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63.38.1(11). If the amount on line 31 (the combined group’s capital gain or loss to be apportioned) is

greater than or equal to zero, enter “0”.

If the amount on line 31 is a loss and the amount on line 32 (the combined group s. 1231 gain or loss) is

also a loss (or zero), enter, as a positive adjustment, the amount of the loss on line 31.

If line 31 is a loss and line 32 is a gain, combine those amounts; if the total is greater than zero, enter “0”

on line 34, otherwise, enter a positive adjustment, equal to the excess of the loss on line 31 over the gain

on line 32.

Line 35. Combine the amounts on line 30 and line 34.

Line 36. Enter 10% of 1/3 of the amount on line 35.

Part 2: Apportionment Denominators

The denominators to be used to apportion the income of the combined group are determined by adding

the separately determined denominators for all members of the combined group but disregarding inter-

company transactions that relate to the unitary business (or, in the case of an affiliated group election, all

inter-company transactions). Each member, including any non-taxable member, is to determine its

denominators under the terms of the statutory apportionment provisions that apply to that member under

M.G.L. c. 63, except that if the combined group includes one or more financial institutions, each member

of the group is to include in its receipts for sales factor purposes interest and other receipts as described in

M.G.L. c. 63, § 2A(d)(i) through (d)(xi) in both the numerator and the denominator of its apportionment

calculation.

If the combined group has not made an affiliated group election, only property, payroll and receipts of

each member that relate to the unitary business generating the income to be apportioned are to be used to

apportion the combined group’s taxable income. If one or more members of the group have property,

payroll and sales that are not used in, or are not part of, the unitary business, that property, payroll and

sales must be excluded from both the numerator and the denominator of the apportionment calculations

used to apportion the combined group’s taxable income.

If the combined group includes one or members which are not U.S. corporations and a worldwide election

has not been made, the denominator of each factor must include only the property, payroll and receipts of

such non-U.S. corporations that relate to the income they include in the combined report. See 830 CMR

63.32B.2 (7) (f). See also 830 CMR 63.32B.2 (5) (b) 3, as it pertains to non-U.S. corporations that are

included in the combined group only with respect to certain inter-affiliate income.

A group of corporations engaged in more than one unitary business that is not subject to an affiliated

group election must divide the collective income of the different businesses and file separate Schedules

U-E for each unitary business.

In such cases, the group of corporations that is engaged in more than one unitary business must divide the

group’s property, payroll and sales between the different unitary businesses to which they relate. For the

rules that govern the apportionment of income in the context of a combined group, see 830 CMR

63.32B.2 (7).

Line 37. All combined group members that are financial institutions within the meaning of M.G.L. c. 63,

§ 1, whether or not taxable on their income in Massachusetts, must determine the average value of their

loans and combine the totals. Loans from one member of the unitary group to another (or as between

combined group members in the case where the group is subject to an affiliated group election) are

eliminated from the calculation. Loans and other financial institution property owned by members that are

not financial institutions are not included in this calculation.

Line 38. All members that are financial institutions taxable within the meaning of M.G.L. c. 63, § 1 must

determine the average value of their credit card receivables or other financial institution property and

Instructions For Schedule U-E - Massachusetts Unitary Or Affiliated Group Income - 2012 Page 5

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