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      ASSACHUSETT
     M                                         S
 E                                          EMT    E
 P                                          I E     U
 D    TPE  EN SEIT                         EVO
  A               PLAC IDAM SVBL I B E RTAT        N
   R                                              E
    T                                            V
     M                                          E
      E              N     T O       F         R

                                                     Commonwealth of MassachusettsDepartment of Revenue

                                                     2009

                                                     Massachusetts

                                                     Corporation

                                                     Excise Return

                                                     Form 355

                                                     Massachusetts has an electronic filing requirement for this
                                                     form. See TIRs 05-22 and 09-18 for further information.

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What kind of help is available
The instructions in the Department of Revenue’s tax forms should provide answers to most taxpayer questions. If you have questions about com-
pleting your Massachusetts tax form, you can call us at (617) 887-MDOR or toll-free in Massachusetts at 1-800-392-6089 Monday through Friday,
between 10:00 a.m. and 1:00 p.m. and 1:30 p.m. and 4:00 p.m. DOR’s website at www.mass.gov/dor is also a valuable resource for tax information
24 hours a day. Thousands of taxpayers use DOR’s website to e-mail and receive prompt answers to their general tax inquiries. Interactive applica-
tions that allow taxpayers to check the status of their refunds and review their quarterly estimated tax payment histories are available through our
website or by calling our main information lines listed above.

Where to get forms and publications
To obtain Massachusetts forms and publications by phone, call the Department’s main information lines at (617) 887-MDOR or toll-free in
Massachusetts at 1-800-392-6089. Please note that many forms and publications are available 24 hours a day by calling the Department’s
automated forms request system at the numbers listed above.
Many Massachusetts tax forms and publications are available via the DOR website. The address for the Department’s website is
www.mass.gov/dor.

For general tax information. Please call (617) 887-MDOR or toll-free in Massachusetts 1-800-392-6089. These main information
lines can provide assistance with the following:
�abatements �corporate excise �fiduciary taxes �personal income taxes
�bills and payments �estate taxes �nonresident information �refunds
�business registration �estimated taxes �partnerships �withholding
�business taxes

For help in one of the following specific areas. Please call the number listed below.
�Certificates of Good Standing (617) 887-6550 �Installment sales (617) 887-6950
�Teletype (TTY) (617) 887-6140 �Small Business Workshop (617) 887-5660
�Vision-impaired taxpayers can contact any DOR office to receive assistance.
�Upon request, this publication is available in an alternative format. Please send your request to: Office of Diversity and Equal Opportunity, PO Box
9557, Boston, MA 02114-9557.

To report allegations of suspected misconduct or impropriety involving Department of Revenue employees, please call the Inspectional Services
Division’s Integrity Hot Line at 1-800-568-0085 or write to PO Box 9568, Boston, MA 02114-9568.

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3
General Information

U.S. Federal Milk Marketing Order for the applica-
Major 2009 ble market. A taxpayer who holds a certificate of Which Form
registration as a dairy farmer pursuant to M.G.L.
Tax Law Changes Ch. 94, sec. 16A is allowed a refundable tax credit Should Be Filed?
based on the amount of milk produced and sold.
Businesses which are incorporated under the
There are several significant changes that apply to The dairy farmer tax credit as originally enacted
laws of the Commonwealth or businesses doing
corporate taxpayers for tax year 2009. was 90% refundable. Under recent legislation, the
business in Massachusetts but incorporated else-
dairy farmer tax credit is now 100% refundable.
Massachusetts has adopted combined reporting where should file Form 355.
For further information, see TIR 09-21.
for corporations. In general, a corporation is re- A corporation organized in Massachusetts is eligi-
quired to file a combined report when it is subject Taxpayers that have claimed the Economic Oppor- ble to use the simpler Form SBC if it met all of the
to tax under the corporate excise statute (M.G.L. tunity Area Credit where the project certification following conditions during the taxable year:
Ch. 63) and is engaged in a unitary business with has expired should review Directive 09-4. �had gross receipts or sales, and total income
one or more other corporations that are required to
be included in a combined report under the com- For tax years beginning on or after January 1, 2009, under $100,000;
bined reporting statute (M.G.L. Ch. 63, sec. 32B). certain life science companies may be eligible for �had 100% of its net income taxable in Mass-
Corporations that fall into this category should specified tax benefits. These tax benefits are admin-achusetts and was not subject to corporate tax in
consult 830 CMR 63.32B.2: Combined Reporting. istered by the Massachusetts Life Science Center. another state;
Affected corporations must file Form 355U and For further information, see TIR 08-23. �was not a DISC, an S corporation or a security
its associated schedules. Entities that formerly corporation;
filed combined returns of income under 830 CMR
�
63.32B.1 may no longer do so for taxable years Who Must File is not claiming any credits, special deductions
beginning on or after January 1, 2009. Taxpayers or adjustments against its Massachusetts corpo-
rate excise; and
should also consult TIR 09-5 with respect to the and Pay Corporate
payments of estimated tax by corporations partic- �does not own 50% or more of the voting stock of
ipating in combined reporting. another corporation and did not have 50% or more
Excise?
of its voting stock owned by another corporation.
Massachusetts has also changed the way unincor- The purpose of the corporate excise is to require
porated businesses are classified and treated for payment for the right granted by the laws of the The Department of Revenue also has the follow-
purposes of the Massachusetts corporate excise Commonwealth to exist as a corporation and for ing tax forms to meet the unique filing needs
and personal income taxes, resulting in general the enjoyment under the protection of the Com- of combined filers, security corporations and S
conformity with federal entity classification and fil-monwealth’s laws of the powers, rights, privileges corporations.
ing rules, effective with the first taxable year be- and immunities derived by reason of the corporate Corporations which are incorporated under the
ginning on or after January 1, 2009. While these form of existence and operation. The corporate ex- laws of the Commonwealth or corporations doing
rules do not affect entities that have always filed ascise is due and payable when any of the following business in Massachusetts but incorporated else-
corporations, they do require that unincorporated conditions are met: where which are participating in a combined re-
entities that file federally as corporations also gen-�the corporation actually does business within port of their net income to Massachusetts must
erally must file in Massachusetts as corporations. the Commonwealth; file Form 355U.
For more information, see 830 CMR 63.30.3: En-
�the corporation exercises its charter within the Taxpayers filing Form 355U may still have the re-
tity Classification under St. 2008, c. 173.
Commonwealth; quirement to file Form 355 or Form 355S. Read
the instruction for the Registration Section, ques-
Corporate combined groups, composite filers, �the corporation owns or uses any part of its
tion number 5, for further information.
and certain pass-through entities must file their capital, plant or other property in the Common-
returns electronically. For further information, see wealth; or Corporations engaged exclusively in buying, sell-
TIR 09-18. ing, dealing in or holding securities on their own
�the corporation owns and/or rents real or tan-
behalf and not as brokers must file Form 355SC.
Massachusetts has decoupled from IRC § 108(i). gible personal property as a lessor in Massachu-
A taxpayer subject to taxation under M.G.L. Ch. setts even without having a usual place of busi- S corporations which are incorporated under the
63 that makes the federal election allowed by IRC ness here. laws of the Commonwealth or S corporations doing
business in Massachusetts but incorporated else-
§ 108(i) is required to add back to gross income Corporations which must file and pay corporate ex-
where should file Form 355S.
any cancellation of debt (COD) income that is de- cise include any corporation which:
ferred under IRC § 108(i). In future years when If a corporation files Form 355, 355U, 355S or
�is organized under, or subject to, Chapters 156,
the deferred COD income is recognized for federal 355SC, the return must be submitted electroni-
156A, 156B or 180 of Massachusetts General
purposes, the taxpayer is allowed to make a corre- cally provided that gross revenues from all
Laws (M.G.L.); or
sponding subtraction, since the recognition event sources are $100,000 or greater. Failure to sub-
will have already taken place for Massachusetts �has privileges, powers, rights or immunities not mit the return electronically may result in a
corporate excise purposes. For further informa- possessed by individuals or partnerships. penalty of $100. For further information on elec-
tion, see TIR 09-21. The following corporations are not obligated to file:tronic filing requirements, see TIRs 04-30 and
05-22.
The Massachusetts dairy farmer tax credit was es- �corporations organized under the provision of
tablished to offset the cyclical downturns in milk M.G.L. Ch. 157, sec. 10.
prices paid to dairy farmers and is based on the

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 4    General Information

Corporations amending an originally filed corpo-      �carrying samples only for display or for distrib-   deductions reported federally and on this return,
ration excise return with respect to federal net in-  ution without charge or other consideration;         except those allowed under state law, will be
come should file Form CA-6, Application for Abate-    �owning or furnishing automobiles to sales rep-      identified and may result in a state audit or fur-
ment/Amended Return.                                  resentatives, provided that the vehicles are used    ther investigation.
Note: Under Massachusetts law, all corporations       exclusively for solicitation purposes;               If the corporation is the parent of a wholly-owned
registered in the Commonwealth are required to        �passing inquiries and complaints on to the          DISC, the U.S. net income of the parent shall be re-
file an Annual Report form with the Secretary of      home office;                                         ported to Massachusetts with no allocation of in-
State on or before the 15th day of the third month                                                         come, deductions, assets or liabilities made to the
                                                      �
after the close of their fiscal year. Annual Report    incidental and minor advertising;                   DISC. The DISC income, which must be included
forms can be obtained by calling (617) 727-9440.      �checking customers’ inventories for reorder only;   in the parent’s return, must be for the same tax-
                                                                                                           able year or the taxable year immediately following
For further information on this requirement, call     �maintaining a sample or display area for an ag-
the Secretary of State’s Corporate Information Line                                                        the close of the parent’s taxable year. DlSCs which
                                                      gregate of fourteen calendar days or less during
at (617) 727-9640.                                                                                         are not wholly-owned, either directly or indirectly,
                                                      the tax year, provided that no sales or other activ-
                                                                                                           are taxable as regular business corporations.
                                                      ities inconsistent with solicitation take place;
                                                      �                                                    Massachusetts generally adopts the IRC treat-
What Is Nexus                                          soliciting of sales by an in-state resident repre-
                                                                                                           ment of transactions between FSCs and share-
                                                      sentative who maintains no in-state sales office or
                                                                                                           holder corporations. For additional information
                                                      place of business; and
for Massachusetts                                                                                          see Regulation 830 CMR 63.38G.2.
                                                      �training or holding periodic meetings of sales
Corporate Excise                                      representatives.
                                                      For further information on corporate nexus, refer    Are There Special
Purposes?                                             to Regulation 830 CMR 63.39.1.
A corporation that owns or uses any part of its                                                            Tax Credits Available
capital or other property, exercises or continues its
charter or is qualified to, or is actually doing busi-What Are the                                         In Massachusetts?
ness in Massachusetts has nexus with the Com-                                                              Yes. Massachusetts offers several special credits
monwealth and must pay a corporate excise. The        Differences Between                                  to corporations.
term “doing business” as defined in M.G.L. Ch. 63,
                                                                                                           Under M.G.L. Ch. 63, sec. 32C, a corporation’s
sec. 39 includes:                                     the Massachusetts                                    credits may not offset more than 50% of its ex-
�the maintenance of a place of business;                                                                   cise. Any credits not utilized as a result of this pro-
�the employment of labor;                             Corporate Excise                                     vision may be carried over for an unlimited number
                                                                                                           of years. This provision does not apply to the Re-
�the buying, selling or procuring of services or
                                                      and the IRC?                                         search Credit, the Harbor Maintenance Tax Credit,
property;
                                                      Gross income for corporate excise purposes is the    Low-Income Housing Credit, Historic Rehabilita-
�the execution of contracts;                          same as that defined under the Internal Revenue      tion Credit, the Full Employment Credit, the Film
�the exercise or enforcement of contract rights;      Code (IRC), as amended and in effect for the tax-    Incentive Credit or the Medical Device Credit.
and                                                   able year, with the following additions:
                                                                                                           Investment Tax Credit
�each and every act, power, right, privilege, or      �interest from the bonds, notes and evidences of     Manufacturing corporations and corporations en-
immunity exercised or enjoyed in the Common-          indebtedness of any state, including Massachusetts.  gaged primarily in research and development, agri-
wealth, as an incident to or by virtue of the powers  Net income is gross income less the deductions,      culture or commercial fishing are allowed a credit
and privileges acquired by the nature of such orga-   but not the credits, allowable under the U.S. IRC.   of 3% of the cost of depreciable real and tangible
nizations, as well as, the buying, selling or procur- The following deductions, however, are not allowed:  property. Such property must have a useful life of
ing of services or property.                                                                               four years or more. The property must be used
                                                      �dividends received, except as permitted under
Public Law (PL) 86-272 excludes from state net        Massachusetts law (See Schedule E-1 instruc-         and located in Massachusetts on the last day of
income-based taxation those interstate activities     tions); and                                          the taxable year. A corporation cannot take the
constituting mere solicitation of orders for sales of                                                      credit on property which it leases to another. A
                                                      �
tangible personal property filled by shipment or de-   taxes on or measured by income, franchise taxes     corporation can take the credit on property which
livery from a point outside Massachusetts after       measured by net income, franchise taxes for the      it leases from another (for property leased and
orders are sent outside the state for approval or     privilege of doing business and capital stock        placed in service on or after July 1, 1994). Gener-
rejection (15 IRC sec. 381(a)).                       taxes imposed by any state or U.S. territory.        ally, eligible corporate lessees making qualifying
The following are activities that ordinarily fall     The deduction for losses sustained in other taxable  leasehold improvements may claim the credit.
within the scope of “solicitation” under PL 86-272:   years is allowed subject to certain restrictions. SeeNote: Motor vehicles and trailers acquired on or
                                                      Schedule E-2 for further information.                after January 1, 1988 and subject to the motor
�activities including advertising related to gener-
ating retail demand for the products of a manu-       DOR and the IRS maintain an extensive exchange       vehicle excise do not qualify for the Investment
facturer or distributor by promoting the products     program, routinely sharing computer tapes and        Tax Credit.
to retailers who order the products from a whole-     audit results. Discrepancies between income and
saler or other middleman;

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General Information 5

A corporation may carry over to the next succeed- The deduction allowed to a corporation for any Brownfields Tax Credit
ing three years any unused portion of its Invest- research expenses generating a Massachusetts Taxpayers are allowed a credit for amounts ex-
ment Tax Credit (ITC). To claim the ITC, Schedule Research Credit must be reduced by the amount pended to rehabilitate contaminated property
H must be completed where the credit is calcu- of the credit generated. This amount is added owned or leased for business purposes and lo-
lated. The amount of the credit is then entered on back to income on Schedule E, line 13. cated within an economically distressed area.
Schedule CR. Any corporation which is a member of a combined The eligibility period for the Brownfields Credit has
group may share excess research credits with been lengthened. The environmental response ac-
Vanpool Credit other members of the combined group. Corpora- tion commencement cut-off date has been ex-
Foreign and domestic corporations are allowed a
tions which are members of a controlled group or
credit of 30% of the cost incurred during the tax- tended from August 5, 2005 to August 5, 2011 and
which are under common control with any trade
able year for the purchase or lease of company the time for incurring eligible costs that qualify for
or business (whether or not incorporated) are
shuttle vans used in the Commonwealth as part of the credit has been extended to January 1, 2012.
treated as a single taxpayer for purposes of deter-
an employer-sponsored ridesharing program. The The Brownfields Credit may be transferred, sold
mining the allowable Research Credit.
shuttle vans must be used for transporting em- or assigned to another taxpayer with a liability
ployees and students from their homes, or public See Schedule RC instructions for further informa- under chapter 62 or chapter 63, or to a nonprofit
transportation facilities, to their places of employ-tion. To claim the Research Credit, Schedule RC organization.
ment or study. must be completed and the amount of the credit
The Department will issue a certificate to the party
entered on Schedule CR.
To claim the Vanpool Credit, Schedule VP must receiving the Brownfields Credit reflecting the
be completed. The amount of the credit is then en- amount of the Brownfields Credit received. The
Harbor Maintenance Tax Credit
tered on Schedule CR. Corporations are allowed a credit against the cor- party receiving the Brownfields Credit must en-
porate excise for certain harbor maintenance close the certificate with each tax return in which
Economic Opportunity Area Credit taxes paid to the U.S. Customs Service pursuant the credits are being applied. Certificate application
A credit of 5% of the cost of qualifying property forms and additional information are available at
to IRC sec. 4461. A corporation is eligible for the
purchased for business use within an Economic www.mass.gov/dor.
credit if the tax paid is attributable to the ship-
Opportunity Area (EOA) is available to businesses.
ment of break-bulk or containerized cargo by sea- The Brownfields Credit cannot offset more than
To qualify for the EOA credit, the property must be
and ocean-going vessels through a Massachusetts 50% of the excise due nor reduce the excise be-
used exclusively in a certified project in an EOA
harbor facility. low the minimum tax. Any unused credit may be
and must meet the same tests (4 years useful life,
etc.) imposed for the 3% ITC. A certified project is The credit is not subject to the 50% limitation; carried forward for five years.
a project that has been approved by the Economic however, it may not reduce the tax to less than See Schedule BC instructions and TIR 06-16 for
Assistance Coordinating Council (EACC). If a cor- the minimum excise of $456. A taxpayer may car- further information. To claim the Brownfields
poration participates in a qualified project and is ryover any excess credit to any of the next suc- Credit, Schedule BC must be completed and the
also eligible for the 3% ITC (see above), the cor- ceeding five taxable years. amount of the credit entered on Schedule CR.
poration may claim either the ITC or the EOAC, See Schedule HM instructions for further informa-
but not both with respect to each item of qualify- tion. To claim the Harbor Maintenance Tax Credit, Low-Income Housing Credit
This credit is administered through the Massachu-
ing property. Schedule HM must be completed and the amount
setts Department of Housing and Community De-
The 5% EOA credit cannot offset more than 50% of the credit entered on Schedule CR.
velopment (DHCD). The Low-Income Housing
of the excise due nor reduce the excise below the Credit is available to taxpayers that claim a U.S.
minimum tax. Any unused credit may be carried Full Employment Credit
forward for ten years. Corporations who participate in the Full Employ- credit for the construction or development of low-
ment Program and continue to employ a participant income housing. The state credit is taken over five
To claim the credit, Schedule EOAC must be com- for at least one full month after any Full Employ- years. The amount of credit a taxpayer may claim
pleted and the amount of the credit entered on ment Program subsidy has expired may claim the for a qualified Massachusetts project is allocated
Schedule CR. Full Employment Credit. A qualified employer may by the DHCD and is based on a total pool of money
claim a credit equal to $100 per month of eligible awarded to the Commonwealth. In order to claim
Research Credit employment per participant with a maximum credit the credit, a copy of the eligibility statement issued
A credit is allowed for corporations which made by DHCD must be available upon request.
of $1,200 per participant. Qualified participants and
basic research payments and/or incurred quali-
employers are those who participate in the Full Em- The LIHC is not subject to the 50% limitation rule
fied research expenses conducted in Massachu-
ployment Program under the rules of the Depart- for corporate taxpayers. If the taxpayer disposes of
setts during the taxable year. A corporation taking
ment of Transitional Assistance. the property generating the LIHC, a portion of the
the research credit is limited in the amount that
can be taken against the excise in any year. The The credit is not subject to the 50% limitation; credit may be subject to recapture.
credit cannot reduce the tax to less than $456. however, it may not reduce the tax to less than the For further information regarding this credit, con-
minimum excise of $456. A taxpayer may carry- tact the Department of Housing and Community
The amount of credit is equal to:
over any excess credit to any of the next succeed- Development, Division of Private Housing, at
�100% of the first $25,000 of excise; and ing five taxable years. (617) 727-7824.
�75% of any amount of excise remaining after See Schedule FEC instructions for further informa- To claim the Low-Income Housing Credit, sup-
the first $25,000. tion. To claim the Full Employment Credit, Sched- porting documentation must be enclosed with the
ule FEC must be completed and the amount of the return and the amount of the credit entered on
credit entered on Schedule CR. Schedule CR.

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6General Information

Historic Rehabilitation Credit For further information on the Medical Device This credit, which is available to certified life sci-
Effective for years beginning on or after January Credit, see TIR 06-22. To claim the Medical De- ences companies only to the extent authorized pur-
1, 2005 and ending on or before December 31, vice Credit, enter the Certificate Number issued suant to the Life Sciences Tax Incentive Program,
2011, taxpayers may be eligible for the Historic by the Department of Revenue and the amount of is equal to 100% of the user fees actually paid by
Rehabilitation Credit (HRC). To claim this credit, athe credit on Schedule CR. Certificate application the taxpayer, as specified in the certification, and
historic rehabilitation project must be complete forms and additional information are available at may be claimed in the taxable year in which the ap-
and have been certified by the Massachusetts His- www.mass.gov/dor. plication for licensure of an establishment to man-
torical Commission. Unused portions of the credit ufacture the drug is approved by the U.S.F.D.A. To
may be carried forward for a maximum of five Life Science Company Investment be eligible for the credit, more than 50% of the re-
years. This credit may be transferred or sold to an-Tax Credit search and development costs for the drug must
other taxpayer. For taxable years beginning on or after January 1, have been incurred in Massachusetts.
2009, a new Investment Tax Credit (ITC) may be
The HRC is not subject to the 50% limitation rule Taxpayers may use the FDA user fees credit to
available corporate excise taxpayers.
for corporate taxpayers. If the taxpayer disposes of their tax to zero. To the extent authorized pursuant
the property generating the HRC, a portion of the This credit, which is available to certified life sci-to the Life Sciences Tax Incentive Program, 90% of
credit may be subject to recapture. ences companies only to the extent authorized pur- the balance of credit remaining is refundable. The
suant to the Life Sciences Tax Incentive Program, deduction otherwise allowable for user fees qual-
For further information, see Regulation 830 CMR
is equal to 10% of the cost of qualifying property ifying for the credit is disallowed.
63.38R.1, Massachusetts Historic Rehabilitation
acquired, constructed or erected during the taxable
Tax Credit. For further information, see TIR 08-23. The
year and used exclusively in the Commonwealth. amount of this credit must be entered on Sched-
To claim the Historic Rehabilitation Credit, sup-
The refundable ITC can apply to purchases made ule CR.
porting documentation must be enclosed with the
on or after January 1, 2009 even if a construction
return and the amount of the credit entered on
project started before that date. The scope of qual- Life Sciences Company Research
Schedule CR.
ifying property for purposes of the new credit is the Credit
same as that provided by the existing ITC under For taxable years beginning on or after January 1,
Film Incentive Credit
For taxable years beginning on or after January 1, M.G.L. Ch. 63, sec. 31A. 2009, a new credit may be available for certified
2006 and before January 1, 2023, Massachusetts Life sciences companies or persons also qualify- life sciences companies pursuant to the Life Sci-
allows two credits for motion picture production ing for the Economic Opportunity Area Credit ences Tax Incentive Program, to provide qualify-
companies who meet certain qualification require- (EOAC) for the same property may only take such ing companies with a means to obtain a research
ments. Production companies who incur at least EOAC to the extent of an additional 2% of the cost credit for certain expenditures not qualifying for
$50,000 of production costs in Massachusetts are of the qualifying property. Corporations taking the existing research credit under c. 63, § 38M.
eligible for income and corporate excise tax cred- these credits are not allowed to take the ITC under St. 2008, c. 130, §§ 30 and 53, codified at G.L. c.
its equal to 20% of the total Massachusetts payroll M.G.L. Ch. 63, sec. 31A or the Low-Income Hous- 63, § 38W. Under this new provision, the credit is
for the production, excluding salaries of $1 mil- ing Credit under M.G.L. Ch. 63, sec. 31H for the generally calculated in the same manner as the
lion and higher. In addition, production companies same qualifying property. research credit under section 38M. However, the
qualified research expenditures which form the
whose Massachusetts production expenses ex- If a life sciences ITC exceeds the tax otherwise basis for the calculation in new section 38W differ
ceed 50% of the total production cost receive an due under the corporate excise, as applicable, from those of section 38M in that they can qualify
income and corporate excise tax credit of 25% of 90% of the balance of such credit may, at the op- when the activities are performed both inside and
the total Massachusetts production expense. Sup- tion of the taxpayer and to the extent authorized outside of the Commonwealth, to the extent they
porting documentation must be available to the pursuant to the Life Sciences Tax Incentive Pro- relate to legally mandated clinical trial activities.
Department of Revenue upon request. gram, be refundable to the taxpayer for the tax
For further information on the Film Incentive year in which the qualified property giving rise to The credit can reduce the corporate excise to the
Credit, see TIR 07-15. To claim the Film Incentive such credit is placed in service. If such refund is minimum excise of $456 and may be carried for-
Credit, enter the Certificate Number issued by the elected by the taxpayer, then the carryover provi- ward for 15 years. Unlike the regular research
Department of Revenue and the amount of the sions for this credit that would otherwise apply credit, as amended by the new subsection (j) of
credit on Schedule CR. Certificate application shall not be available. section 38M, described above, the new life sci-
ences research credit under M.G.L. Ch. 63, sec.
forms and additional information are available at For further information, see TIR 08-23. The 38W is not refundable.
www.mass.gov/dor. amount of this credit must be entered on Sched-
ule CR. For further information, see TIR 08-23. The
Medical Device Credit amount of this credit must be entered on Sched-
The Medical Device Credit is equal to 100% of the ule CR.
Life Science Company FDA User
user fees actually paid to the United States Food
and Drug Administration (USFDA) by a medical de- Fees Credit
Refundable Film Credit
For taxable years beginning on or after January 1,
vice company during the taxable year for which the Schedule RFC, Refundable Film Credit, is used by
2009, a new credit may be available to corporate
tax is due for pre-market submissions (e.g., appli- motion picture production companies to elect to
excise tax payers for user fees paid on or after
cations, supplements, or 510(k) submissions) to claim a refundable film credit if they have not trans-
June 16, 2008 to the U. S. Food and Drug Admin-
market new technologies or upgrades, changes, ferred or carried forward a portion of the film credit
istration (U.S.F.D.A.) upon submission of an ap-
or enhancements to existing technologies, devel- for the production. Transferees of the film credit
plication to manufacture a human drug in the
oped or manufactured in Massachusetts. do not qualify for the refundable film credit.
Commonwealth.

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General Information7

If an election to refund the film credit for a pro-
duction is made, the entire film credit remaining What If a What is a Proper
after reducing the current year tax liability will be
refunded at 90%. The production company is not Corporation’s Return?
allowed to partially refund and partially transfer or
A proper return is a return upon which all required
carryover over any portion of the credit to the next
Taxable Year Is Less amounts have been entered in all appropriate lines
tax year.
on all forms. Data sheets, account forms or other
The refundable film credit is claimed on the Ex- Than 12 Months? schedules must be available to explain amounts
cise Calculation Schedule, line 16. entered on the forms. Referencing lines to enclo-
Corporations whose taxable year is less than twelve
calendar months may determine their excise by sures in lieu of entering amounts onto the return
Refundable Dairy Credit is not sufficient.
prorating calendar months for the non-income
A taxpayer who holds a certificate of registration
measure of the excise only. Schedules should be An exact copy of U.S. Form 1120, including all
as a dairy farmer pursuant to M.G.L. Ch. 94, sec.
available to explain any prorating computations. applicable schedules and any other documenta-
16A is allowed a refundable tax credit based on
the amount of milk produced and sold. The dairy A corporation may never pay less than the $456 tion required to substantiate entries made on this
farmer tax credit as originally enacted was 90% minimum excise on a return, and this amount can return, must be made available to the Department
refundable. Under recent legislation, the dairy never be prorated as Massachusetts law makes no of Revenue upon request.
farmer tax credit is now 100% refundable. provision for the proration of the minimum excise.

Refundable Life Science Credit Should the Corpo-
There are different credits which the Massachu- When Are
setts Life Sciences Center, with the approval of the ration Be Making
Secretary of Administration and Finance, may au-
Returns Due?
thorize a taxpayer to have refunded in lieu of carry- Estimated Tax
Corporate excise returns, together with payment in
ing forward such credit to a future year.
full of any tax due, must be filed on or before the
A taxpayer may apply for a refund of 90% of the 15th day of the third month after the close of the Payments?
unused Investment Tax Credit granted under M.G.L. taxable year, calendar or fiscal. All corporations which reasonably estimate their
Ch. 63, sec. 38U or the additional credit on the corporate excise to be in excess of $1,000 for the
An extension of time for filing returns will be
same property that may be granted under M.G.L. taxable year are required to make estimated tax
granted for reasonable cause upon request. In or-
Ch. 63, sec. 38N if property for which the 38U payments to the Commonwealth. Estimated taxes
der to request an extension, a corporation must file
credit is granted is used in a certified project. may be paid in full on or before the 15th day of
Form 355-7004 on or before the normal due date
A taxpayer may apply for a refund of 90% of the un- of the return and pay in full the estimated tax due. the third month of the corporation’s taxable year
used FDA User Fee Credit granted under M.G.L. Ch. or in four installment payments according to the
Corporations with $100,000 or more in receipts
63, sec. 38M, including credits carried over from schedule below.
or sales must submit their extension request, as
prior years. Schedule RLC, Refundable Life Science �40% of the estimated tax due for the year is
well as any accompanying payment, electroni-
Credit, is used by taxpayers to claim the refund. due on the 15th day of the 3rd month of the tax-
cally. Also, any corporation making an extension
payment of $5,000 or more must make the pay- able year;
ment using electronic means. See TIR 04-30 for �25% of the estimated tax due for the year is
Are Combined further information. due on the 15th day of the 6th month of the tax-
Under certain circumstances, if a payment is not able year;
Reports Sometimes �25% of the estimated tax due for the year is
required to be submitted with the extension re-
quest, the requirement to file the extension may be due on the 15th day of the 9th month of the tax-
Required? waived. For further information, see TIR 06-21. able year;
Yes. If two or more corporations under common
control are engaged in a unitary business, any Note: An extension of time to file is not valid if the�10% of the estimated tax due for the year is
such corporations that are taxed on their income corporation fails to pay at least 50% of the total due on the 15th day of the 12th month of the tax-
in Massachusetts must determine their income tax liability or the minimum tax of $456, which- able year.
measure of excise by filing a combined report, ever is greater, through estimated payments or with Corporations with $100,000 or more in receipts or
Form 355U. Form 355-7004. sales must submit their estimated payments elec-
This requirement applies regardless of whether or Any tax not paid on or before the due date — with- tronically. See TIR 04-30 for further information.
not the corporations file a consolidated federal re- out regard to the extension — shall be subject to Note: New corporations in their first full taxable
turn. See 830 CMR 63.32B.2. The non-income an interest charge. year with less than 10 employees have different es-
measure of excise for members of a combined timated payment percentages — 30%, 25%, 25%
group is still determined on a separate company and 20% respectively.
basis on Form 355 or Form 355S, as appropriate. To avoid a possible underpayment penalty on its
A combined return, previously filed on Form 355C, taxes, a corporation should, when making its first
can no longer be filed in Massachusetts for tax payment, estimate its tax to be at least equal to the
years beginning on or after January 1, 2009.

- 8 -

8
Line by Line Information

prior year’s tax. If the prior year’s tax was the min-Effective January 1, 1997, mutual fund service If you are a classified manufacturer, you must have
imum tax, the corporation should make a payment corporations are required to attribute their mutual filed Form 355Q and had your manufacturing sta-
or payments equal to the minimum tax to safe- fund sales to Massachusetts based on the domicile tus approved by the Commissioner.
guard against a possible underpayment penalty. of the shareholders in the fund. Effective July 1, A Regulated Investment Company (RIC) must file
Note: Any corporation having $1 million or more 1997 mutual fund service corporations are allowed an informational return and may do so by filing
of U.S. taxable income in any of its three preced- to apportion their net income from mutual fund Form 355 or 355SC. The Excise, Balance Due and
ing taxable years (as defined in IRC sec. 6655(g)) sales based solely on their sales factor. However, in Refund lines should be left blank and “RIC-Infor-
may only use its prior year tax liability to calculateorder to use the single sales factor apportionment mational Return” must be written across the front
its first quarterly estimated tax payment. Any re- method a mutual fund service corporation must of the return.
duction in the first installment payment that results increase its workforce in Massachusetts by 5% a
from using this method must be added to its sec- year for five years based on the 1996 employment If the corporation is a Real Estate Investment Cor-
ond installment payment. level unless adverse economic conditions exist. poration (REIT), which is an intangible property
Taxable net income not derived from mutual fund corporation, it is required to file Schedule RNW,
For more information on corporate estimated taxes, sales is apportioned according to the statutory Reit Net Worth Calculation in place of Schedule D.
refer to Regulation 830 CMR 63B.2.2, and M.G.L. three factor method. See TIR 06-6 for further information.
Ch. 63B.
A corporation is a mutual fund service corporation Line 4
if it derives more than 50% of its gross income Check “Yes” if this corporation or any predecessor
from providing, directly or indirectly, management,
Registration to this corporation was previously defined as a cor-
distribution or administration services to or on be- porate trust under Ch. 62 sec. 1(j) on or after July 3,
half of a regulated investment company, and from 2008. All other corporations check “No.”
Information trustees, sponsors and participants of employee
Line 2 benefit plans which have accounts in a regulated Line 5
A corporation is a section 38 manufacturer for any investment company. If line 5 is “Yes” you may still be required to file
taxable year if it is engaged in manufacturing dur- The Department has issued further guidance on ap- Form 355.
ing the taxable year and its manufacturing activity portionment for mutual fund service corporations; The following outlines the relationship of the
during the taxable year is substantial. This applies see Regulation 830 CMR 63.38.7. combined report (Form 355U) to the non-income
whether the corporation is a domestic manufactur-
ing corporation under M.G.L. Ch. 63, sec. 38C or a If a corporation is qualified as a section 38 manu- measure of excise (Form 355).
foreign manufacturing corporation under M.G.L. facturer or is a mutual fund service corporation, Form 355U is used by the combined group to cal-
Ch. 63, sec. 42B, and regardless of whether the check the applicable box and complete Schedule culate and pay the income excise due from the
corporation is classified as a manufacturing cor- F, Income Apportionment, accordingly. Section 38 taxable members of a combined group. Members
poration under M.G.L. Ch. 58, sec. 2 and Regula- manufacturers and mutual fund service corpora- of such a group that are subject to a non-income
tion 830 CMR 63.58.2.1. tions must also complete and enclose Form F-2. measure of excise under the provisions of M.G.L.
Form F-2 is available at www.mass.gov/dor. Ch. 63, sec. 39 (including those S corporations
The apportionment factor for corporations en-
gaged in substantial manufacturing (section 38 The Department has issued further guidance on that are not taxed as financial institutions under
manufacturers) is 100% of sales. apportionment; see Regulation 830 CMR 63.38.1. M.G.L. Ch. 63 sec. 2D) must file a separate return
to pay that portion of the excise. These members
A corporation's manufacturing activity is substan- Line 3 will file Form 355 or Form 355S (as appropriate)
tial for any taxable year if the corporation meets A domestic business qualifies as an R & D corpo- indicating on the face of such return that they are
any of the following tests: ration only if: its principal activity is research andsubject to combined reporting for their income
�The corporation derives 25% or more of its re- development; more than two-thirds of its total re- measure of excise and exclude from that separate
ceipts for the taxable year from the sale of manu- ceipts for the taxable year are derived from re- return the income that is reported on the group’s
factured goods that the corporation manufac- search and development; and more than one-third Form 355U.
tures; or of its receipts for the taxable year are derived from The separate non-income measure return, if re-
the research and development of tangible personal
�The corporation pays 25% or more of its pay- quired, must include Schedules A, B, C, D and
property capable of being manufactured in the
roll for the taxable year to employees working in Schedule CD along with any supporting sched-
Commonwealth.
manufacturing operations and derives 15% or ules required for some entries as referenced on
more of its receipts for the taxable year from the A foreign business qualifies as an R & D corpora- Schedule A. A corporation that would be eligible
sale of manufactured goods that the corporation tion only if: its principal activity is research and to apportion its income based on its own separate
manufactures; or development; more than two-thirds of its total re- activities (i.e., the corporation is taxable on its in-
ceipts assignable to Massachusetts (for the taxable come in another state without regard to the activ-
�The corporation uses 25% or more of its tangi-
year) are derived from research and development; ities of its other combined group members) must
ble property in manufacturing during the taxable
and more than one-third of its receipts assignable also complete Schedule F without regard to the
year and derives 15% or more of its receipts for
to Massachusetts (for the taxable year) are derived combined reporting provisions in order to deter-
the taxable year from the sale of manufactured
from the research and development of tangible mine its non-income measure. If a corporation
goods that the corporation manufactures; or
personal property capable of being manufactured would not be allowed to apportion its income
�The corporation uses 35% or more of its tangible in Massachusetts. based on its own separate activities, no Schedule F
property in manufacturing during the taxable year. is required and the corporation will use an appor-
tionment percentage of 100% in determining the

- 9 -

Line by Line Instructions 9

non-income measure. Such corporations include partment of Revenue, Customer Service Bureau, Line 1j
all of their property, payroll and sales, including PO Box 7010, Boston, MA 02204. The value of any certified solar/wind units for
those attributes used to apportion income for pur- which a deduction is claimed this year should be
poses of a combined report, in completing their Line 14 entered here. Amounts of certified industrial waste
stand alone Schedule F for this purpose. Corpora- If your corporation has undergone a federal audit and/or air pollution treatment facilities and certi-
tions required to file Schedule F-2 (i.e., section 38for some prior year, you must report any changes fied solar/wind deductions claimed in any prior
manufacturers with more than 25 employees and to Massachusetts on Form CA-6, Application for year should be included. In order to be eligible for
mutual fund sales corporations) must submit Abatement/Amended Return. You must report any this deduction, property must be certified by the
schedule F-2 with their Form 355 or 355S. federal audit changes within three months after the appropriate state agencies and copies of such cer-
final determination of the correct taxable income
Schedule E is not required unless the taxpayer has tificates must be available upon request. See in-
by the IRS. Otherwise, you will be subject to a pen-
income from a source other than a unitary busi- structions for Schedule E, line 25.
alty. If the federal change results in less tax due to
ness that is to be reported on a separate company
Massachusetts than was assessed or paid, you
basis and also has a tax year that is different than Line 1k
may apply for abatement under the federal change
the combined group’s tax year. In such cases, the Enter here the value of all tangible property re-
rules within one year of the final federal determina-
corporation is to report on Form 355 or 355S, ported on the corporation’s books as CIP. In addi-
tion. Answering line 14 does not relieve the corpo-
Schedule E only the income that is not included in tion, enter here 15% of the current year’s real
ration from this filing obligation.
the combined report and is to allocate or appor- estate CIP accumulation. For further information,
tion such income without regard to the combined see Department of Revenue Directive 02-11.
Line 16
reporting provisions.
If the corporation is deducting intangible or interestLine 2b
Corporations taking part in a combined report do expenses, answer Yes. Complete Schedule ABI, Enter here the value of inventory that is exempt
not complete Schedule CR. The total of credits Exceptions to the Add Back of Interest Expense, from the tangible property measure of the excise.
taken by such corporations against the non-in- and/or Schedule ABIE, Exceptions to the Add Back An example of exempt inventory is merchandise of
come measure of excise is entered directly on line of Intangible Expenses to claim the deduction. foreign origin imported and immediately placed in
6 of the tax calculation. The amount of credit allow- a federally bonded warehouse. Merchandise of do-
able to the taxpayer and the allocation of credits Line 17 mestic origin is not exempt from the tangible prop-
between the income and non-income measures If the corporation must explain any inconsistent erty measure of the excise. A schedule listing the
is calculated on schedules attached to the com- filing positions made on the return, answer yes components of any entry in line 2b must be avail-
bined report. Schedules that are required to cal- and enclose Schedule TDS. See TIR 06-5 for fur- able upon request.
culate individual credits should be submitted with ther information.
the combined report. Line 12
In order to be a subsidiary, the parent must own at
Line 6 Excise Calculation least 80% or more of the voting stock of a corpo-
Domestic and foreign insurance mutual holding In order to complete the excise calculation, all ap- ration in accordance with IRC sec. 1504. Include
companies are subject to the corporate excise as propriate schedules must be filled out first. There- investments in capital stock. Advances should in-
business corporations but are not required to pay fore, schedule instructions precede the instructions clude payments in the nature of capital contribu-
the portion of tax based on the value of their tan- for the excise calculation section. Use the whole tions. Do not include loans or other receivables.
gible property or net worth (i.e., the non-income dollar method.
measure of the excise). The corporate excise tax Line 12a
for an insurance mutual holding company is the Enter in line 12a the total of capital stock and equity
greater of 9.5% of its net Massachusetts income in contributions of subsidiary corporations 80% or
Massachusetts or the minimum excise tax of $456. Schedule A.
more owned. If an amount other than “0” is entered
in line 12a, Schedule A-1, Investments in Subsid-
Line 7 Balance Sheet iaries, must be completed.
If the corporation is requesting alternative appor- Enter the closing amounts for the taxable year cov-
tionment under M.G.L. Ch. 63, sec. 42, answer yes ered by this return. Once the corporation’s balance Line 12b
in line 7 and enclose Form AA-1. The return and sheet is completed, it will be easier to complete Enter in line 12b the value of capital stock invest-
Schedule F must be completed and the tax must be subsequent schedules. ments with less than 80% ownership and also any
paid according to the statutory three-factor formula. other investment entity such as a partnership.
However, alternative treatment may be requested Line 1a
and a refund will be issued if such treatment is Enter here the book value of all buildings. A portion Line 14
granted by the Commissioner of Revenue. For of the cost attributable to buildings under construc- If the reserve for bad debt exceeds 2% of accounts
further information on alternative apportionment, tion and reported on the corporation’s books as receivable, a complete explanation to enable a re-
see M.G.L. Ch. 63, sec. 42 or Regulation 830 construction in progress (CIP) is considered real view and determination of the proper amount al-
CMR 63.42.1. estate for purposes of the property measure of the lowable must be available upon request.
corporate excise and must be reported in line 1a.
Line 8 Enter 100% of the corporation’s real estate CIP Line 15
Any corporation undergoing a voluntary dissolu- costs, less 15% of the current year’s accumulation. Enter the amount from Schedule A-2, Intercom-
tion should notify the DOR within 30 days of the pany Receivables, line 29.
vote to dissolve by writing to: Massachusetts De-

- 10 -

10Line by Line Instructions

Line 17 Schedule C
Enter here the value of any assets not included in If Schedule B, line 15 is 10% or greater, the cor- Schedule E.
lines 1 through 16. Examples include, but are not poration must complete Schedule C using net book
limited to, goodwill and company patents. values to determine the non-income measure of the Taxable Income
excise. Omit Schedule D. Mutual fund service corporations eligible to ap-
Line 19a portion their income under M.G.L. Ch. 63, sec. 38
Enter the value of mortgages on Massachusetts real Schedule D (m) must complete two separate copies of Sched-
estate, motor vehicles, machinery owned by a cor- Schedule D is used by a corporation to calculate its ule E: (1) for income derived from mutual fund
poration which is not classified as a manufacturing non-income measure excise on the basis of net sales; and (2) for non-mutual fund sales income, if
corporation, and other tangible personal property worth. If line 15 of Schedule B is less than 10%, any. Taxable net income from mutual fund sales is
located in Massachusetts and subject to local tax- complete this schedule. Corporations are allowed gross income from mutual fund sales less: (1) any
ation. Mortgages do not include conditional sales, to deduct the value of investments in, and ad- deductions directly traceable to its mutual fund
pledges or other types of security interest. vances to, Massachusetts and foreign subsidiaries. sales: and (2) a portion of other allowable deduc-
To be a subsidiary, the parent must own 80% or tions. Other allowable deductions consist of deduc-
Line 22 more of the voting stock of the corporation in ac- tions not directly traceable to mutual fund sales or
Enter the amount from Schedule A-3, Intercom- cordance with IRC sec. 1504. non-mutual fund sales. To determine the deduct-
pany Payables, line 29.
ible amount of its other allowable deductions a mu-
tual fund service corporation must multiply the
Schedule E-1. total amount of its other allowable deductions by a
Schedules B, C fraction, the numerator of which is the mutual fund
Dividends Deduction service corporation’s gross income derived from
and D. Tangible Massachusetts corporate excise law does not al- mutual fund sales for the taxable year and the de-
low the dividends received deduction allowed under nominator of which is the mutual fund service cor-
or Intangible the IRC. However, a deduction is generally allowed poration’s total gross income for the taxable year.
for 95% of the value of dividends received except: Taxable net income from non-mutual fund sales
consists of any taxable net income not derived
Classification �dividends from ownership of shares in a
from mutual fund sales.
corporate trust engaged in business in the
and Calculation Commonwealth; If a corporation is not a mutual fund service corpo-
ration, 100% of sales, profits, and income should
�dividends resulting from deemed or actual dis-
be entered in lines 1 through 13. If the corporation
of Non-Income tributions (except actual distributions of previously
has income from business activities which is tax-
taxed income) from a DISC which is not wholly-
able both in Massachusetts and any other state,
Measure owned; or
Schedule F should be completed and the appor-
Schedules B, C and D are used to calculate the �dividends from any class of stock if the corpo- tionment percentage entered in line 22.
non-income measure of the Massachusetts cor- ration owns less than 15% of the voting stock of
porate excise. Schedule B is used to determine the payer corporation. Line 4
whether a corporation is a tangible or intangible Enter U.S. taxable income before deducting net op-
property corporation. Once determined, tangible Dividends received from a Regulated Investment
property corporations must complete Schedule C Company (RIC) or Real Estate Investment Trust erating loss or other special deductions. If the cor-
(and omit Schedule D) and intangible property cor- (REIT) are not eligible for the dividends received poration is the parent of a DISC, income should be
porations must complete Schedule D (and omit deduction, whether the dividend is paid directly reported with no allocation to the DISC.
Schedule C). Net book values should be used in by the RIC or REIT, or indirectly, as through a sub-
completing all schedules. sidiary or affiliate of the taxpayer. Line 5
Enter any allowable U.S. Wage Credit used in cal-
The total dividends amount on Schedule E-1, line culating U.S. Form 1120, line 13.
Schedule B 1 is derived from the amount shown on U.S.
Schedule B is used to calculate whether a corpo- Form 1120, Schedule C, line 19, less any divi- Line 7
ration is a tangible or intangible property corpora- dends received directly or indirectly from RICs or Enter all interest received on state and municipal
tion. Beginning in 2004, taxpayers no longer have REITs as well as any other dividends for which obligations not reported in U.S. net income.
the option of calculating the non-income measure deduction is not allowed under Massachusetts
as a domestic or foreign corporation. To reflect thislaw. The amounts excluded from line 1 are also ex- Line 8
legislative change, both Schedule B and D have cluded from line 8. The dividends shown on lines Massachusetts does not allow a deduction for
been reduced in length. If line 15 is 10% or greater,2 through 6 should not be excluded from line 1, state, local and foreign income, franchise, excise
complete Schedule C. If line 15 is less than 10%, as they will be separately subtracted from line 1 in or capital stock taxes. Any such taxes which have
complete Schedule D. The maximum entry al- determining the amount of line 8. For further infor- been deducted from U.S. net income should be en-
lowed on line 15 is 9.999999. mation, see TIR 04-10. tered in line 8 and added back into income.
A schedule showing payers, amounts and percent
of voting stock owned by class of stock must be Line 9
For Massachusetts purposes, for taxable years
available upon request.
ending after September 10, 2001, depreciation is
to be claimed on all assets, regardless of when

- 11 -

Line by Line Instructions 11

they are placed in service, using the method used setts Research Credit determined in the current Enter the amount of Net Operating Loss (NOL)
for U.S. income tax purposes prior to the enact- taxable year. In addition, subsection (c) of IRC sec.carryover from Schedule E-2, line 8 or 13, which-
ment of sec. 168(k). For more information, see TIR 280C, which requires a similar reduction of the de- ever applies, using the following guidelines.
02-11 and TIR 03-25. duction, shall not apply in determining Massachu- If claiming the general NOL from Schedule E-2,
setts net income. Part 1, line 8, enter the amount of the NOL only if
Line 10 Capital loss carryovers are not allowed under Mass- the amount in line 19 is a positive number. You
A taxpayer must add back to net income any re-
achusetts law. Any loss claimed on the U.S. return must enter “0” if the amount in line 19 is a loss
lated member intangible expenses and costs, in-
must be added back here. (negative).
cluding losses incurred in connection with factor-
ing or discounting transactions. If you qualify for If the corporation has income not subject to ap- If using the new corporation NOL from Schedule
an exception to the add back requirement, com- portionment, the amount should be deducted here E-2, Part 2, line 13, enter that amount regardless
plete Schedule ABIE. For further information, see and entered on Schedule E, line 24. of the amount in line 19, positive or negative. See
TIR 03-19. CMR 830 6332B.1, Combined Returns of Income,
Line 15 for further information.
Line 11 Enter the total cost of renovating an abandoned
A complete schedule of federal loss carryback
A taxpayer must add back to net income any re- building in an Economic Opportunity Area. Multi-
and carryforward deductions must be available
lated member interest expenses and costs, in- ply this amount by 10% and enter here.
upon request.
cluding losses incurred in connection with
factoring or discounting transactions. If you qual- Line 16 If the corporation conducts business activities in
ify for an exception to the add back requirement, Refer to Schedule E-1 for the allowable deductions another state sufficient to give that state the juris-
complete Schedule ABI. For further information, for dividends. Dividends from a Massachusetts diction to tax the corporation, Schedule F should
see TIR 03-19. corporate trust, a non-wholly-owned DISC or a be completed in order to determine the apportion-
corporation of which less than 15% of the voting ment percentage. If all business is conducted in
Line 12 stock is owned are not deductible. Also, direct or Massachusetts, 100% (1.00) should be entered in
Massachusetts has decoupled from the American indirect dividends received from a RIC or REIT line 22.
Jobs Creation Act of 2004, Public Law 108-357. are not deductible.
For corporate excise purposes, the definition of Line 25
net income does not include the new federal pro- Line 18 A deduction is allowed for expenditures paid or in-
duction activity deduction. See TIR 05-5 for fur- There are three different credits which the Mass- curred during the taxable year for the installation of
ther information. achusetts Life Sciences Center, with the approval any solar or wind powered climate control or water
of the Secretary of Administration and Finance, heating unit. Ancillary units do not qualify.
Line 13 may authorize a taxpayer to have refunded in lieu In order to be eligible for this deduction, the prop-
Enter any adjustments to income not previously re- of carrying forward such credit to a future year. erty must be certified by the Office of Facilities
ported. For example, enter in this line the amount A taxpayer may request for a refund of 90% of the Management. A copy of such certification must be
of depreciation or amortization taken this year in unused Research Credit granted under M.G.L. Ch. available along with a schedule itemizing the:
computing U.S. net income for the following: 63, sec. 38M, including credits carried over from �cost;
�certified industrial waste and/or pollution treat- prior years. Only taxpayers previously authorized
�
ment facilities of prior years; or by the Massachusetts Life Sciences Center to do allowable U.S. depreciation;
so may apply for a refund of sec. 38M credits. �date of installation; and
�certified solar/wind units of current or prior
years, if said facilities were sold during the year. A taxpayer may request for a refund of 90% of �place of installation.
(See M.G.L. Ch. 63, sec. 38D(d) and sec. 38H(e) the unused Life Sciences Investment Tax Credit If these amounts are prorated, the computation
for further explanation.) granted under M.G.L. Ch. 63, sec. 38U or the ad- should be explained.
ditional credit on the same property that may be
Capital gains on installment sales of intangible If eligible units do not continue in qualified use for
granted under M.G.L. Ch. 63, sec. 38N if property
property made prior to 1963 may also be deducted ten years, the deductions previously allowed must
for which the 38U credit is granted is used in a
from income. These gains fall under the provisions be added back to taxable income. The amount
certified project.
of prior Massachusetts law when such income should be entered in Schedule E, line 13.
was not taxable (see M.G.L. Ch. 63, sec. 38(a)(2)). A taxpayer may request for a refund of 90% of the
This adjustment should be made in line 8. unused FDA User Fee Credit granted under M.G.L. Note: The special deduction for the construction
Ch. 63, sec. 31M. of certified industrial waste and/or air pollution
Deduct the full U.S. research credit generated pro- treatment facilities does not apply to expenditures
vided that the full U.S. research credit was taken. IfEnter the total amount of the refund sought for all paid or incurred on or after January 1, 1980.
a reduced U.S. research credit was taken, no ad- three credits on line 18 and enclose Schedule RLC.
justments are necessary. The amount of the refund claimed must match the Line 26
total of the life sciences tax credit refunds calcu-
From Massachusetts Schedule RC, Part 1, line 21, Subtract line 25 from the total of lines 23 and 24. If
lated on all Schedules RLC submitted.
add back the full Massachusetts research credit a corporation has a loss and has business activities
generated. that are attributable to any other state, the amount
Line 20 of the loss must be apportioned using Schedule F.
The deduction allowed to a corporation for any ex- Massachusetts allows two different loss carryover
pense which qualifies for the Massachusetts Re- deductions. A corporation may take only one of
search Credit must be reduced by the Massachu- these deductions.

- 12 -

12Line by Line Instructions

by another corporation (whether or not the own- To determine if a corporation qualifies as a section
Corporate ing corporation is taxable in Massachusetts); 38 manufacturer or mutual fund service corpora-
�Losses of a foreign corporation incurred before tion, see instructions for the registration section:
Disclosure Schedule becoming subject to Massachusetts corporate ex- line 2 of Form 355, 355C or 355S.
Chapter 402 of the Acts of 1992 require the De- cise liability are not allowed; and If a corporation is a section 38 manufacturer or
partment of Revenue to conduct an annual analysis �The deduction can be taken only within the ini- mutual fund service corporation, fill in the applica-
of corporate tax liability. To provide the department tial five-year period. ble oval. If a corporation is not a section 38 manu-
with information necessary to complete this analy- facturer or a mutual fund service corporation, fill in
sis, corporations are required to report amounts Note: A corporation may switch between the two the oval for “Other.”
taken federally for charitable contributions, re- NOL deductions from one taxable year to another. If
search expenses and certain types of depreciation. the corporation switches from the General NOL to Mutual fund service corporations must complete
All corporations must complete the Corporate Dis- the New Corporation NOL, any unexpired General a Schedule F based on mutual fund sales and a
closure Schedule on their return or the return will NOL carryover may be added to the available loss separate Schedule F based on non-mutual fund
be considered insufficient and will be subject to for the New Corporation NOL. See the Net Operat- sales, if any. For further information on apportion-
applicable penalties and interest. ing Loss Deductions and Carryovers Regulation, ment for mutual fund service corporations, see
830 CMR 63.30.2(3)(c) for further information. Regulation 830 CMR 63.38.7.
Corporations must complete all lines, regardless
of apportionment method used. Make certain that
Schedule CR. Other complete information is entered for all apportion-
Schedule F. Income
ment factors. A return which is incomplete will be
Corporate Credits considered insufficient.
Apportionment
Schedule CR is used to calculate the total of any
Mutual fund service corporations should complete
credits being claimed for use in the current tax year.
a Schedule F for income from mutual fund sales if
Corporations which are members of a combined they made mutual fund sales to RIC’s with share- Line Instructions
group required to file Form 355U do not complete holders domiciled outside of Massachusetts. 1. Property Factor
Schedule CR; credits claimed by such corporations Schedule F should be completed by all other corpo- Line 1a
are shown on Schedule U-IC which must be en- rations (including mutual fund service corporations For tax purposes, average value is based on orig-
closed with Form 355U. Such corporations enter reporting non-mutual fund sales) which have in- inal cost and is determined by averaging the prop-
the total of the credits being used against the non- come from business activities which is taxable both erty values at the beginning and end of the taxable
income measure of excise on line 6 of the tax cal- in Massachusetts and in any other state. For pur- year. If substantial changes occur during the tax-
culation section of Form 355. poses of this requirement, “taxable” has the mean- able year, the Commissioner may require monthly
ing set forth in the Apportionment of Income averaging to properly reflect the average value of
Regulation, 830 CMR 63.38.1 sec. 5(b). This stan- the property. For purposes of the property factor, a
Schedule E-2. Loss dard is not satisfied merely because the taxpayer taxpayer may elect to use any reasonable method
is incorporated in such a state or files a return infor attributing its mobile property to Massachu-
Carryover Deduction such a state that relates to capital stock tax or setts. The election is made by filing a return that
Massachusetts allows two different loss carryover franchise tax for the privilege of doing business. employs the chosen method for the first tax year
deductions. A corporation may take only one of If the corporation is requesting alternate appor- ending on or after August 11, 1995, in which the
these deductions. If the corporation qualifies to tionment under M.G.L. Ch 63, sec. 42, answer taxpayer owns or rents mobile property and appor-
take either deduction, the choice between the de- yes in line 7 of Form 355 and enclose Form AA-1. tions income to Massachusetts. The taxpayer must
ductions is left to the corporation’s discretion. You must still complete and file Schedule F. A re- make available a statement describing the method
fund will be issued if alternative apportionment is chosen and must use the same method consis-
Part 1 granted by the Commissioner. For further infor- tently from year to year. For further information, in-
Massachusetts law allows a loss carryover deduc- mation on alternative apportionment see the cluding safe harbor methods, see Regulation 830
tion for all corporations, regardless of how long the Massachusetts Alternate Apportionment Regula- CMR 63.38.1 sec. 7(d).
corporation has been in existence. Corporations will tion, 830 CMR 63.42.1. Construction in progress is generally excluded
be allowed to carryover for no more than five years
For further information about corporations that from the property factor; see Regulation 830 CMR
(but not carry back) net operating losses (NOL) as
hold partnership interests and the appropriate 63.38.1 sec. 7(a). For the property factor, inven-
defined in IRC sec. 172.
method to use to apportion partnership income, tory in transit is deemed to be at its destination;
see Regulation 830 CMR 63.38.1 sec. 4(d) and 12. see Regulation 830 CMR 63.38.1 sec. 7(c).
Part 2
Massachusetts law also allows a carryover deduc- Corporations engaged in substantial manufactur- Line 1b
tion for losses, as determined under IRC sec. 172, ing (section 38 manufacturers) are required to ap- Property rented by the corporation is valued at eight
incurred during the first five years of a corporation’sportion their net income based on sales factor only.times the annual net rental rate paid less any sub-
existence. The following limitations are placed upon Corporations other than section 38 manufacturers rentals received.
this deduction: or mutual fund service corporations are required to
�Carryover losses are not allowed to corporations apportion their net income as follows: sales factor
where 50% or more of the voting stock is owned equals 50%, property factor equals 25%, payroll
factor equals 25%.

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Line by Line Instructions13

2. Payroll Factor Sales of tangible personal property are not assign- If you are claiming an exception on Schedule ABI or
able to Massachusetts if: ABIE, do the following to see if a factor applies.
Line 2a
Enter the total amount of wages, salaries, commis- �the property is shipped or delivered to a buyer Complete Schedule E through line 21 without refer-
sions, or any other compensation paid to employ- in a foreign country; or ence to the add back exception but less the amount
of deductible and intangible expense stated in line
ees. An employee’s compensation is allocated to �the property is sold to any branch or instrumen- 1 of the respective Schedule ABI or ABIE.
Massachusetts, if any of the following apply: tality of the U.S. government for resale to a foreign
�the employee’s service is performed within government. If any of the apportionment totals for “Worldwide”
(lines 1c, 2a or 3f) are less than 3.33% of Sched-
Massachusetts;
Line 3c ule E, line 21, do not include that factor in your
�the employee’s service is performed both in Sales of services, other than mutual fund sales or Massachusetts apportionment percentage.
Massachusetts and in other state(s), but the non- other intangibles, are assigned to Massachusetts
Massachusetts service is secondary to the Mass- if the income producing activity is performed in
achusetts service; Massachusetts, or if a greater portion of the activ- Schedule H.
�part of the employee’s service is performed in ity, based on performance cost, occurs in Mass-
Massachusetts, and the service is controlled from achusetts than in any other state.
Investment
a location in Massachusetts; Mutual fund sales are assigned to Massachusetts
�part of the employee’s service is performed in as follows: Tax Credit
Massachusetts, and the location of the service is not �mutual fund sales are determined separately for
in a state in which some part of the service is per- each RIC from which the mutual fund service cor- and Carryovers
formed, but the employee lives in Massachusetts. poration receives fees for mutual fund services; Corporations claiming an Investment Tax Credit
The total amount paid for compensation is com- �the mutual fund sales for each RIC are multi- and corporations taking a credit carryforward from
puted on the cash basis, as reported for unemploy- plied by a fraction, the numerator of which is the a prior year must file Schedule H.
ment purposes. A taxpayer that uses the accrual average number of shares owned by the RIC’s
method of accounting in computing its taxable shareholders domiciled in Massachusetts at the Part 1. Calculation of Current-Year
net income may elect to use the accrual method in beginning and end of the RIC’s taxable year that Investment Tax Credit Generated
determining the total amount of compensation paid ends within the mutual fund service corporation’s Lines 1a through 1d
in Massachusetts during the taxable year. For fur- taxable year, and the denominator of which is the Only R&D corporations should complete these
ther information on how to elect the accrual method average number of shares owned by all of the lines. All others leave blank. R&D corporations
see Regulation 830 CMR 63.38.1 sec. 8(a). RIC’s shareholders for the same period; and are eligible for the credit only if two thirds of their
�the resulting amounts are totaled for all RICs. Massachusetts receipts are derived from the pro-
3. Sales Factor vision of research and development services or
For sales factors, enter the gross receipts of the cor-Line 3d from royalties or fees from licensing patents,
poration with the exception of those receipts from Rents from property located or used in Mass- know-how or other technology developed from re-
interest, dividends and the sale or other disposi- achusetts are assigned to Massachusetts. Royal- search and development. See Regulation 830
tion of securities. Any receipts resulting in allocableties derived from the use of intangible property are CMR 64H.6.4 for further information.
income must be excluded. For further information, assigned to the state to the extent that the prop-
see Regulation 830 CMR 63.38.1 sec. (9)(a). erty is used in the state. Lines 2a through 2h
Enter the total cost basis of all qualified deprecia-
Also, in the case of the sale, exchange or other dis- If using a three-factor apportionment formula, and ble property placed in service during the tax year
position of a capital asset used in the taxpayer’s one or more factors are inapplicable the following by Schedule A category. Qualifying property must
trade or business, enter the gain from the transac- shall apply: be tangible property, including buildings but ex-
tion and not the gross receipts. For further informa- �In cases where only two of the three apportion- cluding motor vehicles and other property taxable
tion, see Regulation 830 CMR 63.38.1 sec. (9)(b).
ment factors (property, payroll, sales) are applica- under Ch. 60A, used by the corporation in Mass-
Line 3a ble, the taxable net income is apportioned by a achusetts, situated in the Commonwealth on the
Sales of tangible personal property are assignable fraction, the numerator of which is the remaining last day of the taxable year and depreciable under
to Massachusetts if the property is delivered or two factors with their respective weights and the Section 167 of the IRC with a useful life of four
shipped to any buyer, including the U.S. govern- denominator of which is the number of times that years or more. A corporation may not claim the
ment, in Massachusetts. such factors are used in the numerator. credit for property it leases to others as a lessor.
�
Line 3b In cases where only one of the three apportion- Line 4
Sales of tangible personal property are assignable ment factors (property, payroll, sales) is applica- If any of the property included in lines 2a through
to Massachusetts if the selling corporation is not ble, the taxable net income is apportioned solely 2h is eligible for a U.S. Tax Credit, the total amount
taxable in the state of the buyer and the property is by that factor with its respective weight, and the of the U.S. credit taken with respect to the qualify-
not sold by an agent or agencies chiefly situated denominator is the number of times the factor is ing property must be entered here and applied as
at, connected with, or sent out from premises for used in the numerator. a reduction to the basis in calculating the Mass-
the transaction of business owned or rented by the Note: An apportionment factor should not neces- achusetts credit.
corporation outside Massachusetts. A buyer for sarily be considered inapplicable if its Massachu-
Line 6
this item includes the U.S. government. setts total (lines 1c, 2a or 3f) is zero.
Enter the tentative tax credit. This is 3% of the cost
after any basis reduction.

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14 Line by Line Instructions

Line 7 available for carryforward to any future period in a taxpayer from taking credits that will reduce the
If qualifying property is placed in service and dis- each of the 4 tax years (a total of $14,000, all of tax below 50% of the excise due before credits. If
posed of or otherwise ceases to be in qualified which is also from the earliest available credit, the taxpayer has available and will be taking other
service before the end of the same tax year, the which is the year 1 amount). At the end of year 4, credits that are also subject to the section 32C lim-
amount of credits available is reduced. Multiply the the remainder of the year 1 credit ($30,000 less itation (e.g. the Brownfields Credit under sec 38Q)
credit otherwise available (cost as reduced by U.S. $14,000 used less $14,000 converted equals the maximum amount of investment tax credit al-
tax credits times 3%) by a fraction, the numerator $2,000) expires unused. lowed is reduced by the amount of such other
of which is the number of months remaining in At the beginning of January in year 5, Manufac- credits taken. Taxpayers may chose which credits
the useful life of the asset when it is disposed of turing sells all of its assets, triggering recapture.to use but the total of all such credits subject to the
or otherwise ceases to qualify and denominator of section 32C limitation may not exceed 50% of the
which is the total number of months in the assets’ The potential recapture on the year 1 assets is excise before credits. Credits may also not reduce a
useful life. For example, an item that is depreciated $30,000 ×72 ÷120 =$18,000. This is partially corporation’s tax below the $456 minimum excise.
over a seven-year period for U.S. tax purposes has offset by the $2,000 of the expired credits. A fur-
a useful life of 84 months. ther $14,000 is offset by reducing the unlimited Enter in column c, the amount of credits originat-
carryforward generated in year 1 that is still avail-ing in each tax year converted to unlimited carry-
Line 8 able and unused. There is a net recapture tax of over status. Credits that could have been used
Subtract the amount of the credit reduction in line $2,000 related to the year 1 assets. except for the 50% limitation in M.G.L. Ch. 63, sec
7 from the tentative credit in line 6. 32C may be used in any subsequent year, without
The potential recapture on the year 2 assets is regard to the normal 3 year time limit provided in
$10,000 ×84÷120=$7,000. This is offset by re-
Part 2. Recapture of Unused Credit Ch.63, sec. 31A. The taxpayer may choose which
ducing the carryover available from year 2 by the
If property is disposed of or ceases to be in qual- credits to treat as converted to unlimited status,
same amount. There is no recapture tax related to
ified use prior to the end of its useful life, the but the total of all such credits designated for un-
the year 2 assets. Manufacturing still has $3,000
difference between the credit taken and the credit limited carryover may not exceed 50% of the cur-
of year 2 credits available for use. They will expire
allowed for actual use must be added back in the rent year excise before credits.
at the end of the current year.
excise calculation in the year the property is dis- Enter in lines 2 through 4, column d the amount
posed of. Recapture tax is not due if the credit Completing the Schedule of credits originating in each tax year and still
with respect to the property disposed were never Enter $25,000 in line 1 (the total potential ITC re- subject to the 3-year time limit which are carried
used to offset excise, whether or not still available capture from all years). over to future years. Note that any credits on line
for use. Recapture does not apply if the property 1(a) not used or converted expire at the end of the
Enter $2,000 in line 2a (the amount of credits ex-
has been in qualified use for more than 12 years. current year.
pired unused).
For each item disposed of or otherwise ceasing to
Enter $7,000 in line 2b (the amount of the reduc-
qualify prior to the end of its useful life, calculate the Part 4. Reconciliation of
tion in year 2 credits).
reduction in the amount of the original credit. This Massachusetts Tangible Property
is the credit originally allowed times a fraction, Enter $14,000 in line 2e (the amount of the re- Corporations claiming an ITC in Part 1 or claiming
the numerator of which is the number of months duction in the unlimited carryover). an ITC carryforward in Part 3, whether or not used
remaining in the useful life of the asset when it is Enter $2,000 in line 3 (the total recapture tax in the current year, must complete Part 4 based
disposed of and the denominator of which is the added to excise this year). on the book value of their capital assets located in
number of months in the asset’s useful life, as de- Massachusetts.
termined for U.S. tax depreciation purposes. Part 3. Calculation of Available
Next determine whether or not the credits allowed Credits
but not earned have been used to reduce excise. Enter the amount of each credit available for use Excise Calculation
The potential recapture tax for each asset is then in the current year based on the year generated. If The excise calculation schedule is used to calculate
offset, on a dollar for dollar basis, by credits of the carryover credits were offset against potential re- the various measures of the Massachusetts corpo-
same type generated in the same tax period that captures in Part 2, the amount available should ration excise. These are:
have never been used to reduce excise. Include reflect the reduction by those offsets. �a tax of $2.60 per $1,000 on taxable Massachu-
both credits carried over from the prior year and setts tangible property or taxable net worth, which-
credits which expired unused. Lines 1 through 5 ever applies. If the return is for a short taxable year,
Enter in column a the amount of credit available the tangible property or taxable net worth should
Example for use in the current year. Credits available which be prorated; and
Manufacturing Corporation begins business in year are subject to the 3-year carryover limitation are
1 and generates $30,000 in ITC. In year 2, Manu- entered on the line appropriate for the tax year in �a tax of 9.5% on income attributable to
facturing Corporation generates $10,000 in ITC. It which the credit was generated. Credits no longer Massachusetts.
generates no credits in years 3 or 4. All property is subject to the 3-year time limit are shown on line 5.The law also provides for a minimum excise of
acquired in the first month of the year and has a If carryover credits were offset against potential $456.
useful life of 10 years. In each year, Manufactur- recaptures in Part 2, the amount actually available
ing’s excise before credits is $7,000 and it uses should reflect the reduction by those offsets. Line 3
$3,500 of ITC (a total of $14,000 in credits used) Enter the amount from Schedule E, line 26, if you
Enter in, column b, the amount of credits originat-
all of which is from the earliest available credit (the had taxable income (a positive number). If the
ing in each tax year being used in the current year.
year 1 amount). Under the provisions of M.G.L. amount in Schedule E, line 26 is a loss, enter “0.”
M.G.L. Ch. 63, sec. 32C limits the amount of these
Ch. 63, sec. 32C, a further $3,500 in ITC becomes
credits that may be used in any year by prohibiting

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Line by Line Instructions15

Line 6 Penalty for Late Payment Schedule M-1 must be filed by all S corporations
Corporations which are not members of a com- The penalty for failure to pay the total payment required to complete Schedule E. S corporations
bined group filing a combined report enter the due with this form is 1% of the tax due per month with receipts of less than $6 million on an annual-
amount from Schedule CR, line 15 and enclose any (or fraction thereof), up to a maximum of 25%. ized basis also are not required to file Schedule
required schedules showing the calculation of the M-1.
individual credits taken on Form 355. Corporations Line 25 Corporations reporting their income on Form 355U
which are members of a group filing Form 355U Any corporation which fails to pay its tax when due as part of a combined group that file Schedule U-M
enter the total amount of the credits being taken will be subject to interest charges on the unpaid with that combined report are not required to file
against the non-income measure of excise here balance. Schedule M-1.
(from Form U-IC, line 37 plus line 40). Corporations
which are members of a combined group filing Line 26 S corporations, if required to file Schedule M-1,
Form 355U do not complete Schedule CR. Enter the total payment due. Checks for this amount must complete and file Schedule M-1 as if they
should be made payable to the Commonwealth of were a C corporation.
Line 10 Massachusetts. Checks should have the corpora-
Any corporation that wishes to contribute any tion’s Federal Identification number written in the
amount to the Natural Heritage and Endangered lower left corner. Schedule CIR
Species Fund may do so on this form. This Schedule CIR, Consolidated Income Reconcilia-
amount is added to the excise due. It increases Privacy Act Notice
tion, reconciles the net income of corporations fil-
the amount of the corporation’s payment or re- The Privacy Act Notice is available upon request or
ing in Massachusetts that are part of a U.S.
duces the amount of its refund. at www.mass.gov/dor.
consolidated return with the consolidated net in-
Line 15 Signature come reported to the IRS.
Enter the amount of any withholding tax from When the form is complete, it must be signed by Taxpayers must file this schedule if their income is
pass-through entities. This is the amount of with- the treasurer or assistant treasurer or, in their ab-included in a U.S. consolidated return. For corpo-
holding from all Schedules 3K-1, lines 33 and 35 sence or incapacity, by any other principal corpo- rations that are filing as members of a Massachu-
that the corporation has received. rate officer. The Social Security number of the setts combined group, only one schedule CIR
signing officer should be entered next to the date must be filed. It must be filed by the principal re-
Line 16 the return was signed. If you are filing as an porting corporation.
Enter the amount from Schedule RFC, Refundable authorized delegate of the appropriate corporate
Film Credit, line 7. officer, check the box in the signature section and Schedule CIR and instructions are available at
enclose a copy of Massachusetts Form M-2848, www.mass.gov/dor.
Line 17 Power of Attorney. The form must also be signed
Enter the amount of any refundable Dairy Credit. by any paid preparer of the form. The form should
Be sure to enter the certificate number. be mailed to: Massachusetts Department of Rev- Schedule NIR
enue, PO Box 7005, Boston, MA 02204.
Line 18 Schedule NIR, Net Income Reconciliation recon-
Enter the amount from Schedule RLC, Refundable ciles income reported to shareholders with the in-
Life Science Credit, line 13. Schedule M-1. come reported on the taxpayer’s consolidated U.S.
tax return and is similar to U.S. Schedule M-3,
Part 1.
Lines 24 Federal
The following penalties may apply:
Taxpayers must file Schedule NIR if required to file
Penalty for Underpayment of Estimated Tax Reconciliation a U.S. Schedule M-3 with their U.S. return. This in-
An additional charge may be imposed on corpora- Schedule M-1 reports the taxpayer’s current year cludes corporations that are part of a consolidated
tions which underpay their estimated taxes or fail net income and expenses as they are or would be return that as a group meets the requirement to file
to pay estimated taxes. Form M-2220, Underpay- shown on U.S. Form 1120, lines 1 through 28, in U.S. Schedule M-3. For corporations that are filing
ment of Massachusetts Estimated Tax by Corpora- calculating gross income under the provisions of as members of a Massachusetts combined group,
tions, should be used to compute any underpay- the U.S. IRC and the deductions allowable in cal- only one Schedule NIR need be filed and it must
ment penalty. culating net income under the code. be filed by the principal reporting corporation.
Penalty for Failure to File Corporations filing in Massachusetts and partici- Schedule NIR and instructions are available at
The penalty for failure to file a tax return by the duepating in a U.S. consolidated return must com- www.mass.gov/dor.
date is 1% of the tax due per month (or fraction plete Schedule M-1 on a separate company basis.
thereof), up to a maximum of 25%.

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