Form 355s - Massachusetts S Corporation Excise Return

Line by Line Instructions

tion of securities. Any receipts resulting in allocable

assigned to the state to the extent that the prop-

last day of the taxable year and depreciable under

income must be excluded. For further information,

erty is used in the state.

Section 167 of the IRC with a useful life of four

see Regulation 830 CMR 63.38.1 sec. (9)(a).

years or more. A corporation may not claim the

If using a three-factor apportionment formula, and

credit for property it leases to others as a lessor.

Also, in the case of the sale, exchange or other dis-

one or more factors are inapplicable the following

position of a capital asset used in the taxpayer’s

shall apply:

Line 4

trade or business, enter the gain from the transac-

◗ In cases where only two of the three apportion-

If any of the property included in lines 2a through

tion and not the gross receipts. For further informa-

2h is eligible for a U.S. Tax Credit, the total amount

ment factors (property, payroll, sales) are applica-

tion, see Regulation 830 CMR 63.38.1 sec. (9)(b).

of the U.S. credit taken with respect to the qualify-

ble, the taxable net income is apportioned by a

ing property must be entered here and applied as

fraction, the numerator of which is the remaining

Line 3a

a reduction to the basis in calculating the Mass-

two factors with their respective weights and the

Sales of tangible personal property are assignable

achusetts credit.

denominator of which is the number of times that

to Massachusetts if the property is delivered or

such factors are used in the numerator.

shipped to any buyer, including the U.S. govern-

Line 6

◗ In cases where only one of the three apportion-

ment, in Massachusetts.

Enter the tentative tax credit. This is 3% of the cost

ment factors (property, payroll, sales) is applica-

after any basis reduction.

Line 3b

ble, the taxable net income is apportioned solely

Sales of tangible personal property are assignable

Line 7

by that factor with its respective weight, and the

to Massachusetts if the selling corporation is not

If qualifying property is placed in service and dis-

denominator is the number of times the factor is

taxable in the state of the buyer and the property is

posed of or otherwise ceases to be in qualified

used in the numerator.

not sold by an agent or agencies chiefly situated

service before the end of the same tax year, the

Note: An apportionment factor should not neces-

at, connected with, or sent out from premises for

amount of credits available is reduced. Multiply the

sarily be considered inapplicable if its Massachu-

the transaction of business owned or rented by the

credit otherwise available (cost as reduced by U.S.

setts total (lines 1c, 2a or 3f) is zero.

corporation outside Massachusetts. A buyer for

tax credits times 3%) by a fraction, the numerator

this item includes the U.S. government.

of which is the number of months remaining in

If you are claiming an exception on Schedule ABI or

the useful life of the asset when it is disposed of

ABIE, do the following to see if a factor applies.

Sales of tangible personal property are not assign-

or otherwise ceases to qualify and denominator of

Complete Schedule E through line 19 without refer-

able to Massachusetts if:

which is the total number of months in the assets’

ence to the add back exception but less the amount

◗ the property is shipped or delivered to a buyer

useful life. For example, an item that is depreciated

of deductible and intangible expense stated in line

in a foreign country; or

over a seven-year period for U.S. tax purposes has

1 of the respective Schedule ABI or ABIE.

◗ the property is sold to any branch or instrumen-

a useful life of 84 months.

If any of the apportionment totals for “Worldwide”

tality of the U.S. government for resale to a foreign

(lines 1c, 2a or 3f) are less than 3.33% of Sched-

Line 8

government.

ule E, line 19, do not include that factor in your

Subtract the amount of the credit reduction in line

Line 3c

Massachusetts apportionment percentage.

7 from the tentative credit in line 6.

Sales of services, other than mutual fund sales or

Part 2. Recapture of Unused Credit

other intangibles, are assigned to Massachusetts

Schedule H

if the income producing activity is performed in

If property is disposed of or ceases to be in qual-

Massachusetts, or if a greater portion of the activ-

ified use prior to the end of its useful life, the

Investment Tax Credit and

ity, based on performance cost, occurs in Mass-

difference between the credit taken and the credit

Carryovers

achusetts than in any other state.

allowed for actual use must be added back in the

Part 1. Calculation of Current-Year

excise calculation in the year the property is dis-

Mutual fund sales are assigned to Massachusetts

posed of. Recapture tax is not due if the credit

Investment Tax Credit Generated

as follows:

with respect to the property disposed of were

Lines 1a through 1d

◗ mutual fund sales are determined separately for

never used to offset excise, whether or not the

Only R&D corporations should complete these

each RIC from which the mutual fund service cor-

credits are still available for use. Recapture does

lines. All others leave blank. R&D corporations

poration receives fees for mutual fund services;

not apply if the property has been in qualified use

are eligible for the credit only if two thirds of their

◗ the mutual fund sales for each RIC are multi-

for more than 12 years.

Massachusetts receipts are derived from the pro-

plied by a fraction, the numerator of which is the

For each item disposed of or otherwise ceasing to

vision of research and development services or

average number of shares owned by the RIC’s

qualify prior to the end of its useful life, calculate the

from royalties or fees from licensing patents,

shareholders domiciled in Massachusetts at the

reduction in the amount of the original credit. This

know-how or other technology developed from re-

beginning and end of the RIC’s taxable year that

is the credit originally allowed times a fraction,

search and development. See Regulation 830

ends within the mutual fund service corporation’s

the numerator of which is the number of months

CMR 64H.6.4 for further information.

taxable year, and the denominator of which is the

remaining in the useful life of the asset when it is

average number of shares owned by all of the

Lines 2a through 2h

disposed of and the denominator of which is the

RIC’s shareholders for the same period; and

Enter the total cost basis of all qualified deprecia-

number of months in the asset’s useful life, as de-

ble property placed in service during the tax year

◗ the resulting amounts are totaled for all RICs.

termined for U.S. tax depreciation purposes.

by Schedule A category. Qualifying property must

Next determine whether or not the credits allowed

Line 3d

be tangible property, including buildings but ex-

but not earned have been used to reduce excise.

Rents from property located or used in Mass-

cluding motor vehicles and other property taxable

The potential recapture tax for each asset is then

achusetts are assigned to Massachusetts. Royal-

under Ch. 60A, used by the corporation in Mass-

offset, on a dollar for dollar basis, by credits of the

ties derived from the use of intangible property are

achusetts, situated in the Commonwealth on the

Form 355s - Massachusetts S Corporation Excise Return - 2012 Page 14

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