Instructions For Form 1 - Massachusetts Resident Income Tax - 2013 Page 39
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2013 Form 1 — Schedule Instructions
Line 23. Available Losses for
Accounting Method
certain agent or commission drivers and traveling
salespersons and certain homeworkers. If you had
Carryover
If you filed a return on the accrual basis last year,
both self-employment income and statutory em-
your return for this year must be on the same basis.
Enter the amount from Schedule D, line 17, only if
ployee income, do not combine these amounts
If a taxpayer requesting permission to change an
it is a loss.
on a single Sched ule C. In this case, you must file
accounting method for Massachusetts purposes is
separate Schedule Cs.
eligible for an automatic change of accounting
Schedule C
method federally, and has correctly followed the
Line 4. Other Income
most recently issued federal revenue procedure for
Note: If showing a loss, be sure to mark over the
If you received bartering income, you must report
requesting an automatic change, then the taxpayer
“X” in the box to the left. Also, be sure to enclose
the fair market value of goods or services received
should file his/her annual return using the new
with Form 1.
in payment for your goods and services in line 4. Do
method and write at the top, “Automatic Change
not include interest income (other than from Mass -
Substituting U.S. Schedules C
of Accounting Method — filed in compliance with
achusetts banks) and dividends here (see line 32).
DOR Directive 02-13.” The taxpayer should en-
or C-EZ
close a copy of federal Form 3115, together with
U.S. Schedules C or C-EZ are no longer allowed
Line 7. Bad Debts From Sales or
any required statements. See DOR Directive 02-13
as a substitute for Massachusetts Schedule C.
Services
for further information.
Include debts and partial debts from sales or serv-
Profit or Loss from Business or
Material Participation
ices that were included in income and are definitely
Profession
known to be worthless. If you later collect a debt
Indicate if you materially participated in the oper-
Massachusetts Schedule C is provided to report in -
that you deducted as a bad debt, include it as in-
ation of this business during 2013. If you did not
come and deductions from each business or pro -
come in the year collected.
materially participate and have a loss from this
fession operated as a sole proprietorship.
business, see line 33 for further instructions.
Note: Cash method taxpayers cannot take a bad
If your business deductions, excluding the Aban-
debt deduction unless the amount was previously
Line 1a. Gross Receipts or Sales
doned Building Renovation Deduction, exceed
included in income.
In the boxes provided, enter gross receipts or sales
Schedule C income and any other income taxable
from your business. Be sure to include on this line
at the 5.25% rate, such excess deductions may be
Line 11. Depreciation and
amounts you received in your trade or business
subtracted from the other income that is effec-
Section 179 Deduction
as shown on Form 1099-MISC, Miscellaneous In-
tively connected with the active conduct of your
Massachusetts adopts the current federal rules at
come. If the nature of your business is such that
trade or business and any other income allowed
section 179 for expensing certain depreciable
you have gross or other income that is interest
under IRC Section 469(d)(1)(B) to offset losses
business assets. For property placed in service in
(other than from Massachusetts banks) and divi-
from passive activities. To compute the excess
tax years beginning on or after January 1, 2012,
trade or business deductions use Massachusetts
dend income, exclude this income from lines 1 and
the maximum section 179 expensing allowance
4 on Massachusetts Schedule C and include it in
Schedule C-2. This form is available by visiting
is $500,000.
line 32 and in Schedule B, line 3. Note: If not
, or you may have one mailed
required to file Schedule B (see Schedule B in-
to you by calling (617) 887-MDOR.
Line 17. Pension and Profit-Sharing
structions), enter this income on Form 1, line 20.
Plans
Registration Information
Examples of interest (other than from Massa -
Enter your deduction for contributions to a pen-
In the space provided, describe the business or pro-
chusetts banks) and dividend income are interest
sion, profit-sharing or annuity plan, or plans for the
fessional activity that provided your principal source
received on loans, notes receivable or charge ac-
benefit of your employees. If the plan includes you
of income reported on line 1. If you owned more
counts that you accept in the ordinary course of
as a self-employed person, do not include contri-
than one business, you must complete a separate
business, and dividends on stocks received in
butions made as an employer on your behalf. See
Schedule C for each business. Give the general field
payment for goods and services. Capital gains
DOR Directive 08-3 for more information.
or activity and the type of product or service.
from the sale or exchange of assets used in your
business are not reported on Schedule C. Use U.S.
Line 23. Meals and Entertainment
Employer Identification Number
Form 4797 and report the amount in Form 1,
Line 23a. Enter your total business meal and en-
You need an Employer Identification number (EIN)
Schedule B and/or Schedule D. You must also ex-
tertainment expenses. Include meals while travel-
only if you had a Keogh plan, were required to file
clude from Schedule C any income and expenses
ing away from home for business. Instead of the
an employment, excise, estate, trust, or alcohol, to-
that pertain to activities for yourself as distin-
actual cost of your meals while traveling away from
bacco and firearms tax return or employ contract
guished from those performed for your cus-
home, you may use the standard meal allowance.
labor. If you do not have an EIN, leave the line
tomers. Such income must be reported by class of
Business meal expenses are deductible only if they
blank. Do not enter your Social Security number.
income in Schedules B and D. Personal expenses
are (a) directly related to or associated with the
are not deductible.
conduct of your trade or business, (b) not lavish or
Small Business Energy Exemption
If you received Form W-2 and the “Statutory em-
extravagant and (c) incurred while you or your em -
If you are claiming the small business energy ex-
ployee” box in item 13 of that form was checked,
ployee is present at the meal. Club dues are not
emption from the sales tax on purchases of tax-
report your income and expenses related to that
allowed as a business deduction.
able energy or heating fuel during 2013, you must
income on Schedule C. Enter your statutory em-
have five or fewer employees. You must enter the
Line 23b. Generally, you may deduct only 50% of
ployee income from box 1 of Form W-2 on line 1
number of your employees in the space provided.
your business meal and entertainment expenses,
of Schedule C and fill in the oval. Statutory em-
including meals incurred while traveling away from
ployees include full-time life insurance agents,
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