Instructions For Form 1 - Massachusetts Resident Income Tax - 2006 Page 24
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2006 Form 1 — Schedule Instructions
◗ Dividends from any corporate trust which is not
◗ Short-term capital gains taxed directly to
Line 17. Loss on Sale of Business
taxed directly by Massachusetts. Such entities in-
Massachusetts estates and trusts (reportable on a
Property
clude: those not doing business in Massachusetts;
Massachusetts Fiduciary Return, Form 2);
Enter from U.S. Form 4797 the amount of loss
◗ Upon the sale of stock of an S corporation, the
regulated investment companies or real estate in-
from the sale, exchange or involuntary conversion
vestment trusts (both as defined under the U.S.
federal basis must be modified according to
of property used in a trade or business and held
Internal Revenue Code, Sections 851 and 856); or
Massachusetts Income Tax Regulation, 830 CMR
for one year or less.
holding companies (as defined in Massachusetts
62.17A.1; and
◗ Massachusetts has adopted basis adjustment
General Laws, Chapter 62, section 8).
Line 18. Prior Years Short-Term
rules to take into account differences between Mass-
Unused Losses
Line 8. Allowable Deductions
achusetts and federal tax laws. For more informa-
You may use short-term losses accumulated in the
from Your Trade or Business
tion regarding basis adjustment rules, see TIR 88-7.
previous taxable years beginning after 1981 in the
Enter the appropriate amount from Massachu-
computation of short-term gain or loss for the cur-
Line 10. Short-Term Capital Gains
setts Schedule C-2 if you qualify for an excess
rent year. Enter here the amount from your 2005
Enter the gross short-term capital gains included
trade or business deduction. Generally, taxpayers
Massachusetts Schedule B, line 40.
in U.S. Schedule D, lines 1, 2, 4 and 5, column (f).
may not use excess 5.3% deductions to offset
other income. However, where the taxpayer files a
Line 19. Subtotal Interest and
Line 11. Long-Term Capital Gains
Massachusetts Schedule C or Schedule E, Mass-
Dividends and Certain Capital
on Collectibles and Pre-1996
achusetts law allows such offsets if the following
Gains and Losses
Installment Sales
requirements are met: the excess 5.3% deductions
Combine lines 15 through 18. If “0” or greater, omit
must be adjusted gross income deductions al-
Enter the amount of long-term capital gains on col-
lines 20 through 23 and enter the amount from line
lowed under MGL Ch. 62, sec. 2(d); and these ex-
lectibles and pre-1996 installment sales classified
19 in line 24. If less than “0,” complete line 20.
cess deductions may only be used to offset other
as capital gain income for Massachusetts pur-
income which is effectively connected with the
poses, from Massachusetts Schedule D, line 11.
Line 20. Short-Term Losses Applied
active conduct of a trade or business or any other
Against Interest and Dividends
Line 12. Gain on Sale of Business
income allowed under IRC, sec. 469(d)(1)(B) to
Enter the smaller of line 9 or line 19 (considered
offset losses from passive activities.
Property
as a positive amount). Not more than $2,000.
Enter from U.S. Form 4797 the amount of gain
Line 9. Subtotal Interest and
from the sale, exchange or involuntary conversion
Line 21. Available Short-Term Losses
Dividend Income
of property used in a trade or business and held
Combine lines 19 and 20. This amount should be
Subtract line 8 from line 7. If you have no short-
for one year or less.
“0” or less. If line 21 is less than “0,” go to line 22.
term capital gains or losses, net long-term capital
If line 21 is “0,” omit lines 22 through 28 and go
Line 14. Allowable Deductions
gains or losses, carryover short-term losses from
to Part 3.
from Your Trade or Business
prior years, long-term gains on collectibles and
If Schedule B, line 21 is a loss and Schedule D, line
pre-1996 installment sales classified as capital gain
Enter the appropriate amount from Massachu-
12 is a loss, omit line 22, enter the amount from
income for Massachusetts purposes, gains or
setts Schedule C-2 if you qualify for an excess
line 21 in line 23 and line 40, omit lines 24 through
losses from the sale, exchange or involuntary con-
trade or business deduction. Generally, taxpayers
28 and complete Parts 3 and 4.
version of property used in a trade or business
may not use excess 5.3% deductions to offset
and held for one year or less, allowable deductions
other income. However, where the taxpayer files a
Line 22. Short-Term Losses Applied
from your trade or business, or excess exemp-
Massachusetts Schedule C or Schedule E, Mass-
Against Long-Term Gains
tions, omit lines 10 through 37. Enter the amount
achusetts law allows such offsets if the following
from line 9 in line 38 of Schedule B and on Form
If Schedule B, line 21 is a loss and Schedule D, line
requirements are met: the excess 5.3% deductions
1, line 20, and omit lines 39 and 40 of Sched-
12 is greater than “0,” enter the smaller of Sched-
must be adjusted gross income deductions al-
ule B. Otherwise, complete Parts 2, 3 and 4.
ule B, line 21 (considered as a positive amount)
lowed under MGL Ch. 62, sec. 2(d); and these ex-
or Schedule D, line 12 in Schedule B, line 22 and
cess deductions may only be used to offset other
Part 2. Short-Term Capital Gains
in Schedule D, line 13.
income which is effectively connected with the
and Losses and Long-Term Gains
active conduct of a trade or business or any other
Line 23. Short-Term Losses for
on Collectibles and Pre-1996
income allowed under IRC, sec. 469(d)(1)(B) to
Carryover in 2007
offset losses from passive activities.
Installment Sales
Combine line 21 and line 22 and enter the result
If there are any differences between U.S. and
Line 16. Short-Term Capital Losses
in line 23 and in line 40, omit lines 24 through 28
Massachusetts amounts reported in lines 10, 11,
Enter the gross short-term capital losses included
and complete Part 3 and Part 4.
12, 16 and 17, be sure to enter the Massachu-
in U.S. Schedule D, lines 1, 2, 4 and 5, column (f).
setts amount. Possible differences include:
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