Tax 3.01 NoteExample: Taxpayer A and Taxpayer B are related and A paid, accrued, or incurred $3,000 of original issue discount to B. Taxpayer C and Taxpayer D are related and C paid, accrued, or incurred $3,000 of interest that have been capitalized under section 263A of the Internal Revenue Code. Taxpayer E and Taxpayer F are unrelated and E has paid, accrued, or incurred $100,000 of indebtedness interest to F. A is required to add back $3,000 to its income since it paid, accrued, or incurred this amount to a related entity and it is the type of interest expense deductible under section 163 of the Internal Revenue Code. C is not required to add back $3,000 to its income since this type of interest is not the type of interest that is deductible under section 163 of the Internal Revenue Code. E is not required to add back $100,000 since the addback provisions do not apply to unrelated taxpayers. Tax 3.01(3)(d)1.1. Rent expenses include expenses otherwise deductible in computing Wisconsin adjusted gross income or Wisconsin net income which are attributable to, for the use of, or for the right to use, real property, including the following: Tax 3.01(3)(d)1.a.a. Tangible personal property affixed to real property if the owner of the tangible personal property is the same as or related to the owner of the real property. Tax 3.01(3)(d)1.b.b. Services rendered in connection with rented real property if the owner of the property is the same as or related to the entity providing the service. Tax 3.01(3)(d)2.2. For purposes of the addition modification, the method used to compute the expense and the manner in which it is reported for financial accounting purposes are immaterial. Tax 3.01 NoteExample: Amounts paid under capital leases might not be called “rent expenses” in the financial accounting records of a taxpayer, but these expenses are considered “rent expenses” for purposes of the addition modification.
Tax 3.01(3)(e)1.1. Other than services provided by the taxpayer’s own employees, management fees include expenses and costs otherwise deductible in computing Wisconsin adjusted gross income or Wisconsin net income for the purchase or retention of services, including services that pertain to any of the following: Tax 3.01(3)(e)2.2. Subdivision 1. a. to m. are in no way intended to and should not be construed as limiting the scope of the activities subject to this paragraph. Tax 3.01(3)(f)1.1. Intangible expenses include any of the following expenses to the extent they would otherwise be deductible in the computation of Wisconsin adjusted gross income or Wisconsin net income: Tax 3.01(3)(f)1.c.c. Losses related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions.