Wis. Admin. Code § Tax 2.89 — Estimated tax requirements for short taxable years

Tax 2.89(1) (1) General. Under ss. 71.09 and 71.29 , Stats., certain corporations and persons other than corporations shall make estimated tax payments. For short taxable years, estimated tax payments shall be made in accordance with this section.

Tax 2.89(2) (2) Definitions. In this section:

Tax 2.89(2)(a) (a) “Corporation” includes corporations, tax-option (S) corporations, insurance companies, publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code, limited liability companies treated as corporations under the Internal Revenue Code, joint stock companies, associations, common law trusts, regulated investment companies, real estate investment trusts, real estate mortgage investment conduits, nuclear decommissioning trust funds and virtually exempt entities as defined in s. 71.29 (1) (c) , Stats.

Tax 2.89(2)(b) (b) “Estimated tax payable” means the amount calculated under s. 71.09 (13) or 71.29 (9) or (10) , Stats.

Tax 2.89(2)(c) (c) “Persons other than corporations” includes individuals, estates, trusts other than those treated as corporations in par. (a) , partnerships except publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code and limited liability companies treated as partnerships under the Internal Revenue Code.

Tax 2.89(2)(d) (d) “Short taxable year” means a period of less than 12 months.

Tax 2.89(3) (3) Number of installment payments required.

Tax 2.89(3)(a) (a) For short taxable years, the following number of estimated tax installment payments shall be made:

Tax 2.89(3)(a)1. 1. For periods of one month or less, none.

Tax 2.89(3)(a)2. 2. For periods of 2 to 3 months, one.

Tax 2.89(3)(a)3. 3. For periods of 4 to 6 months, 2.

Tax 2.89(3)(a)4. 4. For periods of 7 to 9 months, 3.

Tax 2.89(3)(a)5. 5. For periods of 10 to 11 months, 4.

Tax 2.89(3)(b) (b) Except as provided in par. (c) , for purposes of determining the required number of estimated tax installment payments under par. (a) , a portion of a month shall be treated as a full month.

Tax 2.89(3)(c) (c) If a short taxable year terminates before the end of a month and another taxable year begins at that time, for estimated tax installment purposes the first taxable period shall be treated as ending on the last day of that month and the second taxable period shall be treated as beginning on the first day of the following month.

Tax 2.89(4) (4) Due dates of installment payments for corporations. For short taxable years, corporations, or the designated agent as provided in s. Tax 2.65 (3) (a) 5. , shall make estimated tax installment payments on or before the 15th day of each of the following months:

Tax 2.89(4)(a) (a) For periods of 2 to 3 months, the last month of the taxable year.

Tax 2.89(4)(b) (b) For periods of 4 to 6 months, the 4th and last months of the taxable year.

Tax 2.89(4)(c) (c) For periods of 7 to 9 months, the 4th, 6th and last months of the taxable year.

Tax 2.89(4)(d) (d) For periods of 10 to 11 months, the 4th, 6th, 9th and last months of the taxable year.

Tax 2.89(5) (5) Due dates of installment payments for persons other than corporations.

Tax 2.89(5)(a) (a) Except as provided in pars. (b) and (c) , for short taxable years, persons other than corporations shall make estimated tax installment payments on or before the 15th day of each of the following months:

Tax 2.89(5)(a)1. 1. For periods of 2 to 3 months, the first month following the close of the taxable year.

Tax 2.89(5)(a)2. 2. For periods of 4 to 6 months, the 4th month of the taxable year and the first month following the close of the taxable year.

Tax 2.89(5)(a)3. 3. For periods of 7 to 9 months, the 4th and 6th months of the taxable year and the first month following the close of the taxable year.

Tax 2.89(5)(a)4. 4. For periods of 10 to 11 months, the 4th, 6th and 9th months of the taxable year and the first month following the close of the taxable year.

Tax 2.89(5)(b) (b) If a person other than a corporation files an income tax return on or before the last day of the first month following the close of the taxable year and pays the full amount computed on that return as payable, that person need not make the last payment of estimated tax.

Tax 2.89(5)(c) (c) Instead of making estimated tax installment payments, a farmer or fisher as defined in s. 71.09 (1) (a) , Stats., may either pay the estimated tax in full by the 15th day of the first month after the close of the taxable year or file the tax return on or before the first day of the 3rd month following the close of the taxable year and pay the full amount computed on that return as payable.

Tax 2.89(6) (6) Computation of estimated tax payable. Corporations and persons other than corporations shall make estimated tax payments equal to the lesser of the following amounts:

Tax 2.89(6)(a) (a) Ninety percent of the tax shown on the return for the taxable year or, if no return is filed, 90% of the tax for the taxable year.

Tax 2.89(6)(b) (b) For individuals, corporations having less than $250,000 of Wisconsin net income and estates and trusts having less than $20,000 of Wisconsin taxable income for the current taxable year, the tax shown on the return for the preceding taxable year, provided the taxpayer filed a return for the preceding year covering a full 12-month year. When the current year is a short taxable year and the preceding year was a period of 12 months, the tax shown on the return for the preceding taxable year may be prorated based on the number of months in the short taxable year.

Tax 2.89(6)(c) (c) Ninety percent of the tax calculated by annualizing the taxable income earned for the months in the taxable year ending before the due date of the installment. The following special rules apply:

Tax 2.89(6)(c)1. 1. Corporations which determine their Wisconsin net incomes under the apportionment method may compute their annualized income using the apportionment percentage from the return filed for the previous taxable year if the previous year’s return is filed by the due date of the installment for which the income is being annualized and the apportionment percentage on that return is greater than zero. A corporation that has at least $250,000 of Wisconsin net income for the current taxable year may also compute annualized income using the apportionment percentage from the return filed for the previous taxable year if the previous year’s return is filed by the due date of the 3rd installment, the apportionment percentage on that return is greater than zero, and the apportionment percentage used in computing the first 2 installments is not less than the apportionment percentage used on that return.

Tax 2.89(6)(c)2. 2. Entities subject to tax on unrelated business taxable income and trusts and estates shall annualize their incomes for the months in the taxable year ending one month before the installment due date.

Tax 2.89(7) (7) Portion of estimated tax payable in each installment. The portion of the estimated tax payable in each installment depends on when the taxpayer determines that the taxable year will be a period of less than 12 months and the number of installment payments required, as follows:

Tax 2.89(7)(a) (a) If an event that will terminate the taxable year before the end of the 12th month occurs after the taxpayer has begun making estimated tax payments, the initial estimated tax installment payments shall be based on 25% of the estimated tax payable, with the last payment adjusted for the difference between the estimated tax liability and the amount previously paid.

Tax 2.89(7)(b) (b) If an event that will result in a taxable year of less than 12 months occurs before the taxpayer has begun making estimated tax payments, installment payments shall be made as follows:

Tax 2.89(7)(b)1. 1. If one installment is due, all of the estimated tax shall be paid at that time.

Tax 2.89(7)(b)2. 2. If 2 installment payments are due, 75% of the estimated tax shall be paid for the first installment and 25% shall be paid for the remaining installment.

Tax 2.89(7)(b)3. 3. If 3 installment payments are due, 50% of the estimated tax shall be paid for the first installment and 25% shall be paid for each of the 2 remaining installments.

Tax 2.89(7)(b)4. 4. If 4 installment payments are due, 25% of the estimated tax shall be paid for each installment.

Tax 2.89(8) (8) Annualized income installment payments. Under ss. 71.09 (13) (d) and 71.29 (9) (c) , Stats., taxpayers may compute estimated tax installment payments by annualizing income for the months in the taxable year ending before the installment payment’s due date. Corporations that are subject to a tax on unrelated business taxable income and virtually exempt entities may compute estimated tax installment payments by annualizing income for the months in the taxable year ending before the date one month before the due date for the installment payment. Annualized income installment payments shall be computed as follows:

Tax 2.89(8)(a) (a) Computation of annualized income. Taxpayers shall annualize income for the annualization period as follows:

Tax 2.89(8)(a)1. 1. Compute the Wisconsin net income for the annualization period, excluding adjustments which remain constant from period to period, such as net business loss carryforwards and the amortization of adjustments for changes in the method of accounting.

Tax 2.89(8)(a)2. 2. Calculate the annualization factor for the annualization period by dividing the number of months in the taxable year by the number of months in the annualization period.

Tax 2.89(8)(a)3. 3. Multiply the amount computed in subd. 1. by the annualization factor computed in subd. 2.

Tax 2.89(8)(a)4. 4. Subtract from the result in subd. 3. any adjustments excluded from the calculation of Wisconsin net income in subd. 1. which remain constant for each period. Individuals shall also subtract the standard deduction.

Tax 2.89(8)(b) (b) Computation of installment payments. Taxpayers shall calculate their estimated tax installment payments based on annualized income for the annualization period as follows:

Tax 2.89(8)(b)1. 1. Determine the gross tax on the amount calculated under par. (a) .

Tax 2.89(8)(b)2. 2. Subtract from the gross tax under subd. 1. any allowable tax credits, excluding estimated tax paid.