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2006 Form 1-NR/PY Instructions — Schedule Instructions

◗ If in line 9 you entered amounts which increase

of Section 1231 property, recapture amounts under

Line 14. Subtotal

Sections 1245, 1250 and 1255, Section 1244 losses

the amounts reported from U.S. to Massachu-

If line 12 is greater than “0,” subtract line 13 from

and the loss on the sale, exchange or involuntary

setts, for example, a long-term gain reported as

line 12. If line 12 is less than “0,” combine lines 12

conversion of property used in a trade or business.

installment sales for U.S. tax purposes but not for

and 13.

Massachusetts, add the amount in line 9 to the

If Schedule D, line 14 is a loss and Schedule B,

Line 7. Carryover Losses from

amount in line 8.

line 24 is “0” or greater and Schedule B, line 31 is

Previous Years

a positive amount, go to Schedule D, line 15.

Line 11. Long-Term Gains on

If you have a carryover loss from a prior year, enter

Collectibles and Pre-1996

If Schedule D, line 14 is a loss, and Schedule B,

in line 7 the total amount of carryover losses from

line 21 is “0” or less, omit Schedule D, line 15,

Installment Sales

your 2004 Schedule D, line 22.

enter the amount from Schedule D, line 14 in

Enter in line 11 the amount of long-term gains on

Line 9. Differences

Schedule D, line 16, omit Schedule D, lines 17

collectibles and pre-1996 installment sales classi-

through 21 and enter the amount from Schedule

Nonresidents. Enter in line 9 any long-term capi-

fied as capital gain income for Massachusetts pur-

D, line 16 in Schedule D, line 22, and enter “0” on

tal gains and losses included on Schedule D, lines

poses that are included in line 10.

Form 1-NR/PY, line 28.

1 through 7 which are not Massachusetts source

Long-term gains on collectibles and pre-1996 in-

income and thus not taxable to you as a nonresi-

stallment sales classified as capital gain income

Line 15. Long-Term Capital Losses

dent. A nonresident’s capital gains and losses are

for Massachusetts purposes are taxed at the 12%

Applied Against Interest and

subject to tax if the gain or loss resulted from the

rate and should be entered on Schedule B, line 11.

sale or exchange of property connected with a

Dividends

Massachusetts trade or business or from the

Collectibles are defined as any capital asset that is

If Schedule D, line 14 is a loss, and Schedule B,

ownership of real or tangible personal property

a collectible within the meaning of Internal Rev-

line 24 is “0” or greater and Schedule B, line 31 is

located in Massachusetts.

enue Code section 408(m), as amended and in

a positive amount, complete the Long-Term Capi-

effect for the taxable year, including works of art,

tal Losses Applied Against Interest and Dividends

Part-year residents. Enter in line 9 any long-term

rugs, antiques, metals, gems, stamps, alcoholic

Worksheet for Schedule B, Line 32 and Schedule

capital gains or losses included on Schedule D,

beverages, certain coins, and any other items

D, Line 15.

lines 1 through 7 that occurred while you were

treated as collectibles for federal tax purposes.

legally domiciled in another state or country during

Line 16. Subtotal

the taxable year.

Line 12. Subtotal

Combine line 14 and line 15. If Schedule D, line

Nonresidents and part-year residents. Enter here

Subtract line 11 from line 10 and enter the result

16 is “0,” enter “0” in lines 17 through 20 and

any other differences between the gains or losses

in line 12.

omit lines 21 and 22. If Schedule D, line 16 is a

reportable for Massachusetts tax purposes and

loss, omit lines 17 through 21 and enter the

If Schedule D, line 12 is a loss and Schedule B,

the gains or losses reported on U.S. Schedule D.

amount from line 16 in line 22.

line 21 is less than “0,” omit Schedule D, lines 13

For example:

through 15, enter the amount from Schedule D,

◗ Pre-1996 installment sales classified as ordi-

Line 17. Allowable Deductions

line 12 in Schedule D, line 16, omit Schedule D,

nary income for Massachusetts purposes;

From Your Trade or Business

lines 17 through 21 and enter the amount from

◗ Massachusetts long-term capital gains or

Enter the appropriate amount from Massachusetts

Schedule D, line 16 in Schedule D, line 22, and

losses from transactions reported as installment

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

enter “0” on Form 1-NR/PY, line 28.

sales for U.S. income tax purposes but not for

business deduction. Generally, taxpayers may not

If Schedule D, line 12 is a gain and Schedule B,

Massachusetts; and

use excess 5.3% deductions to offset other income.

◗ Massachusetts has adopted basis adjustment

line 21 is a loss, go to Schedule D, line 13.

However, where the taxpayer files a Massachusetts

rules to take into account differences between

If Schedule D, line 12 is a loss and Schedule B, line

Schedule C or Schedule E, Massachusetts law al-

Massachusetts and federal tax laws.

24 is “0” or greater, go to Schedule D, line 13.

lows such offsets if the following requirements are

met: the excess 5.3% deductions must be adjusted

If Schedule D, line 12 is a gain, and Schedule B,

Line 10. Adjusted Capital Gains

gross income deductions allowed under MGL Ch.

line 24 is “0” or greater, omit Schedule D, lines 13

and Losses

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

through 15 and enter the amount from Schedule

Exclude/subtract line 9 from line 8 and enter the

only be used to offset other income which is effec-

D, line 12 in Schedule D, line 16.

result in line 10.

tively connected with the active conduct of a trade

◗ If line 9 is a loss, add loss as a positive number

Line 13. Capital Losses Applied

or business or any other income allowed under

to the amount recorded in line 8. See the follow-

Against Capital Gains

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

ing examples:

sive activities.

If Schedule D, line 12 is a positive amount and

Schedule B, line 21 is a loss, enter the smaller of

Schedule D

Line 19. Excess Exemptions

Schedule D, line 12 or Schedule B, line 21 (con-

Line

ex. A

ex. B

ex. C

ex. D

Enter in line 19 the amount from line 14 of the Ex-

sidered as a positive amount) in Schedule D, line

$1,000 $1,000 *$0,700**$700*

cess Exemption and Excess Home Heating Fuel

13 and in Schedule B, line 22.

$1,500 *$1,300* $0,500 *$500*

Deduction Worksheet.

$1,500 $1,300 *$1,200**$200*

If Schedule D, line 12 is a loss and Schedule B,

*denotes loss

line 24 is a positive amount, enter the smaller of

Line 21. Tax On Long-Term Capital

Schedule D, line 12 (considered as a positive

Gains

amount) or Schedule B, line 24 in Schedule D,

Multiply line 20 by .053 (5.3%) and enter the re-

line 13 and in Schedule B, line 25.

sult here and in Form 1-NR/PY, line 28.

Instructions For Form 1-Nr/py - Massachusetts Nonresident Or Part-Year Resident Income Tax - 2006 Page 31

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