Form 355s - Massachusetts S Corporation Excise Return

Line by Line Instructions

S corporations that have indicated on the SK-1

down of long-term capital gains and losses by the

This credit is available only to resident sharehold-

that they are reporting transactions under M.G.L.

applicable holding period.

ers and may be taken by using Form 1, Schedule Z,

ch. 62C, 32A, identified as IRC section 453A or

or Form 1NR/PY, Schedule Z or if applicable, on

Line 1

453(l)(2)(B) transactions, must separately com-

Form 2. Where the credit is available, the S corpo-

Enter the amount of the shareholder’s share of the

municate information to the partner/shareholder

ration must also provide each resident shareholder

S corporation’s Massachusetts ordinary income or

that will enable the shareholder to calculate the

with separately stated totals of 5.25% interest

loss from Schedule S, line 25. For a nonresident

addition to tax.

(other than from Massachusetts banks), dividends

eligible to apportion, enter the amount of the

and certain capital gains taxed at 12% income and

For 453A transactions, the shareholder must in-

shareholder’s share of the S corporation’s Mass-

long-term capital gain taxed by other jurisdictions

form the shareholder of the shareholder’s share

achusetts ordinary income or loss multiplied by the

to enable each shareholder to calculate the amount

of the aggregate face amount of installment sales

apportionment percentage in Schedule F, line 5.

of the credit. The S corporation should provide

transactions arising in and outstanding as of the

each shareholder with the names of each applica-

close of the taxable year, and any other informa-

Line 2

ble jurisdiction and the amount taxed.

tion the shareholder may need to calculate the ad-

Report and describe in line 2 any other expense

dition to tax. The $150,000/$5 million thresholds

Enter the shareholder’s proportionate share of the

that is deductible from income taxed at 5.25% and

apply at the level of the individual shareholder.

Lead Paint Credit, Economic Opportunity Area

properly reportable on Massachusetts Form 1 or

Credit, Full Employment Credit, Brownfields Credit,

The S corporation must therefore communicate

1-NR/PY, Schedule E, Part II, or Form 2 and is not

to the shareholder all 453A installment sale trans-

Low-Income Housing Credit, Historic Rehabilita-

reported elsewhere on Schedule SK-1. Examples

actions exceeding $150,000. The “applicable per-

tion Credit, Home Energy Efficiency Credit, Solar

of such deductions include oil and gas depletion

centage” is the ratio of the aggregate face amount

Heat Credit, Film Incentive Credit and Medical De-

and the expense deduction for recovery property,

of installment sale obligations arising in and out-

vice Credit. Supporting documentation must be

IRC sec. 179. An estate or trust may not elect to

standing as of the close of the taxable year in ex-

made available upon request.

expense recovery property.

cess of $5 million to the aggregate face amount

Line 5

of such obligations arising in and outstanding at

Line 3

Enter the shareholder’s share of the S corporation’s

the close of the taxable year. The “applicable per-

Combine the amounts in lines 1 and 2. The result

net rental income or loss from real estate activities

centage” will be determined by each shareholder.

in line 3 includes each shareholder’s share of the S

from Schedule S, line 26.

For 453(l)(2)(B) transactions, the S corporation

corporation’s Massachusetts ordinary income.

The correct Massachusetts amount of the share-

must inform the shareholder of the shareholder’s

The correct Massachusetts amount of the share-

holder’s net income or loss from rental real estate

share of gain on installment transactions, the date

holder’s share of ordinary income may differ from

activities may differ from the comparable U.S. total

of the transactions, and any other information the

the comparable U.S. total reported on the share-

reported on the shareholder’s Form 1, or 1-NR/PY,

shareholder may need to calculate the addition to

holder’s Form 1 or 1-NR/PY, Schedule E, Part II;

Schedule E, Part II; or Form 2, Schedule E. Each

tax.

or Form 2. Each shareholder should make ad-

shareholder should make adjustments in Form 1,

Shareholder’s Massachusetts

justments in Form 1 or 1-NR/PY, Schedule E, Part

or 1-NR/PY, Schedule E, Part II; or Form 2,

II if applicable; or Form 2, to reflect the correct

Information

Schedule E, to reflect the correct Massachusetts

Massachusetts amount. Each shareholder should

The shareholder’s distributive share of each item

amount. Each shareholder should enclose a

enclose a statement with the shareholder’s Mass-

of income, loss, deduction, or credit is determined

statement with the shareholder’s Massachusetts

achusetts tax return and explain the adjustments.

by the shareholder’s percentage of ownership of

tax return and explain.

stock in the S corporation computed on a daily

The S corporation should also provide each share-

Line 6

basis during the taxable year.

holder with the amount of any costs of renovating

a qualifying abandoned building. Each shareholder

Enter the shareholder’s share of the S corporation’s

Note: If the shareholder is a single member of a

should use this amount to complete Form 1 or

net rental income or loss from other activities from

Limited Liability Company (LLC), the taxpayer iden-

1-NR/PY, Schedule E, Part II; or Form 2. Enclose a

Schedule S, line 27.

tification number is the shareholder’s Social Secu-

statement detailing the location and cost of reno-

rity number, not the Federal Identification number

The correct Massachusetts amount of the share-

vating the qualifying abandoned building.

of the LLC.

holder’s share of net rental income or loss from

The S corporation should provide each shareholder

other activities may differ from the comparable

◗ For a nonresident shareholder eligible to appor-

with the amount of the shareholder’s share of any

U.S. total reported on the shareholder’s Form 1 or

tion, enter in lines 1 through 21 the amount of the

5.25% interest from Massachusetts banks and in-

1-NR/PY, Schedule E, Part II; or Form 2. Each

shareholder’s share of each applicable distributive

terest (other than from Massachusetts banks) and

shareholder should make adjustments in Form 1 or

share item multiplied by the apportionment per-

dividend income included in line 3. Each share-

1-NR/PY, Schedule E, Part II; or Form 2, to reflect

centage in Form 355S, Schedule F, line 5.

holder should use these amounts to complete

the correct Massachusetts amount. Each share-

Note: For line 8, enter the amount of the non-

Form 1 or 1-NR/PY, Schedule E, Part II.

holder should enclose a statement with the share-

resident shareholder’s distributive share without

holder’s Massachusetts tax return and explain.

apportionment.

Line 4

Line 7

Enter the shareholder’s share of any tax due from

◗ For all other shareholders, enter in lines 1

the S corporation to any other state, territory or

Enter the shareholder’s share of the S corporation’s

through 21 the amount of the shareholder’s share

possession of the United States, or Canada or any

interest on U.S. debt obligations from Schedule S,

of each applicable distributive share item.

of its provinces on income taxable to the share-

line 29. For a nonresident shareholder eligible to

◗ For lines 17 through 20 the S corporation may

holder in Massachusetts and otherwise allowable

apportion, enter the shareholder’s share without

provide each shareholder with a written break-

as a credit to individuals.

Form 355s - Massachusetts S Corporation Excise Return - 2012 Page 17

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