Reporting Capital Gains and Losses Publication 103
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B. Net Capital Loss Offset Against Other Income
Federal treatment: Capital losses are allowed in full against capital gains. If the losses are more than the gains,
up to $3,000 ($1,500 if married filing separate) of the excess loss is allowed as a deduction against other income.
Capital losses in excess of the amount of the allowable loss may be carried over and used in later years.
Wisconsin treatment: Capital losses are allowed in full against capital gains. Beginning in taxable year 2023, if
the losses are more than the gains, up to $3,000 ($1,500 if married and file a separate return) of the excess loss
is allowed as a deduction against other income. Capital losses in excess of the amount of the allowable loss may
be carried over and used in later years.
Although Wisconsin has the same capital loss limitation as the federal capital loss limitation for taxable years
beginning with 2023, a difference may still occur. For example, a taxpayer's Wisconsin capital loss carry over is
$20,000 and the federal capital loss carry over is $0. Assume there were no transactions during the taxable year
that resulted in capital gains or losses. The taxpayer may claim up to $3,000 of capital loss for Wisconsin and $0
of capital loss for federal.
How to report: Complete Schedule WD or Schedule 2WD.
C. Capital Gain or Loss Affected By Different Wisconsin and Federal Elections
Federal treatment: Certain elections are allowed regarding the federal tax treatment of some items. For
example, gain on an installment sale is generally reported as payments are received, but an election is available
to report the entire gain in the year of sale.
Wisconsin treatment: A different federal election may be made for Wisconsin and federal tax purposes.
How to report: Any of the following methods may be used to claim a different election for Wisconsin and federal
tax purposes:
(1) Prepare a pro forma federal return based on the election chosen for Wisconsin. This pro forma return is to
be attached to the Form 1 or 1NPR instead of the actual return filed for federal tax purposes.
(2) Make the election using Schedule I.
(3) For estates and trusts, make the election by including a schedule with Form 2. State the nature of the
adjustment and a complete explanation. Enter the total amount on line 1 of Schedule B, Form 2.
Example: Individual taxpayer sells real estate in Iowa while an Iowa resident. Taxpayer reports the gain under
the installment method for federal income tax purposes. Subsequently, taxpayer becomes a Wisconsin resident.
For Wisconsin purposes, it is assumed that a nonresident individual who sells property located outside
Wisconsin elects to report the entire gain in the year of sale, when none of the gain would have been taxable
to Wisconsin. Any gain from this installment sale is not taxable for Wisconsin.
If using the first method described under How to report in Item C above, prepare a pro forma federal return
which doesn't report any installment sale income on federal Schedule D. Federal adjusted gross income would
not need to be adjusted on Schedule I. For estates and trusts, include a schedule explaining the adjustment and
enter the total amount on line 1 of Schedule B, Form 2.
Example: Within certain limits, sec. 179 of the federal Internal Revenue Code (IRC) allows an individual who
places depreciable property in service to expense the cost of that property. As long as the sec. 179 requirements
are met, a taxpayer may elect to claim a different amount of sec. 179 expense for Wisconsin than was claimed
for federal purposes. For property placed in service in taxable years beginning on or after January 1, 2014, using