Instructions For Form 1-Nr/py - Massachusetts Nonresident Or Part-Year Resident Income Tax - 2006 Page 33
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2006 Form 1-NR/PY Instructions — Schedule Instructions
Line 7. Massachusetts Taxable
Employer Identification Number
come and expenses that pertain to activities for
yourself as distinguished from those performed for
Income from Estates or Trusts
You need an employer identification number (EIN)
your customers. Such income must be reported
only if you had a Keogh plan or were required to
Not Previously Taxed
by class of income in Schedules B and D. Personal
file an employment, excise, estate, trust, or alcohol,
Subtract line 6 from line 5. Generally, for nonresi-
expenses are not deductible.
tobacco and firearms tax return or employ contract
dents, the only amount entered in line 5 will be the
labor. If you do not have an EIN, leave the line
If you received Form W-2 and the “Statutory em-
income from grantor-type trusts. Other Massachu-
blank. Do not enter your SSN.
ployee” box in item 13 of that form was checked,
setts source income should be taxed at the estate
report your income and expenses related to that
or trust level.
Small Business Energy Exemption
income on Schedule C. Enter your statutory em-
If you are claiming the small business energy ex-
Line 8. 12% Interest and Dividends
ployee income from box 1 of Form W-2 on line 1
emption from the sales tax on purchases of tax-
of Schedule C and fill in the oval. Statutory em-
Enter any 12% interest and dividends if included
able energy or heating fuel during 2006, you must
ployees include full-time life insurance agents,
in line 7 and enter on Massachusetts Schedule B,
have five or fewer employees. You must enter the
certain agent or commission drivers and traveling
line 3.
number of your employees in the space provided.
salespersons and certain homeworkers. If you had
Line 9. Adjustment of 5.3% Income
both self-employment income and statutory em-
Accounting Method
Enter the total of interest from Massachusetts
ployee income, do not combine these amounts
If you filed a return on the accrual basis last year,
banks if included in line 7. This income must be re-
on a single Schedule C. In this case, you must file
your return for this year must be on the same
ported on Form 1-NR/PY, line 7a. Enter the total of
two Schedules C.
basis. If a taxpayer requesting permission to
pension and annuity income if included in line 7.
change an accounting method for Massachusetts
Line 7. Bad Debts From Sales
This income must be reported on Form 1-NR/PY,
purposes is eligible for an automatic change of ac-
or Services
line 6.
counting method federally, and has correctly fol-
Include debts and partial debts from sales or serv-
lowed the most recently issued federal revenue
Line 11. Income or Loss
ices that were included in income and are definitely
procedure for requesting an automatic change,
from Grantor-Type and Non-
known to be worthless. If you later collect a debt
then the taxpayer should file his/her annual return
Massachusetts Estates and Trusts
that you deducted as a bad debt, include it as in-
using the new method and write at the top, “Auto-
come in the year collected.
Subtract line 10 from line 7. Remember to subtract
matic Change of Accounting Method — Filed in
losses when calculating the total. Line 11 should
Note: Cash method taxpayers cannot take a bad
compliance with DOR Directive 02-13.” The tax-
be added to any amount(s) in Schedule E, Part I,
debt deduction unless the amount was previously
payer should enclose a copy of federal Form
line 5 and/or Part II, line 8 and the total entered on
included in income.
3115, together with any required statements. See
Form 1-NR/PY, line 9.
DOR Directive 02-13 for further information.
Line 11. Depreciation and
Schedule C
Material Participation
Section 179 Deduction
Massachusetts adopts the current federal rules at
Indicate if you materially participated in the opera-
Note: If showing a loss, be sure to mark over the
section 179 for expensing certain depreciable
tion of this business during 2006. If you did not
“X” in the box to the left.
business assets. For property placed in service in
materially participate and have a loss from this
tax years beginning on or after January 1, 2006
business, see line 33 for further instructions.
Substituting U.S. Schedules C
the maximum section 179 expensing allowance
Line 1a. Gross Receipts or Sales
or C-EZ
is $108,000.
In the boxes provided, enter gross receipts or sales
If you are substituting U.S. Schedule C or Schedule
Line 17. Pension and Profit-Sharing
from your business. Be sure to include on this line
C-EZ for Massachusetts Schedule C and there are
Plans
amounts you received in your trade or business
no differences between the amounts reported on
as shown on Form 1099-MISC, Miscellaneous In-
U.S. Schedule C or Schedule C-EZ and amounts
Enter your deduction for contributions to a pen-
come. If the nature of your business is such that
that would be reported on Massachusetts Sched-
sion, profit-sharing or annuity plan, or plans for the
you have gross or other income that interest (other
ule C, write “No Massachusetts Differences” on
benefit of your employees. If the plan includes you
than from Massachusetts banks) and dividend,
the top of U.S. Schedule C or Schedule C-EZ.
as a self-employed person, do not include contri-
exclude this income from lines 1 and 4 on Mass-
butions made as an employer on your behalf.
Profit or Loss from Business
achusetts Schedule C and include it in line 32 and
Line 22. Travel
or Profession
in Schedule B, line 3. Examples of interest (other
than from Massachusetts banks) and dividend in-
Enter your expenses for lodging and transporta-
Massachusetts Schedule C is provided to report in-
come are interest received on loans, notes receiv-
tion connected with overnight travel for business
come and deductions from each business or pro-
able or charge accounts that you accept in the
while away from your tax home. Generally, your
fession operated as a sole proprietorship.
ordinary course of business, and dividends on
tax home is your main place of business regard-
Registration Information
stocks received in payment for goods and services.
less of where you maintain your family home. You
In the space provided, describe the business or pro-
Capital gains from the sale or exchange of assets
cannot deduct expenses paid or incurred in con-
fessional activity that provided your principal source
used in your business are not reported on Sched-
nection with employment away from home if that
of income reported on line 1. If you owned more
ule C. Use U.S. Form 4797 and report the amount
period of employment exceeds one year. Spouse’s
in Form 1-NR/PY, Schedule B and/or Schedule D.
than one business, you must complete a separate
and other family members’ travel expenses are
You must also exclude from Schedule C any in-
Schedule C for each business. Give the general field
generally disallowed as a business deduction.
or activity and the type of product or service.
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