlled corporations and common control, and clerical amendments to the
FSC Repeal and Extraterritorial Income Exclusion Act of 2000.
• Section 301 of P.L. 110-245, which provides for tax responsibilities of expatriation.

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2024 Wisconsin Form 5S Instructions

• Section 15351 of P.L. 110-246, limits the amount of farm losses that may offset non-
farming business income to $300,000.
• Section 302 of division A, section 401 of division B, and sections 312, 322, 502(c), 707,
and 801 of division C of P.L. 110-343, which limits executive compensation for employers
participating in troubled assets relief program for the taxable year in which the troubled
assets exceed $300,000,000. Caps the domestic production activities deduction at 6% for
oil-related activities. The deduction for income attributable to domestic production
activities in Puerto Rico applies to the first 8 taxable years beginning before January 1,
2010. Tax incentives for investment in the District of Columbia includes exclusion for gain
on sale of an asset held from more than 5 years. Defines wages for purposes of the
domestic production activities deduction. Creates sec. 198A to provide for expensing of
disaster expenses for control of hazardous substances. Specifies treatment of
nonqualified deferred compensation plans maintained by foreign corporations.
• Sections 1232, 1251, 1501, and 1502 of division B of P.L. 111-5, which suspends the
special rules for original issue discount on high yield obligations issued during the period
9/1/2008 and 12/31/2009. Provides that no built-in-gain tax is imposed on a tax-option (S)
Corporation for a taxable year beginning in 2009 and 2010 if the seventh taxable year in
the corporation's recognition period preceded such taxable year. Tax-exempt obligations
held by financial institutions, in an amount not to exceed 2 percent of the adjusted basis
of the financial institution's assets, are not taken into account for determining the portion
of the financial institutions interest expense subject to the pro rata interest disallowance
rule of sec. 265(b). Modification of the small insurer exception to tax-exempt interest
expense allocation rules for financial institutions.
• Sections 211, 212, 213, 214, and 216 of P.L. 111-226, which adopts a matching rule to
prevent the separation of foreign taxes from the associated foreign income, denies a
foreign tax credit for the disqualified portion of any foreign income tax paid in connection
with a covered asset acquisition, provides a separate application of foreign tax credit
limitation to items resourced under treaties, limits the amount of foreign taxes deemed
paid with respect to sec. 956 inclusions, treats a foreign corporation as a member of an
affiliated group for interest allocation and apportionment purposes in more than 50% of
gross income is effectively connected income and at least 80% of either the vote or value
of all outstanding stock is owned directly or indirectly by members of the affiliated group.
• Section 2122 of P.L. 111-240, which clarifies the income sourcing rules for guarantee fees.
• Sections 754 and 760 of P.L. 111-312, which specifies certain tax incentives for
investments in the District of Columbia and specifies that gross income does not include
gain on certain small business stock.
• Sections 104, 318, 322, 323, 326, 327, and 411 of P.L. 112-240, which makes the
alternative minimum tax exemption permanent and indexed for inflation, extends through
2013 the deduction with respect to income attributable to domestic production activities in
Puerto Rico, extends the subpart F exception for active financing income, extends the
look-thru treatment of payments between related controlled foreign corporations under
foreign personal holding company, extends through 2013 the reduction in tax-option (S)
corporation built-in gains tax and clarifies treatment of installment sales, provides a 60%
exclusion for gain on small business stock acquired before 2019, and extends through
2013 the rules that allow gain certain sales of electric transmission property to be
recognized ratably over 8 taxable years.
• Public Law 114-7, relating to contributions for relief of slain New York Police Detectives.

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2024 Wisconsin Form 5S Instructions

• Section 1101 of P.L. 114-74 relating to partnership rules.
• Section 305 of division P of P.L. 114-113, relating to the transportation costs of
independent refiners.
• Sections 123, 125-128, 143, 144, 151-153, 165-167, 169-171, 189, 191, 326, and 411 of
division Q of P.L. 114-113.
o Section 123, relating to extension of 15-year straight-line cost recovery for qualified
leasehold improvements, qualified restaurant buildings and improvements, and
qualified retail improvements.
o Section 125, relating to the extension of treatment of certain dividends of regulated
investment companies.
o Section 126, relating to the extension of exclusion of 100 percent of gain on certain
small business stock.
o Section 127, relating to the extension of reduction in S-corporation recognition
period for built-in gains tax.
o Section 128, relating to the extension of subpart F exception for active financing
income.
o Section 143, relating to the extension and modification of bonus depreciation.
o Section 144, relating to the extension of look-thru treatment of payments between
related controlled foreign corporations under foreign personal holding company
rules.
o Section 151, relating to the extension and modification of exclusion from gross
income of discharge of qualified principal residence indebtedness.
o Section 152, relating to the extension of mortgage insurance premiums treated as
qualified residence interest.
o Section 153, relating to the extension of above-the-line deduction for qualified
tuition and related expenses.
o Section 165, relating to the extension of classification of certain race horses as 3-
year property.
o Section 166, relating to the extension of 7-year recovery period for motorsports
entertainment complexes.
o Section 167, relating to the extension and modification of accelerated depreciation
for business property on an Indian reservation.
o Section 169, relating to the extension of special expensing rules for certain film
and television productions; special expensing for live theatrical productions.
o Section 170, relating to the extension of deduction allowable with respect to
income attributable to domestic production activities in Puerto Rico.
o Section 171, relating to the extension and modification of empowerment zone tax
incentives.
o Section 189, relating to the extension of special allowance for second generation
biofuel plant property.

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2024 Wisconsin Form 5S Instructions

o Section 191, relating to the extension of special rule for sales or dispositions to
implement FERC or State electric restructuring policy for qualified electric utilities.
o Section 326, relating to the dividends derived from RICs and REITs ineligible for
deduction for United States source portion of dividends from certain foreign
corporations.
o Section 411, relating to the partnership audit rules.
• Sections 11011, 11012, 13201 (a) to (e) and (g), 13206, 13221, 13301, 13304 (a), (b),
and (d), 13531, 13601, 13801, 14101, 14102, 14103, 14201, 14202, 14211, 14212,
14213, 14214, 14215, 14221, 14222, 14301, 14302, 14304, and 14401 of P.L. 115−97:
o Section 11011, relating to the 20% deduction for domestic qualified business
income.
o Section 11012, relating to the limitation on losses for taxpayers other than
corporations.
o Section 13201 (a) to (e) and (g), relating to the temporary 100% expensing for
certain business assets (bonus depreciation).
o Section 13206, relating to the amortization of research and experimental
expenditures beginning in 2022.
o Section 13221, relating to special rules for the taxable year of inclusion.
o Section 13301, relating to the 30% taxable income limitation for the deduction of
interest.
o Section 13304(a), (b), and (d) relating to the limit on the deduction by employers
of fringe benefits (meals, entertainment, and transportation).
o Section 13531, relating to the limitation on deductions for FDIC premiums.
o Section 13601, relating to the modification of the limitation on excessive employee
remuneration.
o Section 13801, relating to the production period for beer, wine, and distilled spirits.
o Section 14101, relating to the deduction for the foreign-source portion of dividends
received by domestic corporations from specified 10% owned foreign corporations.
o Section 14102, relating to the special rules for sale or transfers involving specified
10% owned foreign corporations.
o Section 14103, relating to the treatment of deferred foreign income upon transition
to a participation exemption system of taxation.
o Section 14201, relating to the current year global intangible low-taxed income by
U.S. shareholders.
o Section 14202, relating to the deduction for foreign derived intangible income and
global intangible low-taxed income.
o Section 14211, relating to the elimination of the inclusion of foreign base company
oil related income.
o Section 14212, relating to the repeal of the inclusion based on withdrawal of
previously excluded subpart F income from qualified investment.

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2024 Wisconsin Form 5S Instructions

o Section 14213, relating to the modification of stock attribution rules for determining
the status as a controlled foreign corporation.
o Section 14214, relating to the modification of the definition of a U.S. shareholder.
o Section 14215, relating to the elimination of the requirement that a corporation
must be controlled for 30 days before the subpart F inclusions apply.
o Section 14221, relating to the limitations on income shifting through intangible
property transfers.
o Section 14222, relating to certain related party amounts paid or accrued in hybrid
transactions or with hybrid entities.
o Section 14301, relating to the repeal of section 902 – indirect foreign tax credits,
and determination of the deemed paid credit for subpart F inclusions under sec.
960 on a current year basis.
o Section 14302, relating to the separate foreign tax credit limitation basket for
foreign branch income.
o Section 14304, relating to the election to increase the percentage of domestic
taxable income offset by the overall domestic loss treated as foreign source.
o Section 14401, relating to the base erosion anti-abuse tax.
• Sections 40304, 40305, 40306, and 40412 of P.L. 115-123.
o Section 40304, relating to the extension of classification of certain race horses as
3-year property.
o Section 40305, relating to the extension of 7-year recovery period for motor-sports
entertainment complexes.
o Section 40306, relating to the extension of accelerated depreciation for business
property on an Indian reservation.
o Section 40412, relating to the extension of special allowance for second generation
biofuel plant property.
• Section 101 (c) of division T of P.L. 115-141, relating to the application of section 199 to
certain qualified payments paid after 2017 for payments received by a patron from a
specified agricultural or horticultural cooperative for qualified production activities income.
• Sections 101 (d) and (e), 102, 201 to 207, 301, 302, and 401 (a) (47) and (195), (b) (13),
(17), (22) and (30), and (d) (1) (D) (v), (vi), and (xiii) and (xvii) (II) of division U of P.L. 115-
141.
o Sections 101 (d) and (e) and 102, relating to technical corrections to bonus
depreciation, alternative minimum tax requirements for qualified Indian reservation
property, and qualified production activities income made by the Protecting
Americans from Tax Hikes Act of 2015 and the Consolidated Appropriations Act,
2016.
o Sections 201 to 207 relating to partnership audit rules.
o Sections 301 and 302, relating to amendments to regulatory requirements for
partnership returns and the definition of qualified small power production facilities
made by the Bipartisan Budget Act of 2015 and the Energy Policy Act of 2005.

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2024 Wisconsin Form 5S Instructions

o Section 401 (a) (47) and (195), (b) (13), (17), (22) and (30), and (d) (1) (D) (v), (vi),
and (xiii) and (xvii) (II), relating to clerical corrections and deadwood-related
provisions to the following: exempt facility bonds, tax-exempt enterprise zone
facility bonds, the special allowance for qualified disaster assistance property,
reducing the dividends received deduction where portfolio stock is debt financed,
exemption from tax on corporations, certain trusts, etc., requirements of domestic
international sales corporations, dividends received by corporations, rules applied
to deductions for dividends received, the foreign tax credit, and dividends received
by corporations.
• Sections 104, 114, 115, 116, 130, and 145 of division Q of P.L. 116-94.
o Section 104, relating to the deduction of qualified tuition and related expenses.
o Section 114, relating to the classification of certain race horses as 3-year property.
o Section 115, relating to the 7-year recovery period for motorsports entertainment
complexes.
o Section 116, relating to the accelerated depreciation for business property on
Indian reservations.
o Section 130, relating to special allowance for second generation biofuel plant
property.
o Section 145, relating to look-thru rule for related controlled foreign corporations.
• Sections 2304 and 2306 of P.L. 116-136.
o Section 2304, relating to the modification of limitations on losses for taxpayers
other than corporations.
o Section 2306, relating to the modifications of limitation on business interest.
• Sections 111, 114, 115, 116, 118 (a) and (d), 133, 137, 138, and 210 of division EE of P.L.
116-260.
o Section 111, relating to the look-thru rule for related controlled foreign
corporations.
o Section 114, relating to the exclusion from gross income of discharge of qualified
principal residence indebtedness.
o Section 115, relating to the 7-year recovery period for motorsports entertainment
complexes.
o Section 116, relating to the expensing rules for certain productions.
o Section 118 (a) and (d), relating to empowerment zone tax incentives.
o Section 133, relating to the treatment of mortgage insurance premiums as qualified
residence interest.
o Section 137, relating to the classification of certain race horses as 3-year property.
o Section 138, relating to the accelerated depreciation for business property on
Indian reservations.
o Section 210, relating to temporary allowance of full deduction for business meals.

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2024 Wisconsin Form 5S Instructions

• Sections 5003, 9041, 9673, 9675, and 9708 of P.L. 117-2.
o Section 5003, relating to additional restaurant revitalization grant funds.
o Section 9041, relating to the excess business loss limitation extension for
noncorporate taxpayers to December 31, 2026.
o Section 9673, relating to restaurant revitalization grants not being included in gross
income and deductions allowed.
o Section 9675, relating to the exclusion from income for most student loans
discharged after December 31, 2020 and before January 1, 2026
o Section 9708, relating to the expanded definition of "covered employee" for publicly
held corporations deducting excessive employee remuneration.
• Section 13903 (b) of P.L. 117-169, relating to the extension of the excess business loss
limitation for noncorporate taxpayers through December 31, 2028.

Other Exceptions to Internal Revenue Code

The following federal provisions in effect as of December 31, 2022, are specifically excluded for
Wisconsin franchise and income tax purposes:

Depreciation and Bonus Depreciation

For taxable years beginning on or after January 1, 2014, for purposes of computing depreciation,
depletion, and amortization, the Internal Revenue Code means the federal Internal Revenue Code
in effect on January 1, 2014.

The provision that property required to be depreciated for taxable year 1986 under the Internal
Revenue Code as amended to December 31, 1980, to continue to be depreciated under the
Internal Revenue Code as amended to December 31, 1980, is limited to taxable years beginning
before January 1, 2014.

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. Bonus depreciation was not in effect on January 1, 2014.

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.

How to Report Differences

You must report any differences between federal income and income for Wisconsin purposes in
Schedule 5K, column (c). For differences relating to depreciation and amortization, you must
prepare schedules detailing the differences between the federal and Wisconsin computations and
submit them with your return.

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2024 Wisconsin Form 5S Instructions

Specific Instructions for Form 5S

You must complete pages 1 through 5 of Form 5S. Do not enter “See Attached” instead of
completing the entry spaces. If more space is needed, prepare separate sheets using the same
size and format as the printed forms, and submit these sheets with your Form 5S.

Round cents to the nearest whole dollar by eliminating amounts less than 50 cents and increasing
amounts from 50 cents through 99 cents to the next higher dollar.

Note: Federal line numbers referenced in these instructions and on Form 5S may change.

Items A Through J

Before completing items A through J, fill in the tax-option (S) corporation’s 2024 taxable year at
the top of the form and the corporation’s name and address. The name and address information
should be written on single lines. Do not stack the information on the lines. If more room is needed,
abbreviate where possible.

Do not write "None" on the amount lines if there is not an entry for the lines. Instead, leave the
lines blank.

• Federal Employer Identification Number – Enter the tax-option (S) corporation’s federal
employer identification number (EIN).
• Business Activity (NAICS) Code – Enter the tax-option (S) corporation’s principal
business activity code, based on the North American Industry Classification System
(NAICS), from your federal return.
• Number of Shareholders – Enter the total number of shareholders that the tax-option (S)
corporation had during the taxable year.
• Number of Nonresident Shareholders – Enter the total number of nonresident
shareholders that the tax-option (S) corporation had during the taxable year, including
individuals, estates, and trusts not domiciled in Wisconsin.
• State of Incorporation and Year – Enter the 2-letter postal abbreviation for the state (or
name of the foreign country) under the laws of which the tax-option (S) corporation was
incorporated and the year of incorporation.
• A1. Amended Return – If this is an amended return, check this box and include Schedule
AR showing details of the changes made. Be sure to include any supporting forms or
schedules with the amended return.
• A2. First Return – If this is the first year that you are filing a Wisconsin return because
the corporation wasn't in existence or didn’t do business in Wisconsin in prior years, check
this box.
• A3. Final Return – If the corporation ceased to exist or withdrew from Wisconsin during
the year and will no longer be filing Form 5S, check this box and submit a copy of your
plan of liquidation and federal Form 966 if the corporation liquidated. Note: checking this
box will not close all your accounts with the department; only the corporation account will
close.

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                 2024 Wisconsin Form 5S Instructions 

 • A4-6. Short Period – Indicate that a short period return is being filed due to a change in 
   the  corporation’s  accounting  period,  a  stock  purchase  or  sale,  or  termination  of  S-
   corporation election by checking the appropriate line. 
   Be sure to use the correct year's tax return when filing for a short period. If the tax returns 
   are not yet available, wait until the returns become available and file under extension. For 
   example, if a taxpayer has a short period from January 1, 2024 through March 31, 2024, 
   the 2024 Form 5S will not be ready by June 15, 2024 (unextended due date for a March 
   31 year-end). Wisconsin law provides for an automatic 7-month extension to file the return, 
   so filing under extension will allow the correct years return to be filed when the 2024 Form 
   5S is available (typically November 1). Note that an extension does not extend the time to 
   pay a balance due. To avoid interest charges, pay the amount due by the unextended due 
   date. 
 • A7. Election to Pay Tax at the Entity Level – Check this box to indicate the election was 
   made  to  pay  tax  at  the  entity  level  and  complete  Schedule  5S-ET, Entity-Level  Tax 
   Computation. 
   For more information about the entity-level tax election and how it affects Schedule 5K-1, 
   see the instructions for Schedule 5S-ET. 
 • A8. Election to Pay Tax at the Entity Level Was Made by Lower-Tier Entity – If you 
   are a member of a multi-tier pass-through entity structure and any of your lower-tier entities 
   made an election under sec. 71.21(6)(a), Wis. Stats., to pay tax at the entity level, check 
   this box. 
   A lower-tier entity is a pass-through entity (i.e., partnership) that is directly or indirectly 
   owned by a tax-option (S) corporation. 
   If one or more of your lower-tiered entities made an election to pay tax at the entity level 
   and you are not making the election to pay tax at the entity level, you must provide each 
   shareholder a supplemental statement with the Schedule 5K-1 detailing the amount of the 
   shareholder's items of income, gain, loss, and deduction that have been taxed by a lower-
   tier entity. 
   Caution: In general, if a tax-option (S) corporation receives a Schedule 3K-1 from a lower-
   tier entity making the election to pay tax at the entity level under sec. 71.21(6)(a), Wis. 
   Stats., the tax-option (S) corporation does not make adjustments to column (b) or (c) or 
   Form 5S, Schedule 5K, and the related Schedules 5K-1 for the items of income, gain, loss, 
   and deduction received from the lower-tier entity. 
   For more information about the entity-level tax election and how it affects Schedule 5K-1, 
   see the instructions for Schedule 5S-ET. 
 • A9.  Reorganization –  If the  tax-option  (S)  corporation  reorganized  under the  Internal 
   Revenue  Code  (IRC),  check  this  box  and  enter  the  section  of  the  IRC  for  the 
   reorganization.  
   Example: Section 368(a)(1)(F), IRC, provides: "a mere change in identity, form, or place 
   of organization of one corporation, however effected". If a tax-option (S) corporation was 
   reorganized  under  sec.  368(a)(1)(F),  IRC,  the  tax-option  (S)  corporation  must  enter 
   "368(a)(1)(F)" in the space provided. 
 • B. Extended Due Date – If the tax-option (S) corporation has an extension of time to file 
   its Wisconsin return, check this box and enter the extended due date. 

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2024 Wisconsin Form 5S Instructions

Disaster Relief Extension. If you are filing under extension because of a federal or state
disaster, include a statement indicating which disaster extension you are using and attach
it to your return.
• C. No Business Transacted in Wisconsin – If the corporation was incorporated under
Wisconsin law or licensed to do business in Wisconsin but had no property or activity in
Wisconsin for the taxable year, check this box. Submit a complete copy of the
corporation’s federal return with Form 5S.
• D. Filing Form 1CNS – Check this box if the tax-option (S) corporation is filing a composite
Wisconsin individual income tax return (Form 1CNS) on behalf of its qualified and
participating nonresident shareholders. If you check Item D, then you may be required to
file Form PW-1. See the instructions for Form 1CNS and Form PW-1 for more information.
• E. Effective Date of Wisconsin Tax-Option Corporation Election – Enter the month,
day, and year that the corporation’s Wisconsin tax-option (S) corporation election became
effective.
• F. Schedule RT Required – Check this box if the tax-option (S) corporation is filing
Schedule RT, Wisconsin Related Entity Expenses Disclosure Statement, with its return.
Schedule RT is generally required if the tax-option (S) corporation pays, accrues, or incurs
more than $100,000 of expenses to a related person or entity in the taxable year. See the
Schedule RT instructions for details of the requirement to file Schedule RT.
• G1-G2. Wisconsin Property and Total Company Property – Enter the total amount of
the company’s real and tangible property located in Wisconsin and the company’s total
amount of real and tangible property everywhere. Use the cost basis of the property as of
the end of the year.
Include the following types of property: land, buildings, furniture and fixtures,
transportation equipment, machinery and other equipment, and inventories.
Include only property that is owned by the tax-option (S) corporation; you do not need to
include property you are renting.
• H1-H2. Wisconsin Payroll and Total Company Payroll – Enter the total amount of the
company’s payroll located in Wisconsin and the company’s total amount of payroll
everywhere. Include only amounts attributable to employees of the corporation. In the
computation of payroll located in Wisconsin, include individuals that satisfy one or more
of the following:
o The individual’s service is performed entirely in Wisconsin.
o The individual’s service is performed in and outside Wisconsin, but the service
performed outside Wisconsin is incidental to the individual’s service in Wisconsin.
o A portion of the individual’s service is performed in Wisconsin and the base of
operations of the individual is in Wisconsin.
o A portion of the individual’s service is performed in Wisconsin and, if there is no
base of operations, the place from which the individual’s service is directed or
controlled is in Wisconsin.
o A portion of the individual’s service is performed in Wisconsin and neither the base
of operations of the individual nor the place from which the service is directed or
controlled is in any state in which some part of the service is performed, but the
individual’s residence is in Wisconsin.

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            2024 Wisconsin Form 5S Instructions 

 • I. IRS Adjustments – If a corporation’s federal tax return is adjusted by the IRS and the 
   adjustments affect the Wisconsin net tax payable, the amount of a Wisconsin credit, a 
   Wisconsin net business loss carryforward, or a Wisconsin capital loss carryforward, you 
   must report the adjustments to the Department of Revenue within 180 days after they 
   become final. 
   File your amended return electronically by using one of the third-party software providers. 
   If submitting a federal audit report without an amended return, mail it to: 
   Audit Bureau, Mail Stop 6-81  
   Wisconsin Department of Revenue   
   PO Box 8906  
   Madison, WI 53708-8906.  
    
   Don’t include these items in the original tax return for the current year. 
 • J. Election to Claim Certain Credits at the Entity Level – Check here if the tax-option 
   (S) corporation qualifies and elects to claim the following credits at the entity level: 
    o The Enterprise Zone Jobs Credit (Schedule EC) 
      According to sec. 71.28(3w)(c)2.b., Wis. Stats., a tax−option (S) corporation may 
      elect to claim the enterprise zone jobs credit, if the credit results from a contract 
      entered  into  with  the  Wisconsin  Economic  Development  Corporation  before 
      December 22, 2017. A tax−option (S) corporation that wishes to make this election 
      shall make the election on its original return and cannot subsequently make or 
      revoke the election. If a tax−option (S) corporation elects to claim the credit, the 
      shareholders cannot claim the credit. 
    o The Business Development Credit (Schedule BD)  
      According to sec. 71.28(3y)(c)1.b., Wis. Stats., a tax−option (S) corporation may 
      elect to claim the business development credit, if the credit results from a contract 
      entered  into  with  the  Wisconsin  Economic  Development  Corporation  before 
      December 22, 2017. A tax−option (S) corporation that wishes to make this election 
      shall make the election on its original return and cannot subsequently make or 
      revoke the election. If a tax−option (S) corporation elects to claim the credit, the 
      shareholders cannot claim the credit. 
   If the tax-option (S) corporation makes this election, attach Schedules  EC, or BD with 
   Form 5S and include the amount of the credit(s) on Form 5S, page 1, line 15. Do not pass 
   through the credits to the shareholders on Schedules 5K-1. 
   Caution: A tax-option (S) corporation that makes an election under sec.     71.365(4m)(a), 
   Wis. Stats., to pay tax at the entity level may not make the election to claim these credits 
   at the entity level. 
 
Part I – Calculation of Tax Due or Refund 
 
Lines 1 Through 8 
 
A foreign corporation subject to the Wisconsin income tax rather than the franchise tax (see page 
3) should skip lines 1 through 6 and begin with line 7. All other tax-option (S) corporations subject 
to the Wisconsin franchise tax begin with line 1. 
 
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2024 Wisconsin Form 5S Instructions

Line 1. Federal, State, and Municipal Government Interest – Enter the amount of interest
income received from the following obligations:

• Obligations of the United States government and its instrumentalities.
• Municipal housing authority bonds issued under sec. 66.1201, Wis. Stats.
• Municipal redevelopment authority bonds issued under sec. 66.1333, Wis. Stats.
• Housing and community development authority bonds issued under sec. 66.1335, Wis.
Stats.
• Bonds issued by the Wisconsin Housing and Economic Development Authority (WHEDA)
under sec. 234.65, Wis. Stats., to fund an economic development loan to finance
construction, renovation, or development of property that would be exempt from property
tax under sec. 70.11(36), Wis. Stats. (professional sports and entertainment home
stadiums).
• Bonds issued by a local exposition district under subch. II of ch. 229, Wis. Stats.
• Bonds issued under sec. 66.0621, Wis. Stats., by a local professional baseball park
district, a local professional football stadium district, or a local cultural arts district.
• Bonds issued on or after January 1, 2004, by the Wisconsin Housing and Economic
Development Authority under sec. 234.08 or 234.61, Wis. Stats., to fund multifamily
affordable housing projects or elderly housing projects.
• Bonds issued by the Wisconsin Aerospace Authority under sec. 114.70 or 114.74, Wis.
Stats.
• Bonds issued on or after October 27, 2007, by the Wisconsin Health and Education
Facilities Authority to fund acquisition of information technology hardware or software.
• Conduit revenue bonds issued under sec. 66.0304, Wis. Stats., if the bonds or notes are
used to fund multifamily affordable housing projects or elderly housing projects in
Wisconsin and the Wisconsin Health and Education Facilities Authority has the authority
to issue the bonds. The bonds or notes are used by a health facility to fund the acquisition
of information technology hardware or software in Wisconsin and the Wisconsin Health
and Educational Facilities Authority has the authority to issue the bonds. The bonds or
notes issued to fund a redevelopment project or housing project in Wisconsin.
• Wisconsin housing and economic development authority bonds if the bonds or notes are
issued to provide loans to a public affairs network under s. 234.75(4), Wis. Stats.
• Wisconsin Health and Educational Facilities Authority Bonds if the bonds or notes are
issued for the benefit of a person who is eligible to receive the proceeds from another
entity for the same purpose for which the bonds or notes are issued and the interest
income received from the other bonds or notes is exempt from Wisconsin taxation.

The corporation may reduce the amount of interest income by any applicable amortizable bond
premium or interest paid to purchase or hold these federal, state, or municipal government
obligations. For Wisconsin purposes, neither the amortizable bond premium nor the related
interest expenses are deductible by the shareholders since this federal, state, and municipal
government interest isn’t taxable to them.

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2024 Wisconsin Form 5S Instructions

Caution: Do not include any interest income or related expenses that were taxed by a lower-tier
entity.

Line 2. Wisconsin Apportionment Percentage

• Tax-option (S) corporations engaged in business wholly within Wisconsin:
Enter "100.0000%" on line 2 and check the 100% apportionment box. No apportionment
schedule is required.
• Tax-option (S) corporations engaged in business both within and without Wisconsin:
If the corporation is using apportionment, enter the apportionment schedule used and the
apportionment percentage, as appropriate. For example, a tax-option (S) corporation
using Schedule A-01, Wisconsin Single Sales Factor Apportionment Data for
Nonspecialized Industries, with a Wisconsin apportionment percentage of 25% enters "01"
and "25.0000%" in the space provided. Include the apportionment schedule with Form 5S.
If the corporation is using separate accounting, check the separate accounting box next
to line 2. Include Form C and Form N, as appropriate, with Form 5S.
If the corporation is using both apportionment and separate accounting, enter the
apportionment schedule used and the apportionment percentage, and check the separate
accounting box. Complete and include the appropriate apportionment schedule with Form
5S. Include Form C and Form N, as appropriate, with Form 5S.
Line 3. Interest Income Attributable to Wisconsin – Multiply the amount on line 1 by the
percentage on line 2. Nonunitary, multistate corporations should enter the amount of federal,
state, and municipal government interest attributable to Wisconsin as determined under the
separate accounting method.

Caution: A tax-option (S) corporation cannot offset a net operating loss carryforward from a year
when it was a regular (C) corporation against the interest income reported on line 3. Sections
71.26(4) and 71.365(2), Wis. Stats., prohibit tax-option (S) corporations from claiming net
business loss carryforwards.

Line 4. Franchise Tax – Enter 7.9% of the amount reported on line 3.

Line 5. Manufacturer’s Sales Tax Credit – Enter the manufacturer’s sales tax credit
carryforward from Schedule MS, line 3. A tax-option (S) corporation that had $25,000 or less of
unused manufacturer’s sales tax credit as of the beginning of its 2006 taxable year may claim any
remaining unused credit. A tax-option (S) corporation's credit carryforward consists of the
following:

• Unused credits computed for taxable years beginning before January 1, 1998.
• Unused credits computed for taxable years beginning after December 31, 1997, that were
not passed through to shareholders.
Caution: You may not offset the manufacturer’s sales tax credit against the built-in gains
tax or the economic development surcharge.

Line 6. – Subtract line 5 from line 4. If line 5 is more than line 4, enter zero.

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           2024 Wisconsin Form 5S Instructions 

Line 7. Additional Tax on Tax-Option (S) Corporations – Complete Schedule Q, page 2 of 
Form  5S,  and  enter  the  amount  of  additional  tax.  Tax-option  (S)  corporations  that  make  an 
election to pay tax at the entity level must complete Schedule 5S-ET and include the amount of 
tax from Schedule 5S-ET on line 7 of Form 5S. 
 
Schedule Q – Additional Tax on Certain Built-In Gains 
 
A tax is imposed on a tax-option (S) corporation that has a “recognized built-in gain” during the 
“recognition period.” A tax-option (S) corporation may be liable for the tax on built-in gains if all of 
the following are true: 
 
 •  It was a regular (C) corporation before making its current election to be treated as a tax-
      option (S) corporation, 
 •  It made its current election after 1986, 
 •  It has a recognized built-in gain within 10 years from the first day of the first taxable year 
      it became a tax-option (S) corporation under its current election (the recognition period), 
      and 
 •  The net recognized built-in gains for prior taxable years don’t exceed the net unrealized 
      built-in gain. 
 
The Wisconsin built-in gains tax also may apply to a federal S corporation that has elected not to 
be a tax-option (S) corporation for Wisconsin purposes and subsequently re-elects Wisconsin tax-
option (S) corporation status. 
 
Schedule Q, Line 1. Enter the amount that would be the corporation’s taxable income for the 
taxable year if only recognized built-in gains and recognized built-in losses were considered. This 
is the amount computed under sec.   1374(d)(2)(A)(i), IRC, but determined using the Wisconsin 
basis of the assets. Prepare a schedule showing the computation details and submit it with your 
Form 5S. 
 
A “recognized built-in gain” is any gain recognized during the recognition period on the sale or 
distribution (disposition) of any asset, except to the extent the corporation establishes that: 
 
 •  The asset wasn’t held by it on the first day of the first year that the current tax-option (S) 
      election became effective, or 
 •  The recognized gain on any asset exceeds the excess of the fair market value of the asset 
      on the date of conversion over the adjusted basis of the asset on that first day. 
Recognized built-in gain for the taxable year includes any carryover of net recognized built-in gain 
from the preceding taxable year. Include on line 1 the carryover amount as recognized built-in 
gain. 
 
A “recognized built-in loss” is any loss recognized during the recognition period on the disposition 
of any asset to the extent the corporation establishes that: 
 
 •  It owned the asset on the date that the current tax-option (S) election became effective, 
      and 

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2024 Wisconsin Form 5S Instructions

• The loss doesn’t exceed the excess of the asset’s adjusted basis on the date of conversion
over its fair market value at that time.

Schedule Q, Line 2. Enter the amount that would have been the corporation’s Wisconsin net
income before apportionment if it were a regular (C) corporation. Generally, this is the taxable
income determined under sec. 1375(b)(1)(B), IRC, adjusted for any modifications prescribed by
Wisconsin law. Net business loss carryforwards or capital loss carryforwards aren’t used in
figuring the net income. Submit with your Form 5S a schedule showing the computation details.

Schedule Q, Line 3. Enter the smaller of the amount on line 1 or line 2. The net recognized built-
in gain on which the tax may be imposed is limited by the corporation’s net unrealized built-in
gain. The “net unrealized built-in gain” is the excess of the fair market value of the corporation’s
assets over the aggregate adjusted bases of those assets on the date the current tax-option (S)
election became effective.

If the amount on line 1 exceeds the amount on line 2, the excess is treated as a recognized built-
in gain in the succeeding taxable year. This carryover provision applies only in the case of a
corporation that made its tax-option (S) election on or after March 31, 1988.

Schedule Q, Line 4. If the corporation uses apportionment, enter the apportionment schedule
used and the apportionment percentage, as appropriate. If the corporation uses separate
accounting, enter “100.0000%” on line 4. (Line 4 is required if there are any amounts entered on
Schedule Q.) If the corporation uses apportionment and separate accounting, enter the
apportionment schedule used and the apportionment percentage, as appropriate.

Schedule Q, Line 5. Multiply the amount on line 3 by the percentage on line 4. If the corporation
uses separate accounting or uses both separate accounting and apportionment, enter the net
recognized built-in gain attributable to Wisconsin.

Schedule Q, Line 6. Enter any available Wisconsin net business loss carryforward from taxable
years for which the corporation wasn’t a tax-option (S) corporation. Include any capital loss
carryforward to the extent of net capital gain included in recognized built-in gain for the taxable
year after apportionment. See sec. 1374(b)(2), IRC, for details. Prepare a schedule showing the
computation details and submit it with your Form 5S.

Line 8. Economic Development Surcharge

The economic development surcharge applies to corporations having gross receipts from all
activities of $4 million or more during the taxable year. Corporations that must file Wisconsin
franchise or income tax returns must pay the economic development surcharge, with certain
exceptions. The surcharge doesn’t apply to:

• Domestic corporations that don’t have any business activities in Wisconsin.
• Foreign corporations that don’t have nexus with Wisconsin, unless the foreign corporation
is part of a combined group that has nexus in Wisconsin.
• Corporations that have less than $4 million of gross receipts from all activities. “Gross
receipts from all activities” means gross receipts, gross sales, gross dividends, gross
interest income, gross rents, gross royalties, the gross sales price from the disposition of
capital assets and business assets, gross receipts passed through from other entities, and

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2024 Wisconsin Form 5S Instructions

all other receipts that are included in gross income for Wisconsin franchise or income tax
purposes.
Caution: Gross receipts of a tax-option (S) corporation include gross receipts passed
through from a partnership that made the entity-level tax election under sec. 71.21(6)(a),
Wis. Stats.
• Nuclear decommissioning trust funds.

Complete Schedule S, page 2 of Form 5S, and enter the amount of the economic development
surcharge on line 8 of Form 5S.

For more information, refer to Publication 400, Wisconsin's Economic Development Surcharge.

Schedule S – Economic Development Surcharge

Schedule S, Line 1. Complete Schedule 5K and enter the income (loss) from Schedule 5K, line
19, column (d). This is the net income (loss) as determined under Wisconsin law, before
application of apportionment or separate accounting. It generally includes interest income from
federal, state, and municipal government obligations. However, for a foreign corporation subject
to the income tax rather than the franchise tax, don’t include interest income that is exempt from
state income tax under federal or Wisconsin law.

Schedule S, Line 2. If the tax-option (S) corporation uses apportionment, enter the apportionment
schedule used and the apportionment percentage, as appropriate. If the corporation uses
separate accounting, enter “100.0000%” on line 2. If the corporation uses apportionment and
separate accounting, enter the apportionment schedule used and the apportionment percentage,
as appropriate.

Schedule S, Line 3. Multiply the amount on line 1 by the percentage on line 2. If the tax-option
(S) corporation uses separate accounting or uses both separate accounting and apportionment,
enter the net income (loss) attributable to Wisconsin.

Schedule S, Line 4. Enter nonapportionable and separately apportioned income that was not
included on line 1. Include amounts from Form N, line 14.

Schedule S, Line 6. Enter the greater of $25 or 0.2% (0.002) of the amount on line 5, but not
more than $9,800.

Lines 9 Through 25

Line 9. Endangered Resources Donation – Your donation supports the preservation and
management of more than 200 endangered and threatened Wisconsin plants and animals. It also
helps protect Wisconsin’s finest remaining examples of prairies, forests, and wetlands.

Support endangered resources in Wisconsin. Fill in line 9 with the amount you wish to donate.
Your gift will either reduce your refund or be added to tax due.

You can make an online donation on the Wisconsin Department of Natural Resources' website.

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2024 Wisconsin Form 5S Instructions

You can also send a check directly to:

Endangered Resources Fund
Department of Natural Resources
PO Box 7921
Madison, WI 53707-7921.

Line 10. Veterans Trust Fund Donation – You may designate an amount as a veterans trust
fund donation. Your donation will be used by the Wisconsin Department of Veterans Affairs for
the benefit of veterans or their dependents. Fill in line 10 with the amount you wish to donate.
Your donation will either reduce your refund or be added to tax due.

Line 12. Estimated Tax Payments – Enter estimated tax payments made, and an overpayment
applied from the prior year’s return, minus any “quick refund” applied for on Form 4466W.

Line 13. Wisconsin Tax Withheld – Enter on line 13 the amount of Wisconsin income or
franchise tax withheld on your behalf.

An entertainment corporation that made a deposit using Form WT-11 or had amounts withheld
on its behalf by an employer using Form WT-11 may enter the deposit or withholding on line 13,
or it may elect to allocate the deposit or withholding to its nonresident entertainer shareholders
but only to the extent the income subject to withholding is allocated to those shareholders. For
more information about allocating this withholding to your nonresident entertainer shareholders,
see Form PW-1 and instructions.

A tax-option (S) corporation that makes an election to pay tax at the entity level and has amounts
withheld on its behalf by a lower-tier entity may enter the lower-tier withholding on line 13 provided
the tax-option (S) corporation does not report any amount of withholding to its shareholders on
Schedules 5K-1.

Include documents (e.g., Form WT-11 or Schedule 3K-1) with your Form 5S to substantiate the
withholding claimed on line 13.

Caution: Do not include any deposit or withholding on line 13 that is passed through to your
shareholders on Schedules 5K-1.

Line 14. Amended Return, Amount Previously Paid – Complete this line only if this is an
amended 2024 Form 5S. Fill in the amount of tax you paid with your original Form 5S plus any
additional amounts paid after it was filed.

If you did not pay the full amount shown on your original Form 5S, fill in only the portion that you
actually paid. Also, include any additional tax that may have resulted if your original return was
changed or audited. This includes additional tax paid with a previously filed 2024 amended return
and additional tax paid as a result of a department adjustment to your return. Do not include
payments of interest or penalties.

Line 15. Add lines 12 through 14. If you checked Item J, include the amount of the jobs tax credit,
the enterprise zone jobs credit, and/or the business development credit that the tax-option (S)
corporation elects to claim at the entity level.

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               2024 Wisconsin Form 5S Instructions 

Line 16. Amended Return, Amount Previously Refunded – Complete this line only if this is an 
amended 2024 Form 5S. Fill in the refund from your original 2024 return (not including the amount 
applied to your 2025 estimated tax). 
 
If your refund was reduced because you owed underpayment interest or any penalties, fill in the 
amount of your refund before the reduction for underpayment interest or penalty. If your 2024 
return was adjusted by the department, fill in the refund shown on the adjustment notice you 
received. If the adjustment notice shows a tax due rather than a refund, complete line 14 instead 
of line 16. 
 
Line 18. Interest, Penalty, and Late Fee Due – Enter any interest, penalty, and late fee due from 
Form U, line 17 or 26. Check the designated space if you computed underpayment interest using 
the annualized income installment method on Form U, page 2.  
 
Amended Return: If you previously were assessed interest for underpayment of estimated taxes, 
complete an amended Form U, Part I, based on the total of the amounts shown on Form 5S, lines 
6 and 8, plus any tax from Schedule 5S-ET. Enter the difference between the underpayment 
interest from the amended Form U, line 17, and the amount you previously paid on line 18. Show 
an overpayment as a negative number. File Form U with your amended return. Otherwise, leave 
line 18 blank. The department will compute interest on the amount of refund approved or tax 
owed. 
 
Line 19. Amount Due – If the total of lines 11 and 18 is larger than line 17, enter the amount 
owed. See the department's Make a Payment webpage for information about making payments. 
Line 20. Overpayment – If line 17 is larger than the total of lines 11 and 18, subtract the total of 
lines 11 and 18 from line 17. 
Line 21. 2025 Estimated Tax – Enter the amount of any overpayment from line 20 that is to be 
credited  to  the  corporation’s  2025  estimated  tax.  The  balance  of  any  overpayment  will  be 
refunded. 
 
Changing an Election to Apply a Refund to Estimated Tax: Section 71.29(3), Wis. Stats., provides 
an election to apply all or a portion of a claimed refund to the following year's estimated tax 
payments, provided the refund has not been paid or applied elsewhere (for example, against a 
delinquent tax liability). 
 
An election to apply a refund to estimated tax may be changed to: 
 
 •  request payment of the refund, 
 •  credit the refund against an amended return tax liability for any year, or 
 •  credit the refund against a notice of amount due for any year. 
 
Notification of a change in election must occur on or before the unextended due date of the 
following year's tax return or before the following year's tax return is filed, whichever is earlier. 
 
A change in election must be in writing. You can file an amended return or send an email, fax, 
or letter to: 
 
 •    DORAuditPassThrough@wisconsin.gov  

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2024 Wisconsin Form 5S Instructions

• Fax: (608) 267-0834
• Audit Bureau, Mail Stop 6-81
Wisconsin Department of Revenue
PO Box 8906
Madison WI 53708-8906

Amended Return

If you have already filed your 2025 return, enter the overpayment that you claimed as a credit on
your 2025 return from your previously filed original or amended 2024 return. Otherwise, you may
allocate the overpayment from line 20 between line 21 and line 22 as you choose.

Line 23. Gross Receipts – Enter total company gross receipts, gross sales, gross dividends,
gross interest income, gross rents, gross royalties, the gross sales price from the disposition of
capital assets and business assets, gross receipts passed through from other entities, and all
other receipts that are included in gross income before apportionment for Wisconsin franchise or
income tax purposes.
Line 24. Total Assets – Enter the total company assets from the federal return.
Line 25. Total Nonresident Withholding Paid – If the tax-option (S) corporation paid withholding
tax on pass-through income reportable to nonresident shareholders for the 2024 taxable year,
enter on line 25 the total amount of withholding paid for the 2024 taxable year. This amount should
match the amount on Schedule 5K, line 13j.
Additional Information, Answer Questions, Pass-Through Entity Representative, Third
Party Designee, Signatures, and Supplemental Schedules
• Additional Information Required – Answer questions 1-6 on Form 5S, page 2.
• Pass-Through Entity Representative
A pass-through entity representative is defined in sec. 71.80(26), Wis. Stats. A tax-option
(S) corporation must designate a pass-through member or other person with substantial
presence in the United States as the representative of the tax-option (S) corporation. Enter
the pass-through entity representative's information on the appropriate lines of Form 5S.
If the pass-through entity representative is an individual, enter the individual's full name in
the "Representative's Name" box and leave the "Contact's Name" box blank.
If the pass-through entity representative is a firm or entity, enter the firm's or entity's name
in the "Representative's Name" box and enter the name of the individual who is the primary
contact of the firm or entity in the "Contact's Name" box.
A pass-through entity representative has the following powers and duties:
o Act as the sole authority on behalf of the pass-through entity and its pass-through
members with respect to a determination under sec. 71.745, Wis. Stats.
o Provide the department sufficient information to identify each pass-through
member and the capital, profit, and loss interest of each pass-through member.
o Enter into extension agreements for statute of limitations.
o Receive notices.

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          2024 Wisconsin Form 5S Instructions 

   o  Notify  all  pass-through  members  of  their  share  of  corrections  and  adjustments 
         made  to  pass-through  items  within  60  days  after  a  determination  under  sec. 
         71.745, Wis. Stats., becomes final. 
   o  File an appeal of a notice of determination. 
   o  Enter into settlement agreements and bind pass-through members to adjustments 
         relating to pass-through items. 
   Note: A pass-through entity representative has specific authorities with respect to audit 
   determinations under sec. 71.745,  Wis. Stats., that are not otherwise authorized for a 
   Power of Attorney. However, a Power of Attorney may be appointed as a pass-through 
   representative under sec. 71.80(26), Wis. Stats., or a pass-through entity representative 
   may delegate the powers and duties in 71.80(26)(b), Wis. Stats., to a Power of Attorney 
   as provided under sec. 71.80(26)(c), Wis. Stats. 
   Note: A tax-option (S) corporation may at any time provide a written statement to the 
   department appointing or revoking a pass-through entity representative. The statement 
   must be signed by an authorized agent of the tax-option (S) corporation and include the 
   same information as requested on Form PT-R, Pass-Through Entity Representative. The 
   department recommends using the Wisconsin Form PT-R to appoint or revoke a pass-
   through entity representative. An appointed pass-through entity representative will remain 
   valid until the appointment is revoked. 
 • Third Party Designee – If you want to allow a tax preparer or tax preparation firm, or any 
   other person you choose to discuss your 2024 tax return with the Department of Revenue, 
   check “Yes” in the “Third Party Designee” area of your return. Also, fill in the designee’s 
   name,  phone  number,  and  any  five  digits  the  designee  chooses  as  their  personal 
   identification number (PIN). If you check “Yes,” you are authorizing the department to 
   discuss with the designee any questions that may arise during the processing of your 
   return. You are also authorizing the designee to: 
   o  Give the department any information missing from your return, 
   o  Call  the  department  for  information  about  the  processing  of  your  return  or  the 
         status of your refund or payment(s), and 
   o  Respond  to  certain  department  notices  about  math  errors,  offsets,  and  return 
         preparation. 
   You are not authorizing the designee to receive any refund check, bind you to anything 
   (including any additional tax liability), or otherwise represent you before the department. 
   If you want to expand the designee’s authorization, you must submit Form A-222 (Power 
   of Attorney). The authorization will automatically end no later than the due date (without 
   regard to extensions) for filing your 2025 tax return. 
 • Signatures – An officer of the corporation must sign the form at the top of page 3. If the 
   return is prepared by someone other than an employee of the corporation, the individual 
   who  prepared  the  return  must  sign  the  form,  by  hand,  in  the  space  provided  for  the 
   preparer’s  signature  and  furnish  the  preparing  firm’s  federal  employer  identification 
   number. A self-employed individual must enter “PTIN” and the preparer tax identification 
   number in the space for the preparer’s federal employer identification number. 
 • Supplemental Schedules – Include the following items as supplemental schedules to 
   your Form 5S: 
   o  Federal Form 1120-S. 

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2024 Wisconsin Form 5S Instructions

o Supporting schedules for Form 1120-S, including Schedule M-3 if required for
federal purposes.
o Supporting schedules for Form 5S (supporting schedules that are not department-
prescribed forms may be submitted as Portable Document Format (*.pdf)
documents with electronic returns).
o Wisconsin Schedule 5K-1 for each shareholder.
o A list of your solely owned LLCs and QSubs. Submit Schedule DE with your return.
o Any extension of time to file your return.
o If the tax-option (S) corporation has a nonresident shareholder who is not subject
to income or franchise tax and would otherwise be subject to withholding tax based
on income passed through to that shareholder, include a statement from that
shareholder stating why no tax was withheld.
o If you are filing an amended return, include Schedule AR explaining the changes
made, any supporting department-prescribed forms or schedules, and a worksheet
showing how you figured your refund or additional amount owed.

Part II Schedule 5K – Shareholder's Pro Rata Share Items

Schedule 5K is a summary schedule of all the shareholders’ shares of the tax-option (S)
corporation’s income, deductions, credits, etc., as computed under Wisconsin law, similar to
federal Schedule K.

A tax-option (S) corporation that makes an election to pay tax at the entity level under sec.
71.365(4m)(a), Wis. Stats., completes Schedule 5K as if the election was not made. Exceptions:

• The credit for tax paid to another state is not entered on line 13i.
• The credit for pass-through withholding on line 13j will generally be zero because the
electing tax-option (S) corporation is exempt from pass-through withholding. For more
information regarding pass-through withholding, see the instructions for Form PW-1.

A tax-option (S) corporation that receives a Schedule 3K-1 from ownership in a partnership that
made the entity-level tax election under sec. 71.21(6)(a), Wis. Stats., completes Schedule 5K as
if the election was not made by the lower-tier entity.

For more information about the entity-level tax election and how it affects Schedule 5K-1, see the
instructions for Schedule 5S-ET.

Part II Schedule 5K, Columns (b) Through (d)

Column (b). Federal Amount – Enter the applicable amounts from federal Schedule K in column
(b) of Schedule 5K. For dividends and the net long-term capital gain (loss) items reported on lines
5 and 8, use the totals from federal Schedule K.

Column (c). Adjustment – Enter in column (c) any adjustments to the federal amount necessary
to arrive at the amount under Wisconsin law. Show additions as a positive number. Show
subtractions as a negative number. Use Part IV Schedule 5K – Shareholder's Pro Rata Share of

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2024 Wisconsin Form 5S Instructions

Additions and Subtractions to account for the additions and subtractions. See the instructions for
Part IV.

However, don’t make any adjustments on Schedule 5K to exclude a nonresident or part-year
resident shareholder’s share of tax-option (S) items that are attributable to business outside
Wisconsin. These adjustments will be made on the Schedule 5K-1 of each affected shareholder,
as described in the instructions for Schedule 5K-1 that follow.

For any adjustments you enter in column (c), you must prepare Part IV Schedule 5K –
Shareholder's Pro Rata Share of Additions and Subtractions and include it with your return. See
the section that follows for examples of the adjustments that you are required to enter in column
(c).

Column (d). Wisconsin Amount – Combine the amount in column (b) with any adjustment in
column (c) and enter the result in column (d).

Adjustments Reportable on Schedule 5K, Column (c)

You must make an adjustment on Schedule 5K, column (c) in the following situations:

Adjustments for IRC provisions not adopted for Wisconsin purposes. As mentioned earlier
in these instructions, Wisconsin has not fully adopted the Internal Revenue Code (IRC). If the
federal amount in column (b) is affected by an IRC provision not adopted by Wisconsin, an
adjustment must be computed in column (c). See Part IV Schedule 5K – Shareholder's Pro Rata
Share of Additions and Subtractions.

Basis, Section 179, Depreciation Differences – If there is a difference in federal and Wisconsin
basis of depreciated or amortized assets, include a schedule showing the computation details.
These differences can happen because of IRC sections not adopted for Wisconsin purposes
and/or electing a different depreciation method under the IRC in effect for Wisconsin purposes.

Differences between the federal and Wisconsin bases of assets disposed of during the
taxable year. Sales of assets with different Wisconsin basis than federal basis will also require
you 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

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2024 Wisconsin Form 5S Instructions

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 9: $77,500 in column (b), $(23,000) in column (c), and $54,500 in column (d).

Different elections for Wisconsin and federal purposes. For example, since Wisconsin does
not allow a credit for foreign taxes paid or federal wage credits, foreign taxes and wages included
in the computation of federal wage credits may be deducted for Wisconsin purposes. The
corporation may elect to deduct these expenses on line 1, column (c). For more information about
making different elections for Wisconsin and federal purposes, see Wisconsin Tax Bulletin 214
(July 2021, page 8).

Additions for tax credit amounts. Certain tax credits computed by the tax-option (S) corporation
are required to be added back to the tax-option (S) corporation’s ordinary income (line 1). These
credits include the following:

• Business development credit
• Community rehabilitation program credit
• Development zones credits
• Economic development tax credit
• Electronics and information technology manufacturing zone credit
• Employee college savings account contribution credit
• Enterprise zone jobs credit
• Manufacturing and agriculture credit (computed in 2023)
• Research expense credit

Additions for state taxes. For Wisconsin purposes, state taxes and taxes of the District of
Columbia that are value-added taxes, single business taxes, or taxes on or measured by all or a
portion of net income, gross income, gross receipts, or capital stock are not deductible by tax-
option (S) corporations. These amounts are adjustments on line 1. Also show nondeductible taxes
as additional nondeductible expenses on Schedule 5K, line 16c.

Adjustments for related entity expenses. Tax-option (S) corporation must make an addition
modification to “add back” interest, rental, or intangible expenses, or management fees paid,
accrued, or incurred to a related entity. After the tax-option (S) corporation makes this addition
modification, the tax-option (S) corporation completes Schedule RT to determine if it is eligible for

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2024 Wisconsin Form 5S Instructions

a deduction for any of the amount added back. The tax-option (S) corporation then makes a
subtraction modification in the amount for which it is eligible for a deduction.

See the Schedule RT instructions for further details of the expenses that require this modification
and the specific criteria that must be met in order to deduct related entity interest, rental, intangible
expenses, or management fees.

The tax-option (S) corporation reports the addition modifications for related entity expenses on
Schedule 5K, line 18a. For the amount eligible for a deduction, the tax-option (S) corporation
enters the subtraction amount on Schedule 5K, line 18b. Additionally, these amounts must be
reported as adjustments in column (c) on the lines to which the expenses relate. For example, if
the related entity rental expense is an item of ordinary income, the modifications must also be
reported on Schedule 5K, line 1, column (c).

Subtraction for expenses disallowed to related entity. If the tax-option (S) corporation has
interest, rental, or intangible income, or management fees from a related entity, and that related
entity was ineligible to claim a deduction for the interest, rental, or intangible expenses, or
management fees because it did not meet the criteria set forth in Schedule RT, the tax-option (S)
corporation may make a subtraction modification to exclude the income corresponding to the
expense that the payor could not deduct. The tax-option (S) corporation makes the subtraction
on the line of Schedule 5K corresponding to the type of income being modified. See Schedule
RT-1 and instructions for further details on the treatment of disallowed expenses.

Adjustments 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. The difference between the federal and Wisconsin built-in gains tax amounts must
be reported in column (c).

Additions 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 in column (c).

Differences in taxable interest income. Additions to or subtractions from the federal interest
income amounts may be required for the following items:

• If the interest income reported on line 4, column (b) includes any interest from obligations
of the United States government and its instrumentalities, identify this amount on a
separate schedule for line 17d. Do not subtract this amount on Schedule 5K, line 4, column
(c).
• If the tax-exempt interest income reported on line 16a, column (b) includes any interest
that is exempt for federal purposes but taxable by Wisconsin, such as state and local
government bond interest, report this amount as an addition on line 4, column (c), and as
a subtraction on line 16a, column (c).

Differences for other income and expense items. Income reported on line 16b that is exempt
for federal purposes, but taxable by Wisconsin, is shown as a subtraction in column (c). If more

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2024 Wisconsin Form 5S Instructions

income is nontaxable for Wisconsin purposes than for federal purposes, show the additional
amount of exempt income as an addition. The amount under Wisconsin law in column (d) is the
amount of tax-exempt income for Wisconsin purposes.

Expenses on line 16c that are nondeductible federally but deductible for Wisconsin purposes are
shown as subtractions in column (c). If more expenses are nondeductible for Wisconsin purposes
than for federal purposes, show the additional amount of nondeductible expenses as an addition.
The amount under Wisconsin law in column (d) is the nondeductible expense for Wisconsin
purposes.

Differences in accounting for distributions. Adjustments to the federal amounts of property
distributions and dividend distributions from accumulated earnings and profits may be necessary
because of differences between the Wisconsin and federal accumulated adjustments accounts,
previously taxed undistributed income, and accumulated earnings and profits. These differences
may occur because the computation of Wisconsin and federal “net income (loss)” differed for the
1979 through 1986 taxable years and Wisconsin didn’t recognize tax-option (S) corporations for
years before 1979. See the instructions for Schedule 5M for more information about distributions.

Report the dividend distributions entered on line 17c to the shareholders on Schedule 5K-1, line
17c, for Wisconsin. This differs from the federal requirement to report the amount of the dividends
on Form 1099- DIV rather than on Schedule K-1.

Lines 13a Through 13j, Credits

To determine if you are eligible for any credits, see Publication 123, Business Tax Incentives, or
refer to the instructions to the credit schedules referenced below. Except as otherwise indicated,
you must file the credit schedule referenced below with your Form 5S in order to claim the credits
on Schedule 5K.

Enter the abbreviation of the credit you are claiming 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 and in parentheses below. Use a separate line for each credit you are claiming. For
example, if you are claiming the enterprise zone jobs credit, enter "EC" next to the "Schedule"
line. See exceptions below.

For the following credits, enter the code indicated below instead of the abbreviation from
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

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2024 Wisconsin Form 5S Instructions

Credits:

• Angel Investment Credit (VCA) – Enter the angel investment credit from Schedule VC, line
4.
• Business Development Credit (BD) – Enter the business development credit from
Schedule BD, line 3
• Community Rehabilitation Program Credit (CM) – Enter the community rehabilitation
program credit from Schedule CM, line 5.
• Development Zone Capital Investment Credit (DC) – Enter the development opportunity
zone or agricultural or airport development zone capital investment credit from Schedule
DC, line 15.
• Development Zones Credit (DC) – Enter the development zones credit from Schedule DC,
line 7.
• Early Stage Seed Investment Credit (VCE) – Enter the early stage seed investment credit
from Schedule VC, line 11.
• Economic Development Tax Credit (ED) – Enter the economic development tax credit
from Schedule ED, line 4.
• Electronics and Information Technology Manufacturing Zone Credit (EIT) – Enter the
credit certified by the Wisconsin Economic Development Corporation from Schedule EIT,
line 5.
• Employee College Savings Account Contribution Credit (ES) – Enter the employee college
savings account contribution credit from Schedule ES, line 4.
• Enterprise Zone Jobs Credit (EC) – Enter the enterprise zone jobs credit from Schedule
EC, line 3.
• Low-Income Housing Tax Credit (LI) – Enter the low-income housing credit from Schedule
LI, line 3.
• Manufacturing Credit (MA-M) – Enter the manufacturing credit from Schedule MA-M, lines
18 or 18b.
• Agriculture Credit (MA-A) – Enter the agriculture credit from Schedule MA-A, lines 18 or
18b.
• Research Expense Credit (R) – Enter the research expense credit from line 16 or 16b of
Schedule R.
• Supplement to Federal Historic Rehabilitation Credit (HR) – Enter the supplement to the
federal historic rehabilitation tax credit from Schedule HR. See the Schedule HR
instructions for more information.
• Line 13i. Credit for Tax Paid to Other States – If the tax-option (S) corporation does
business in another state and either the tax-option (S) corporation or its shareholders must
pay an income tax on the tax-option (S) corporation's income earned there, Wisconsin
resident shareholders may be able to claim credit on their individual income tax returns
for their pro rata shares of the tax paid. Credit is allowed only if the income taxed by the
other state is considered taxable income by Wisconsin. Fill in line 13i if:

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           2024 Wisconsin Form 5S Instructions 

  o  The corporation’s S status is recognized by the other state and the corporation 
       files a combined or composite return with that state on behalf of the shareholders 
       who are nonresidents of that state and pays the tax on their pro rata shares of the 
       corporation’s income earned there. 
  o  The corporation’s S status is recognized by the other state and the corporation 
       files a corporate franchise or income tax return with that state and pays tax on the 
       income earned there that is attributable to the shareholders who are nonresidents 
       of that state. 
  o  The corporation’s S status isn’t recognized by the other state and the corporation 
       pays an income or franchise tax on or measured by the income earned there. 
  Caution: A tax-option (S) corporation that makes an election to pay tax at the entity level 
  in Wisconsin 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,  including  taxes  paid  on  a 
  shareholder's behalf on a composite return, to compute a credit for taxes paid to other 
  states. In addition, 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. 
  Enter the postal abbreviation of the state in the space provided and the amount of income 
  tax paid to that state. If tax is paid to more than three states, enter “See Attached” on one 
  of the entry lines, enter the total amount on that line, and submit a schedule listing all 
  states and the amount of income tax paid to each state. Submit with Form 5S a copy of 
  the income tax return filed with each state for which a credit is claimed. If you electronically 
  file the Form 5S, do an attachment to the e-filed return. 
  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.  
  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. 
 •  Line  13j.  Wisconsin  Tax  Withheld  –  If  the  tax-option  (S)  corporation  is  subject  to 
  withholding tax on the Wisconsin income of nonresident shareholders, enter the amount 
  of Wisconsin tax withheld. Generally, this will be the amount the tax-option (S) corporation 
  paid with Form PW-1. 
  CAUTION: On line 13j of Schedule 5K, do not include any withholding already claimed on 
  line 13, page 1 of Form 5S. 
 
Line 14. Federal Schedule K-2 
 
                              42

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2024 Wisconsin Form 5S Instructions

If the tax-option (S) corporation has items of international tax relevance, check this box and
include federal Schedule K-2 (Form 1120-S) with Form 5S. If there are differences between the
federal and Wisconsin amounts reported on Schedule K-2, include a statement to explain the
differences.

Line 17d. Other Items and Amounts

For line 17d, submit a schedule showing any items and amounts not included on lines 1 through
17c that must be reported separately to the shareholders. Include the federal amount, any
adjustment, and the amount determined under Wisconsin law for each item. Amounts that may
be included on this schedule include, but are not limited to, the following:

U.S. Government Interest. If the interest income on line 4, column (b), includes any interest from
United States government obligations that is taxable for federal purposes but exempt from
Wisconsin individual income taxes, report the amount of United States government interest on
this schedule.

Disposal of Section 179 Property. If the tax-option (S) corporation disposed of property for
which a section 179 expense deduction was claimed in a prior year, provide the following
information for each asset:

• Description of the property
• Gross sales price
• Both the federal and the Wisconsin cost or other basis plus expense of sale (excluding
the tax-option (S) corporation’s basis reduction in the property due to the section 179
expense deduction)
• Depreciation allowed or allowable (excluding the section 179 expense deduction)
• Both the federal and Wisconsin amount of section 179 expense deduction passed through
in previous years for the property and the tax-option (S) corporation’s taxable years for
which the amounts were passed through.

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 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.

Business moving expense. According to sec. 71.34(1k)(o), Wis. Stats., 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 operation, 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.

Lines 18 Through 20

Lines 18a and 18b. Related Entity Expenses – On line 18a, enter in column (d) the amounts
attributable to interest, rental, intangible expenses, or management fees paid, accrued, or
incurred to a related entity. On line 18b, enter the amounts eligible for a deduction as determined

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2024 Wisconsin Form 5S Instructions

by the Schedule RT instructions. If line 18a exceeds $100,000, the tax-option (S) corporation
must file Schedule RT with its Form 5S. See the Schedule RT instructions for details.

Line 19. Income (Loss) – For each of columns (b) and (d), combine lines 1 through 10. From the
result, subtract the sum of lines 11 through 12d. Add or subtract, as appropriate, any income or
deductions reported on line 17d that affect the computation of taxable income. Include in column
(d) interest income from federal, state, and municipal obligations that is reportable on Form 5S,
page 1, line 1.

If you reported on line 17d the disposition of property for which a section 179 expense deduction
was claimed in a prior year, complete federal Form 4797 to figure the amount of gain or loss to
combine with the other items of income, loss, and deduction. If the federal and Wisconsin bases
of the property or section 179 deductions differ, use two Forms 4797. Disregard the special
instructions for tax-option (S) corporations and shareholders when filling out Form 4797. On one
Form 4797, determine the federal gain or loss to combine with the other federal amounts reported
in column (b). Complete a second Form 4797 to compute the Wisconsin gain or loss to combine
with the other Wisconsin amounts reported in column (d).

Line 20. Gross Income – Enter the tax-option (S) corporation’s gross income that is reportable
to Wisconsin. Gross income is the total amount received from all activities, before deducting the
cost of goods sold or any other expenses. Gross income includes gross receipts from trade or
business activities, gross rents and royalties, interest and dividends, the gross sales price of
assets, and all other gross receipts. If the tax-option (S) corporation is a member of one or more
other pass-through entities, include gross income attributable to those other pass-through entities.

Part III – Schedule 5M – Analysis of Wisconsin Accumulated Adjustments Account and
Other Adjustments Account

You must complete Schedule 5M to determine the Wisconsin tax effect of distributions from the
corporation to its shareholders. The tax effect of the distributions depends upon the balances of
the Wisconsin Accumulated Adjustments Account (AAA) and the Wisconsin Other Adjustments
Account (OAA).

Wisconsin Accumulated Adjustments Account

The Wisconsin Accumulated Adjustments Account (AAA) is an account of a tax-option (S)
corporation that is used in taxable years beginning after December 31, 1982. The Wisconsin AAA
will have a zero balance on the first day of the corporation’s first taxable year as a tax-option (S)
corporation beginning after December 31, 1982.

For purposes of the Wisconsin AAA, taxable income and deductible losses and expenses are the
total company amounts as determined under Wisconsin law. The total company amounts are
those before application of either apportionment or separate accounting to compute a multistate
corporation’s income, loss, and deductions attributable to Wisconsin.

If the tax-option (S) corporation is subject to a Wisconsin franchise tax measured by certain
federal, state, and municipal government bond interest, that interest is treated as taxable income
which increases the Wisconsin AAA.

As with the federal AAA, the Wisconsin AAA may have a negative balance. Due to past and
current differences in the computation of income, loss, and deductions, the federal AAA and

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2024 Wisconsin Form 5S Instructions

Wisconsin AAA may not have the same balance. This may create a difference between the federal
and Wisconsin treatment of all or a part of any corporate distributions at the shareholder level.

The computation of Wisconsin AAA depends on whether the tax-option (S) corporation has
accumulated earnings and profits from taxable years in which it operated as a C corporation:

Corporations Without Accumulated Earnings and Profits. At the end of the current taxable
year, if the corporation doesn’t have accumulated earnings and profits for Wisconsin purposes,
the Wisconsin AAA is increased or decreased by the following items:

Increased by:

• Taxable income and gains, as determined under Wisconsin law.
• Nontaxable income earned in taxable year 1987 and thereafter (nontaxable income
earned before 1987 didn’t increase the Wisconsin AAA).

Decreased by:

• Deductible losses and expenses, as determined under Wisconsin law.
• Nondeductible expenses, not due to timing differences (that is, expenses that are never
deductible for Wisconsin purposes).
• Property distributions, including cash, made by the corporation that are applicable to the
Wisconsin AAA.
• The amount of the supplement to the federal historic rehabilitation tax credit and early
stage seed investment credit computed.

Corporations With Accumulated Earnings and Profits. At the end of the current taxable year,
if the corporation has accumulated earnings and profits for Wisconsin purposes, the Wisconsin
AAA is increased or decreased by the following items in the order listed:

1. Increased by taxable income and gains, as determined under Wisconsin law.
2. Decreased by:
a. Deductible losses and expenses, as determined under Wisconsin law, and
nondeductible expenses (that is, expenses that are never deductible for Wisconsin
purposes). However, if the total decreases exceed the total increases above, the
excess is a “net negative adjustment” that is accounted for in cbelow.
b. Property distributions, including cash, other than dividend distributions from
accumulated earnings and profits, unless the corporation elects to reduce
accumulated earnings and profits first. Note: Distributions cannot reduce the
Wisconsin AAA below zero.
c. Any net negative adjustment.
d. The supplement to the federal historic rehabilitation tax credit and early-stage seed
investment credit computed.

For corporations with accumulated earnings and profits, the Wisconsin AAA isn’t increased by
nontaxable income nor decreased by nondeductible expenses related to nontaxable income.

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2024 Wisconsin Form 5S Instructions

Instead, adjustments for nontaxable income and related expenses are made to the Wisconsin
Other Adjustments Account as explained below.

Wisconsin Other Adjustments Account

The Wisconsin Other Adjustments Account (OAA) is maintained only by corporations that have
accumulated earnings and profits at year-end. Since 1987 was the first year for which a Wisconsin
OAA may be used, the Wisconsin OAA will have a zero balance at the beginning of the
corporation’s 1987 taxable year. The account is increased by nontaxable income and decreased
by related expenses. The account is also decreased by any distributions during the taxable year
that are applicable to the Wisconsin OAA. The Wisconsin OAA may not agree with the federal
OAA.

Note: If the tax-option corporation is subject to a franchise tax measured by certain federal, state,
and municipal government bond interest, that interest is treated as taxable income which
increases the Wisconsin AAA, not the Wisconsin OAA.

Treatment of Distributions

For Wisconsin, property distributions, including cash, are generally treated as made from the
following sources in the order shown:

1. A nontaxable distribution of net income to the extent of the Wisconsin AAA, but not in
excess of the shareholder’s Wisconsin stock basis. For distributions made in taxable years
beginning on or after January 1, 1997, the Wisconsin AAA is determined without regard
to any “net negative adjustment” for the taxable year. A net negative adjustment is the
excess, if any, of reductions in the AAA for the taxable year, other than for distributions,
over the increases in the AAA for the taxable year.
2. A nontaxable distribution of the shareholder’s Wisconsin “previously taxed undistributed
income” from the 1979 taxable year through the last taxable year beginning before
January 1, 1983, but not in excess of the shareholder’s Wisconsin stock basis after
applying the distributions in 1 above.
3. A taxable dividend to the extent of Wisconsin accumulated earnings and profits.
4. A nontaxable distribution of exempt income to the extent of the Wisconsin OAA, but not in
excess of the shareholder's Wisconsin stock basis after applying the distributions in 1 and
2 above.
5. A nontaxable return of capital to the extent of the shareholder’s Wisconsin stock basis
after applying the distributions in 1, 2, and 4 above.

All nondividend distributions in excess of basis are treated as taxable gain from the sale or
exchange of property. Dividends are taxable as ordinary income.

If a tax-option corporation makes more than one distribution to its shareholders during its taxable
year and the total distribution exceeds the amount in the Wisconsin AAA at the end of the
corporation’s taxable year determined without regard to any net negative adjustment for the
taxable year, allocate the amount in the Wisconsin AAA among the distributions on a
proportionate basis.

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2024 Wisconsin Form 5S Instructions

The tax-option (S) corporation may elect, with the consent of its affected shareholders, to modify
the ordering rules for distributions as follows:

• To distribute accumulated earnings and profits before making distributions from the
Wisconsin AAA.
• To make a deemed dividend.
• To forgo distributions of previously taxed income.

If a Subchapter S election is revoked or terminated, distributions of money during the post-
termination transition period by the former tax-option (S) corporation to its shareholders are
nontaxable to the extent of the corporation’s Wisconsin AAA, but not in excess of a shareholder’s
stock basis. These nontaxable distributions reduce the adjusted basis of the shareholder’s stock.
Alternatively, the tax-option (S) corporation may elect, with the consent of its affected
shareholders, to have distributions of money treated as dividends not made from the AAA to the
extent of the corporation’s accumulated earnings and profits for Wisconsin purposes.

For more information on how to determine the Wisconsin tax treatment of distributions from a tax-
option (S) corporation, see Publication 102, Wisconsin Tax Treatment of Tax-Option (S)
Corporations and Their Shareholders.

Part IV – Schedule 5K - Shareholder's Pro Rata Share of Additions and Subtractions

The purpose of this schedule is to provide detail for the amounts entered on Part II Schedule 5K,
lines 1 through 12d, column (c). The net amount from this schedule should equal the net amount
of the adjustments reported on Part II Schedule 5K, 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 taxpayer 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 taxpayer only has net rental real estate
income, the net addition/subtraction will be entered on line 2, column (c) of those schedules.

If the taxpayer 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 taxpayer 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 this schedule 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 .

Additions

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                 2024 Wisconsin Form 5S Instructions 

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. 
 
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: 
 
 •  “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. 

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                2024 Wisconsin Form 5S Instructions 

 •  “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, for corporations using apportionment, 
you  may  multiply  the  amount  on  line  2  by  the  apportionment  percentage  for  purposes  of 
determining whether you meet the $100,000 threshold for filing Schedule RT. 
 
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. 
 
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2024 Wisconsin Form 5S Instructions

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 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.

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.

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2024 Wisconsin Form 5S Instructions

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

Line 6. Addition for Credits Computed – Enter the total amount of credits from the following list
that you computed on your 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)

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 and include a title describing the addition. Do not
simply list the total with a title of "Other Additions."

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 you report 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.

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2024 Wisconsin Form 5S Instructions

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.

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 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.
• 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.

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            2024 Wisconsin Form 5S Instructions 

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. 
 
Depreciation/Amortization  (not  section  179  expense): 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 you 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). 

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                     2024 Wisconsin Form 5S Instructions 

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 9: $77,500 in column (b), $(23,000) in column (c), and $54,500 in column (d). 
 
Line 15. Adjustment for Built-In Gains Tax – IRC section 1366(f), 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 16. Federal Wage Credits – Enter wages that aren’t deductible in computing federal income 
because they are being used in computing the 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 tax-exempt income from commercial loans on line 18. 
 
Line  19.  Other  Subtractions  –  Enter  any  other  allowable  subtractions  that  have  not  been 
accounted for in the preceding lines. List each subtraction separately with a title describing the 
subtraction. Do not simply list the total amount with a title of "Other Subtractions." 
 
Example: Investment in a Wisconsin qualified opportunity fund (QOF): 
 
 A  tax-option  (S)  corporation  may  qualify  for  a  subtraction  modification  under  sec. 
 71.34(1k)(p), Wis. Stats., if all of the following conditions are met: 
  
  •  In a previous year, the tax-option (S) corporation deferred paying tax on a capital 
   gain by investing in a Wisconsin QOF. 
  •  For the year in which the tax-option (S) corporation invested in the Wisconsin QOF, 
   the Wisconsin QOF properly filed Wisconsin Form WQOF and provided a copy to 
   the tax-option (S) corporation. Exception: Form WQOF is not required for taxable 
   years beginning prior to January 1, 2020. 
  •  The tax-option (S) corporation held the investment in the Wisconsin QOF for at 
   least 5 years. 
  •  For the taxable year beginning in 2024, the tax-option (S) corporation qualifies for 
   the  federal  exclusion  under  sec.   1400Z-2(b)(2)(B)(iii),  IRC,  or  sec.       1400Z-
   2(b)(2)(B)(iv), IRC. 
  
 If  the  above  conditions  are  met,  the  tax-option  (S)  corporation  may  use  the  following 
 worksheet to calculate its subtraction. 

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2024 Wisconsin Form 5S Instructions

Worksheet Amount
Line 1 – If the investment in the WI QOF was held for at least 5 years
but less than 7 years, enter 10%. If the investment in the WI QOF
was held for 7 years or more, enter 15%.
Line 2 – Amount of deferred gains from the investment in a WI QOF.
Line 3 – Multiply line 2 by line 1. This is the amount of the tax-option
(S) corporation's subtraction to report on Form 5S, Part IV, Line 19.
Use a description such as "Wisconsin QOF subtraction".

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
solicitation of orders, which orders 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.

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2024 Wisconsin Form 5S Instructions

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:

o Schedule A-02: Interstate Financial Institutions
o Schedule A-03: Interstate Motor Carriers
o Schedule A-04: Interstate Telecommunications Companies
o Schedule A-05: Insurance Companies
o Schedule A-06: Interstate Brokers-Dealers, Investment Advisors, Investment Companies,
and Underwriters
o Schedule A-07: Interstate Air Carriers
o Schedule A-08: Broadcasters
o Schedule A-09: Interstate Railroads
o Schedule A-10: Interstate Pipeline Companies
o 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
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 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 or LLC’s apportionment factors in the numerator
and denominator of its apportionment factors.

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              2024 Wisconsin Form 5S Instructions 

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 using separate accounting for part or all of its income uses Form C 
and Form N, as appropriate, to determine its income attributable to Wisconsin. 

                             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, 3, and 11, Wis. 
 Adm. Code. 

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