Instructions For Schedule U-Msi - Member'S Apportioned Share Of Group Income - 2012 Page 3
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10shown on this Schedule U-MSI must reflect the member’s property and payroll
included in the group denominator, even though some of that property and
payroll may not be within Massachusetts. For the rules that apply when no
member of the combined group is taxable in another state, see 830 CMR
63.32B.2 (7) (k).
Question 2. If the corporation has special status for apportionment, check the
appropriate box.
Check no more than one box. If no box is applicable, leave blank.
A corporation is a “section 38 manufacturer” for any taxable year if it is engaged
in manufacturing and its manufacturing activities during such taxable year are
substantial. See M.G.L. Ch. 63 sec. 38. This rule applies regardless of whether
the corporation, based solely on its activities within Massachusetts, is also
classified as a manufacturing corporation under M.G.L. Ch. 63 sec. 42B. A
section 38 manufacturer is to use 100% of its sales factor as its apportionment
percentage.
A corporation’s manufacturing activity is substantial if the corporation meets any
of the following tests, regardless of whether any of the manufacturing activity
occurs within Massachusetts:
• The corporation derives 25% or more of its receipts for the taxable year from
the sale of manufactured goods that the corporation manufactures; or
• The corporation pays 25% or more of its payroll for the taxable year to
employees working in manufacturing operations and derives 15% or more of
its receipts for the taxable year from the sale of manufactured goods that the
corporation manufactures; or
• The corporation uses 25% or more of its tangible property in manufacturing
during the taxable year and derives 15% or more of its receipts for the
taxable year from the sale of manufactured goods that the corporation
manufactures; or
• The corporation uses 35% or more of its tangible property in manufacturing
during the taxable year.
In some cases, a member of a combined group purchasing goods manufactured
by another member of the group may be considered to be a section 38
manufacturer for the purpose of determining its Massachusetts apportioned
share of the combined group’s taxable income based upon the manufacturing
activity of such other member. See 830 CMR 63.32B.2 (7) (g) (2).
A corporation is a “mutual fund service corporation” if it derives 50% or more of
its gross income from providing, directly or indirectly, management, distribution or
administrative services to or on behalf of a regulated investment company, and
from trustees, sponsors and participants of employee benefit plans that have
accounts in a regulated investment company. A mutual fund service corporation
must divide its Massachusetts property, payroll and sales between those
attributes as related to its mutual fund sales activities, on the one hand, and all
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