Distributions from foreign LLP taxed as corporation qualify for Wisconsin DRD

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April 2020

Overview

The Wisconsin Dane County Circuit Court has upheld a Tax Appeals Commission decision concluding that a Wisconsin’s dividend received deduction (DRD), which requires that a distribution be received with respect to ‘common stock,’ applies to a distribution made from a foreign LLP that elected to be taxed as a corporation for federal income tax purposes.  The Court affirmed the Commission’s prior decision under similar logic and was not persuaded by the Department’s arguments and was not persuaded by the Department’s arguments.

The takeaway

This decision is instructive for Wisconsin taxpayers facing challenges to their DRD related to distributions from entities that are not legal corporations.  We understand that the Department plans to appeal this decision.

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Peter Michalowski

State and Local Tax Leader, PwC US

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