Instructions For Schedule U-M - Member'S Income And Expenses

Further, the non-U.S. corporation must also report in column (c) any additional gross income of the non-

U.S. corporation that is not effectively connected income and any additional income of the member

(that is, assuming that the income to be reported in column (c) is from the combined group’s unitary

business). The corporation must also report in column (c) any deductions from such additional income.

Columns (b), (d) and (e) may also apply to the non-U.S. corporation that is included in a worldwide

combined group. The non-U.S. corporation that is included in such group and which has income from

sources other than the combined group’s unitary business must follow the same procedures to exclude

such income as would a U.S. corporation (see above discussion of columns (d) and (e)). Only amounts

included in the member’s income as reported in columns (a), (b) or (c) may be excluded in columns (d)

and (e).

Instructions for the Eliminations Schedule (a separately filed “group” Schedule U-M)

Enter the name and other identifying information of the principal reporting corporation in the first line

of the header section, then check the box indicating that this is an eliminations schedule (i.e., check the

last of the six boxes referenced at the top of Schedule U-M). In completing line 2 of the header, check

the tax type that corresponds to the tax type of the principal reporting corporation and respond “No” to

the remaining questions.

Unless otherwise provided for under Massachusetts law, income from inter-company transactions

between members of the same combined group that relates to the unitary business of the group (or,

where the combined group is subject to an affiliated group election, without regard to any unitary

determination) is generally deferred in a manner similar to that in U.S. Treas. Reg. § 1.1502-13 (see 830

CMR 63.32B.2 (6) (c) 9).

Dividends paid by one group member to another combined group member are subject to elimination if

they are paid out of earnings and profits of the unitary business, included in the combined report from

the current or earlier year. Where the member paying such a dividend is a REIT or a RIC, the payer must

reduce its dividends paid deduction as described in the instructions for column c above. See CMR

63.32B2.(6)(c )4 and DD 10-5.

To the extent that such transactions are reflected in the income or expenses referenced on the

Schedules U-M filed by the various group members, enter a single set of Schedule U-M totals reflecting

eliminations and any other adjustments required by the combined group filing. When the tax items at

issue are recognized in a later tax year, those items will be accounted for at such time, most likely on

Schedule U-M (in column (a) if the item is recognized at the same time for Massachusetts and federal

tax purposes or in column (c) if the deferral terminates for Massachusetts purposes at a different time

than it terminates federally).

Instructions For Schedule U-M - Member'S Income And Expenses - 2012 Page 9