Tax News

CCH (cch.taxgroup.com) reports:

The Wisconsin Department of Revenue has issued a notice on how to determine whether interest and rent expenses paid, accrued, or incurred to a related party (related entity) that was added back to income can be deducted for purposes of personal income and corporation franchise and income taxes. The addback requirement and deduction were enacted as part of the recent budget adjustment bill, which was reported previously. (TAXDAY, 2008/05/19, S.23)
This law change, which is effective for taxable years after 2007, applies to corporations, tax-option (S) corporations, partnerships, LLCs, individuals, fiduciaries, and insurance companies. Taxpayers who wish to deduct related party interest or rent expenses must complete and submit, along with their Wisconsin income or franchise tax return, Schedule RT, which will be available on the Department Web site around July 31, 2008.
The Department has provided an article separate from the notice that provides
-- a description of transactions affected by this law change,
-- requirements that must be met in order to deduct related party interest and rent expenses, and
-- details and examples of what is considered a "related entity."
Subscribers to CCH Tax Research NetWork can view the text of the Department notice and article.

News for Tax Practitioners ; Addback of Related Party Interest and Rent Expenses , Wisconsin Department of Revenue, June 19, 2008.