Schedule H-2 Worksheet Instructions
ADVERTISEMENT
1Schedule H-2 Worksheet Instructions
Note: Corporate taxpayers should not complete the Schedule H-2
Column a. Year 1 was the tax year the recapture property was
worksheet. Instead, they must complete the new Credit Recapture
placed in service. For lines 1 through 4 in col. a, enter the be ginning
Schedule to calculate the recapture amount.
balances for each respective credit category. Enter in line 5, col. a
the total credits from property placed in service in year 1, including
To calculate the recapture tax, the taxpayer must complete and file
credits from the recapture property.
Sched ule H-2, Credit Re capture. Under Massachusetts law, an offset
of the recapture tax is allowed for credits that have lapsed or are cur -
Column b. To complete col. b, the taxpayer must know how many
rently in carry over balances. The Recapture Offset Work sheet sub-
credits were allowed for use in that year. Starting with the Economic
stantiates that any offset taken against the recapture tax is a result of
Opportunity Area Credits and working downward through col. a,
credits which directly relate to the recapture property.
transfer credits available for use into col. b until the total col. b credits
equal the amount of credits allowable for use in that year or all avail-
The Recapture Offset Worksheet’s sole function is to calculate what
able credits are used, whichever occurs first.
portion, if any, of the recapture property’s original Investment Tax
Credit has never been used to offset the tax in any tax year. The
Columns c and d.
worksheet provides a method of “track ing” exactly how many credits
Working downward from col. c, transfer unused credits to col. d.
which relate to the recapture property have been used, lapsed or are
Convert the unused credits to unlimited status until all un used credits
currently in carryover balances. In ad dition, if an offset of the recap-
are transferred or the total col. d credits equal the amount of the cred-
ture tax is due to unused credits in current carryover balances, the
its eligible for conversion to unlimited carryover status, whichever
carryover balances must be reduced by that offset amount in order
occurs first.
to prevent future use of these credits.
Column e. Subtract col. d from col. c and enter the result in col. e,
To complete the Schedule H-2 Recapture Offset Worksheet, follow
except for shaded areas.
the instructions below.
If the reduction of the tentative recapture tax is due to unused credits
Recapture Calculation. Use the Recapture Calculation to calculate
in current carryover balances, the carryover balances must be re -
how much of the recapture property’s original credit was actually used
duced by the “reduction amount.” Taxpayers will not be allowed to
during the first four tax years of its qualified use. Starting with the tax
use credit carryovers to reduce the recapture tax and to offset tax in
year the recapture property was placed in service, Part 1 tracks the
future years.
credits related to the recapture property through the first four years.
The detailed tracking of credits in Part 1 is necessary to determine
what portions of three-year carryovers have been used, converted to
unlimited status or have lapsed.
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial