2015 Schedule Nol Instructions (Page 2 of 2) in pdf

Line 8

Losses may only be shared with group members that were also

group members in the year in which the loss was incurred and

Subtract line 7 from line 6. This may not be less than zero. Corpo-

any deductions must be consistent with the requirements and limi-

rations filing from 355 or 355S enter this amount on Schedule E,

tations as referenced in 830 CMR 63.32B.2(8). NOLs that are not

line 28.

derived from a prior year combined report or which derive from

Line 9

losses incurred in connection with a corporation’s “separate” busi-

ness activities, i.e., business activities that are not accounted for

A corporation that is filing Form U-ST must enter the portion of the

as part of a combined group’s taxable income and reported on a

NOL deducted from its own income. This may not be more than

prior year Schedule U-MTI, may never be shared.

the amount shown on line 5. Corporations which are not filing as

members of a Massachusetts combined group do not complete

Precombination losses – taxpayers filing a

this item.

combined report only

Pre-apportionment losses – corporations

A corporation filing a combined report and deducting a loss in-

that did not file in Massachusetts for 2012

curred in a year in which a combined report was not filed is sub-

ject to the limitation calculated under 830 CMR 63.32B.2(8)(f).

In prior years (before 2009 for corporations which filed a com-

The limitation is based on the amount of income that would be ap-

bined report in that year, before 2010 for all other business corpo-

portioned to the taxpayer in the current year using the apportion-

rations and eligible S corps), eligible corporations generally

ment numerators applicable in the year in which the loss was

carried forward and deducted losses on a pre-apportionment

incurred (with adjustments for states no longer eligible for throw-

basis. To the extent a taxpayer has a NOL being carried forward

back and, optionally, for growth). If the taxpayer has losses from 2

from such a year that was used in part on a pre-apportionment

or more pre-combination years, the prior year numerators are av-

basis, taxpayers must

eraged. This limitation does not apply to losses incurred in a com-

1. Calculate the amount of NOL available to be carried forward

bined reporting year. See DD 10-5 for additional information.

from the year in which the loss was incurred, adjusting for losses

use by other members filing a pre-2009 combined return as pro-

Example

vided in 830 CMR 63.32B.1(10).

Corporation X files Form 355 for calendar year 2013 and has ap-

portioned taxable net income of $12,000 on Schedule E, line 25.

2. Subtract the amount of such loss that was deducted in a pre-

Corporation X had net operating losses in the taxable years end-

apportionment year. If the corporation had income in a pre-appor-

ing 03/31/2009 and 03/31/2010, changed to a December year end

tionment year but did not file a Massachusetts return because it

for subsequent periods and also incurred a NOL in 2012. The cor-

did not have nexus, this step still applies (see 830 CMR

poration used part of its available losses as deductions against its

63.30.2(7) (g) 3).

apportioned net income in 2010 and 2011 and the amounts of

3. Convert any unused amount to a post-apportionment figure. If

those losses remaining available are $15,000 for the year ending

the corporation’s Massachusetts apportionment percentage in the

March 2009, $3,000 for the year ending March 2010 and $7,000

year the loss was incurred was zero, the post apportionment loss

for the year ending December 2012. A loss limitation of $10,000

available will be zero.

applies for the loss incurred in March of 2009.

4. Subtract amounts deducted in subsequent prior years on a post

Line 3

apportionment basis.

Post appor-

Re-

The steps in this calculation are as shown on the 2012 Schedule

Period

tionment

NOL used

maining

E-2 which is available on our website (www. mass. gov/ dor/ forms/

end date

NOL available

or shared

NOL

corporate-excise/). Where a taxpayer did not file a Massachusetts

return for the immediate prior year but claims a loss from an ear-

03/31/2009

15,000

10,000

5,000

lier prior year, this procedure must be followed to determine the

03/31/2010

3,000

2,000

1,000

amount of carryover available for use in the current year. Taxable

12/31/2010

years for which the taxpayer did not file a Massachusetts return

are counted in determining when the NOL expires.

12/31/2011

12/31/2012

7,000

Loss sharing – taxpayers filing a combined

report only

4. Total NOL available

25,000

A corporation which filed a combined report in 2009 or a subse-

5. Total NOL used or shared this year

12,000

quent year may have carried forward a NOL from its apportioned

6. Total NOL not used

13,000

share of the loss of generated by the combined group. In general,

the amount of the loss that potentially can be shared will be calcu-

7. Total NOL expired (if applicable)

5,000

lated in a manner similar to the calculations shown on Schedule

8. Total NOL available for carryover to future years

8,000

U-NOLS lines 3-7 for years after 2009. For corporations in com-

bined groups that file a single Schedule U-E with no income other

than that shown on Schedule U-MSI, this NOL will be the amount

shown on Schedule U-ST as “Member’s total income or loss allo-

cated or apportioned to Massachusetts for the tax year (Schedule

U-ST line 24.

2015 Schedule Nol Instructions Page 2

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