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2006 Form 1-NR/PY Instructions — Schedule Instructions

◗ Interest and dividends taxed directly to Mass-

Line 2. Total Ordinary Dividends

or business or any other income allowed under

achusetts estates and trusts. Enter the interest and

IRC, sec. 469(d)(1)(B) to offset losses from pas-

Enter your total ordinary dividends from your U.S.

dividends that are taxed directly to a Massachu-

sive activities.

Schedule B, Part II, line 6 (Form 1040) or U.S.

setts estate or trust (reportable on a Massachu-

Schedule 1, Part II, line 6 (Form 1040A). If you did

Line 9. Subtotal Interest and

setts Fiduciary Return, Form 2);

not file U.S. Schedule B or U.S. Schedule 1, enter

◗ Any distribution which is a return of capital in-

Dividend Income

the amount from U.S. Form 1040 or 1040A, line 9a.

cluded in total gross dividends, line 2;

Subtract line 8 from line 7. If you have no short-

◗ Any interest or dividends from obligations of the

Line 3. Other Interest and Dividends

term capital gains or losses, carryover short-term

Commonwealth of Massachusetts or its political

Enter the following amounts and their sources

losses from prior years, long-term gains on col-

subdivisions held by you;

(enclose additional statement if more space is

lectibles and pre-1996 installment sales classified

◗ Any exempt portion of interest or dividends

necessary):

as capital gain income for Massachusetts pur-

◗ Interest from obligations of other states and their

from a mutual fund included in lines 1, 2 or 3 of

poses, gains or losses from the sale, exchange or

this schedule. Enter only the exempt portion of in-

involuntary conversion of property used in a trade

political subdivisions (including your share, if any,

terest or dividends derived from obligations of the

or business and held for one year or less, allow-

from a partnership, an S corporation and a grantor-

U.S. government or the Commonwealth of Mass-

able deductions from your trade or business, net

type trust or non-Massachusetts trust). Do not in-

achusetts or its political subdivisions;

long-term capital gains or losses, or excess ex-

clude exempt interest already included in line 1;

◗ Any dividends from current earnings of a corpo-

◗ Taxable distributions from Massachusetts S

emptions, omit lines 10 through 37. Enter the

rate trust only if such entity is taxed directly on a

amount from line 9 in line 38 of Schedule B and on

corporations not reported in Schedule B, line 2.

Massachusetts Corporate Trust Return, Massachu-

Form 1-NR/PY, line 24, and omit lines 39 and 40 of

Distributions in excess of the Massachusetts ac-

setts Form 3F; or

Schedule B. Otherwise, complete Parts 2, 3 and 4.

cumulated adjustments account are dividends to

◗ Any interest on pre-retirement distributions

the extent of the corporation’s Massachusetts ac-

Part 2. Short-Term Capital Gains

from state and municipal contributory pension

cumulated earnings and profits. For more infor-

plans.

and Losses and Long-Term Gains on

mation, see Regulation 830 CMR 62.17A.1;

◗ Interest and dividends from a partnership, S

Collectibles and Pre-1996

◗ Nonresidents. Any amounts included in lines 1,

corporation, grantor-type trust, or non-Massachu-

2 and 3 which you received from sources other

Installment Sales

setts estate or trust from Massachusetts Schedule

than Massachusetts; or

If there are any differences between U.S. and

E. Generally, portfolio interest and dividend income

◗ Part-year residents. Any amounts included in

Massachusetts amounts reported in lines 10, 11,

from partnerships and S corporations should al-

12, 16 and 17, be sure to enter the Massachusetts

lines 1, 2 or 3 which you received while legally

ready be included in the Schedule B, line 1 and line

amount. Possible differences include:

domiciled in another state or country.

2 amounts;

◗ Part-year residents, transactions conducted

◗ Interest from a trade or business that is reported

Do not enter in line 6 either of the following:

while you were legally domiciled in another state

◗ Dividends from the earnings and profits accu-

on Massachusetts Schedule C, line 32; or

or country;

◗ Interest or dividends from a mutual fund, if such

mulated prior to January 1, 1971 by any corporate

◗ Nonresidents, transactions that were not asso-

distributions are not included in line 1 or line 2.

trust which was not taxed directly by Massachu-

ciated with a trade or business in Massachusetts;

See line 6.

setts in prior years, even though such an entity is

◗ Short-term capital gains taxed directly to

taxed directly now (obtain from the entity the tax-

Massachusetts estates and trusts (reportable on a

Lines 5 and 6

able status of dividends paid to you); or

Massachusetts Fiduciary Return, Form 2);

Enter only amounts related to income that you

◗ Dividends from any corporate trust which is not

◗ Upon the sale of stock of an S corporation, the

have already included in lines 1, 2, and 3.

taxed directly by Massachusetts. Such entities in-

federal basis must be modified according to

clude: those not doing business in Massachusetts;

Line 5. Total Interest from

Massachusetts Income Tax Regulation, 830 CMR

regulated investment companies or real estate in-

62.17A.1; and

Massachusetts Banks

vestment trusts (both as defined under the U.S.

◗ Massachusetts has adopted basis adjustment

Enter the total interest included in Form 1-NR/PY,

Internal Revenue Code, Sections 851 and 856); or

rules to take into account differences between

line 7a (prior to the exemption amount being sub-

holding companies (as defined in Massachusetts

Massachusetts and federal tax laws. For more in-

tracted) only if it has been included in lines 1 or 3

General Laws, Chapter 62, section 8).

formation regarding basis adjustment rules, see

of this schedule.

TIR 88-7.

Line 8. Allowable Deductions

Line 6. Other Interest and Dividends

from Your Trade or Business

Line 10. Short-Term Capital Gains

to Be Excluded

Enter the appropriate amount from Massachusetts

Enter the gross short-term capital gains included

Enter the total interest and dividends from the fol-

Schedule C-2 if you qualify for an excess trade or

in U.S. Schedule D, lines 1, 2, 4 and 5, column (f).

lowing sources (enclose an additional statement,

business deduction. Generally, taxpayers may not

if necessary):

use excess 5.3% deductions to offset other income.

Line 11. Long-Term Capital Gains

◗ Interest on U.S. debt obligations. Enter interest

However, where the taxpayer files a Massachusetts

on Collectibles and Pre-1996

received on U.S. Treasury bills, notes and bonds,

Schedule C or Schedule E, Massachusetts law al-

Installment Sales

savings bonds or other obligations of the United

lows such offsets if the following requirements are

Enter the amount of long-term capital gains on

States, including its territories or dependencies.

met: the excess 5.3% deductions must be adjusted

collectibles and pre-1996 installment sales classi-

Such interest is tax-exempt in Massachusetts. For

gross income deductions allowed under MGL Ch.

fied as capital gain income for Massachusetts pur-

further information concerning exempt obligations

62, sec. 2(d); and these excess deductions may

poses, from Massachusetts Schedule D, line 11.

of the United States, see TIR 89-8;

only be used to offset other income which is effec-

tively connected with the active conduct of a trade

Instructions For Form 1-Nr/py - Massachusetts Nonresident Or Part-Year Resident Income Tax - 2006 Page 28

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