Section 3.096. Interest paid on money borrowed to purchase exempt government securities.

 

(1)  Any amount of distributable and nondistributable interest or dividend income which is by federal law exempt from the Wisconsin income tax shall be reduced by any related expense before it is claimed as a subtraction modification on a Wisconsin fiduciary income tax return.

(2)  Interest expense is a "related expense" if it is incurred to purchase securities producing exempt interest or dividend income and if it is deducted in computing Wisconsin taxable income.

(3)  Interest expense is not a "related expense" if it is incurred to purchase securities producing exempt interest or dividend income but is not deducted in computing Wisconsin taxable income (for example, because the taxpayer elects the standard rather than to itemize deductions).

History: Cr. Register, January, 1977, No. 253 , eff. 2-1-77; am. (1), Register, June, 1990, No. 414 , eff. 7-1-90.

Note

1) For taxable year 1987, the subtraction modification for the amount of distributable and nondistributable exempt interest and dividend income did not have to be reduced by related expenses before it was claimed on a Wisconsin fiduciary return as a result of amendment to s. 71.05 (1) (b) 1. by 1987 Wis. Act 27 . Microsoft Windows NT 6.1.7601 Service Pack 1 2) For taxable years prior to 1986, individual taxpayers were required to reduce the amount of interest or dividend income which was by law exempt from Wisconsin income tax by any related expense before the income was claimed as a subtraction modification on a Wisconsin individual income tax return if the related expense was deducted in computing Wisconsin taxable income. - See PDF for table Microsoft Windows NT 6.1.7601 Service Pack 1 This section interprets s. 71.05 (6) (b) 1. , Stats. Microsoft Windows NT 6.1.7601 Service Pack 1