Combined Reporting Instructions (Page 2 of 5) in pdf

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Income from a portion of the member’s tax year in which the member’s activities (unlike

its activities from the remainder of such year), were not a part of the combined group’s

unitary business.

A taxable member of a combined group that has income taxable in Massachusetts from a

source other than the unitary business may be required to file multiples of Schedule U-MTI if

different apportionment percentages apply to the member’s different streams of income.

Because allocable investment income is not subject to apportionment, a taxable member that

is domiciled in Massachusetts should file a single Schedule U-MTI to report all of its

allocable investment income. Where a taxable member of a combined group is required to

file Schedule U-MTI, the member’s separate income, and the deductions that relate to that

income which are required to be reported on Schedule U-MTI, must be excluded from the

combined group’s income calculation. The totals, by line item, of the amounts reported on

Schedule U-MTI must match the amounts referenced in column e of Schedule U-M, as filed

by the taxable member.

Members with a Different Fiscal Year from That of the Combined Group

The taxable members of a combined group must determine their apportioned share of the

combined group’s taxable income based on a common tax year, i.e., the combined group’s

taxable year, and pay the tax on this apportioned income with the combined report as filed by

the group. If the tax year of a taxable member does not end on the same date as the combined

group’s taxable year and the combined group is not subject to an affiliated group election, the

member must report and pay the tax due on its income from sources other than the combined

group’s unitary business after the close of the member’s separate tax year. Such a taxpayer

does not file Schedule U-MTI but rather must report its separate income on the appropriate

schedule of whichever return (i.e., Form 355 or 355S) it is required to file at the end of its

separate tax year.

As noted, in some cases a member of a combined group may have income or loss that derives

from sources other than the group’s unitary business and therefore may be required to report

that income using its own tax year and not that of the combined group. In such cases, if the

member is a business corporation within the meaning of Ch. 63, it may apply a net operating

loss (NOL) that derived from the operation of the unitary business against its income as

derived from the sources other than the group’s unitary business (or vice versa) by applying

the NOL carry forward derived from the activities of the combined group to its income as

reported on its subsequent, separate tax filing (or alternatively by applying the NOL derived

from its separate activities to its income as reported on its subsequent, combined filing). A

NOL can only be applied to the member’s next such tax filing or filings as stated, as a NOL

can only be carried forward and cannot be carried back.

Capital losses cannot be carried forward or back and therefore cannot be applied as between

the different taxable years pursuant to which an individual taxable member of a combined

group may be reporting its unitary business income and its other, non-unitary business

income. The deduction of a NOL carry forward must in all cases be consistent with the

requirements and limitations that apply to such carry forwards, including the rule that in no

Combined Reporting Instructions Page 2