Instructions For Form 3 - Massachusetts Partnership Return

Refundable Dairy Credit

Each partner should include the line 8 total in Forms 1 or 1-NR/PY,

Schedule B, line 6; or Form 2, Schedule B.

The Massachusetts dairy farmer tax credit was established to offset

the cyclical downturns in milk prices paid to dairy farmers and is

Line 9. 5.25% Interest from Massachusetts Banks

based on the U.S. Federal Milk Marketing Order for the applicable

Enter the partner’s share of the partnership’s 5.25% interest from

market. A taxpayer who holds a certificate of registration as a dairy

Massachusetts banks from Form 3, line 29. For a nonresident part-

farmer pursuant to G.L. c. 94, s. 16A is allowed a refundable tax

ner eligible to apportion, enter the partner’s share of the partner-

credit based on the amount of milk produced and sold. The dairy

ship’s 5.25% interest from Massachusetts banks multiplied by the

farmer tax credit as originally enacted was 90% refundable. Under re-

apportionment percentage in Form 3, Income Apportionment Sched-

cent legislation, the dairy farmer tax credit is now 100% refundable.

ule, line 46.

Enter the amount of refundable dairy credit from the Department of

Each partner should include the line 9 total in Form 1, line 5; Form

Agricultural Resources’ Dairy Farmer Certified Tax Credit Statement.

1-NR/PY, line 7; or Form 2.

Refundable Conservation Land Tax Credit

Each nonresident partner whose income is apportioned should re-

Effective for tax years beginning on or after January 1, 2011, a

ceive from the partnership the amount of the partner’s pre-appor-

credit is allowed for qualified donations of certified land to a public

tionment share of 5.25% interest from Massachusetts banks. Each

or private conservation agency. The credit is equal to 50% of the fair

nonresident individual whose income is apportioned should include

market value of the qualified donation. The amount of the credit that

this amount in Form 1-NR/PY, Schedule B, line 5. This amount

may be claimed by a taxpayer for each qualified donation cannot

should be used instead of any amount from Form 1-NR/PY, line 7

exceed $50,000. The credit is refundable but not transferable. The

because the partner’s full distributive share of such income is in-

certification process is conducted by the Executive Office of Energy

cluded in the U.S. amount reported in Schedule B, line 1. Each non-

and Environmental Affairs (EEA). EEA has promulgated a regulation,

resident trust or estate whose income is apportioned should include

301 CMR 14.00, entitled Conservation Land Tax Credit, which sets

its pre-apportionment share of 5.25% interest from Massachusetts

forth criteria for authorizing and certifying the credit. See also, 830

banks in Form 2, Schedule B, line 6, instead of any amount from

CMR 62.6.4, entitled Conservation Land Tax Credit, promulgated by

Form 2, line 16.

DOR to explain the calculation of the allowable credit.

Line 10. Interest and Dividend Income

Credit Recapture

Enter the partner’s share of the partnership’s interest (other than in-

If the partnership is required to recapture any Economic Opportunity

terest from Massachusetts banks) and dividend income from Form 3,

Area Credit, Brownfields Credit, Low-Income Housing Credit or His-

line 30. For a nonresident partner eligible to apportion, enter the part-

toric Rehabilitation Credit, enter the partner’s share of any recapture

ner’s distributive share of the partnership’s interest (other than inter-

as computed on Schedule H-2. This amount should then be used by

est from Massachusetts banks) and dividend income multiplied by the

each partner to complete their return.

apportionment percentage in Form 3, Income Apportionment Sched-

ule, line 46.

Line 6. Net Income or Loss from Rental

Real Estate Activity(ies)

The correct Massachusetts amount of the partner’s share of interest

Enter the partner’s share of the partnership’s net rental income or

(other than interest from Massachusetts banks) and dividend income

loss from real estate activity(ies) from Form 3, line 23.

may differ from the comparable U.S. total reported on the partner’s

Forms 1, 1-NR/PY or 2, Schedule B, lines 1 and 2. Each partner

The correct Massachusetts amount of the partner’s share of net in-

should make adjustments in Form 1 and 1-NR/PY, Schedule B, line 6;

come or loss from rental real estate activity(ies) may differ from the

or Form 2, Schedule B, line 7 to reflect the correct Massachusetts

comparable U.S. total reported on the partner’s Forms 1 or 1-NR/PY,

amount. Each partner should attach a statement with the partner’s

Schedule E-2, line 11; or Form 2. Each partner should make adjust-

Massachusetts tax return and explain.

ments in Forms 1 or 1-NR/PY, Schedule E, line 55; or Form 2, to re-

flect the correct Massachusetts amount. Each partner should attach a

Line 11. Non-Massachusetts State and Municipal

statement with the partner’s Massachusetts tax return and explain.

Bond Interest

Enter the partner’s share of the partnership’s non-Massachusetts

Line 7. Net Income or Loss from Other Rental

state and municipal bond interest. For a nonresident partner eligible

Activity(ies)

to apportion, enter the partner’s distributive share of the partnership’s

Enter the partner’s share of the partnership’s net rental income or

non-Massachusetts state and municipal bond interest multiplied by

loss from other activity(ies) from Form 3, line 26.

the apportionment percentage in Form 3, Income Apportionment

The correct Massachusetts amount of the partner’s share of net

Schedule, line 46. This income is not taxed by the federal government,

rental income or loss from other activity(ies) may differ from the com-

but is taxable in Massachusetts.

parable U.S. total reported on the partner’s Forms 1 or 1-NR/PY,

Each partner should include the line 11 total in Forms 1, 1-NR/PY,

Schedule E-2, line 11; or Form 2. Each partner should make adjust-

or 2, Schedule B, line 3.

ments in Forms 1 or 1-NR/PY, Schedule E, line 56; or Form 2, to re-

flect the correct Massachusetts amount. Each partner should attach a

Line 12. Royalty Income

statement with the partner’s Massachusetts tax return and explain.

Enter the partner’s share of the partnership’s royalty income.

Line 8. Interest on U.S. Debt Obligations

For a nonresident partner eligible to apportion, enter the partner’s dis-

Enter the partner’s share of the partnership’s interest on U.S. debt

tributive share of the partnership’s royalty income multiplied by the

obligations from Form 3, line 28. For a nonresident partner eligible

apportionment percentage in Form 3, Income Apportionment Sched-

to apportion, enter the partner’s share without apportionment. This

ule, line 46.

income is taxable by the federal government, but tax-exempt in

Massachusetts.

Instructions For Form 3 - Massachusetts Partnership Return - 2012 Page 10

Related Articles

Related forms

Related Categories