Form 355s - Massachusetts S Corporation Excise Return

Line by Line Instructions

ufactured goods that the corporation manufac-

derives more than two thirds of its gross receipts

on all lines of the excise calculation except line 12

tures; or

attributable to Massachusetts from that activity or

(which reports the total tax paid with the Form

(b) incurs more than two thirds of its expendi-

355U). When the non-income measure of excise

◗ The corporation pays 25% or more of its pay-

tures in that activity. Research and Development

has been paid with Form 355U, the dollar amounts

roll for the taxable year to employees working in

corporations may be eligible for certain tax bene-

on Schedules A and B submitted with the Form

manufacturing operations and derives 15% or

fits. See 830 CMR 64H.6.4.

355S will be blank (do not duplicate the informa-

more of its receipts for the taxable year from the

tion submitted with the Form 355U) and Sched-

sale of manufactured goods that the corporation

A classified manufacturing corporation is a busi-

ules S, SK-1 and Schedule F (if the corporation is

manufactures; or

ness corporation engaged in manufacturing in

eligible to apportion) will be completed without

Massachusetts, whose manufacturing activities in

◗ The corporation uses 25% or more of its tangi-

regard to combined reporting, taking into account

Massachusetts are substantial and which has

ble property in manufacturing during the taxable

only the income and activities of this corporation

filed Form 355Q and had its manufacturing status

year and derives 15% or more of its receipts for the

to determine and apportion the distributive shares

approved by the Commissioner. A corporation

taxable year from the sale of manufactured goods

of income under M.G.L. c. 62.

may be a section 38 manufacturer based on its

that the corporation manufactures; or

If a member of a combined group has a separate

worldwide manufacturing activities but not be a

◗ The corporation uses 35% or more of its tan-

taxable year that ends at a different time than the

classified manufacturer if those manufacturing

gible property in manufacturing during the tax-

combined group’s taxable year, that member

activities occur outside of Massachusetts. Classi-

able year.

fied manufacturing corporations may be eligible

must file a separate return to pay the non-income

for certain tax benefits. See 830 CMR 63.58.2.1.

portion of the excise at the close of the member’s

Effective January 1, 1997, mutual fund service cor-

separate taxable year. S corporations will file Form

porations are required to attribute their mutual

If you are a classified manufacturer, you must

355S indicating on the face of such return that

fund sales to Massachusetts based on the domicile

have filed Form 355Q and had your manufacturing

they are subject to combined reporting for their

of the shareholders in the fund. Effective July 1,

status approved by the Commissioner.

income measure of excise and exclude from that

1997 mutual fund service corporations are allowed

separate return the income that is reported on the

to apportion their net income from mutual fund

Line 4

group’s Form 355U (Schedule E is not required un-

sales based solely on their sales factor. However, in

If line 4 is “Yes” you are still required to file Form

less the taxpayer has income from a source other

order to use the single sales factor apportionment

355S and to submit Schedules S and SK-1. If this

than the unitary business). S corporations with

method a mutual fund service corporation must

corporation has a taxable year that ends at a differ-

separate taxable years that end at a different time

increase its workforce in Massachusetts by 5% a

ent time than the taxable year for which the com-

than the combined group’s taxable year will com-

year for five years based on the 1996 employment

bined report is being filed, you are also required to

plete Schedules A and B and any other schedules

level unless adverse economic conditions exist.

pay the non-income measure of excise with this

required to determine the non-income measure of

Taxable net income not derived from mutual fund

return (instead of with Form 355U).

excise without regard to combined reporting (e.g.

sales is apportioned according to the statutory

When two or more corporations are required to file

based on their assets and liabilities at the close of

three factor method.

a combined report, the taxable members’ appor-

their separate taxable years). Such corporations

A corporation is a mutual fund service corporation

tioned shares of the combined income are based

complete the excise calculation on page 2 of the

if it derives more than 50% of its gross income

the combined group’s taxable year. If not all the

return normally and may take credits against the

from providing, directly or indirectly, management,

members have the same taxable year, the com-

excise reported on this separate return and should

distribution or administration services to or on be-

bined group’s taxable year is determined under

enter the amount of each credit taken on Schedule

half of a regulated investment company, and from

830 CMR 63.32B.2 (11) (b).

CR. S Corporations always complete Schedules S

trustees, sponsors and participants of employee

Form 355U is used by the combined group to cal-

and SK-1 without regard to combined reporting,

benefit plans which have accounts in a regulated

culate and pay the income excise due from the

taking into account only the income and activities

investment company.

taxable members of a combined group. Form

of this corporation.

The Department has issued further guidance on ap-

355U and payment of the income measure of ex-

An S corporation member of a combined group

portionment for mutual fund service corporations;

cise is due on 15th day of the 3rd month follow-

that has a taxable year ending at a different time

see Regulation 830 CMR 63.38.7.

ing the close of the combined group’s taxable

than the combined group’s taxable year submits

year. Members of such a group that are subject to

If a corporation is qualified as a section 38 manu-

Schedule CD with Form 355S. If the S corporation

a non-income measure of excise under the provi-

facturer or is a mutual fund service corporation,

is a mutual fund sales corporation or a section. 38

sions of M.G.L. Ch. 63, sec. 39 (including those S

check the applicable box and complete Schedule

manufacturer with 25 or more employees, it also

corporations that are not taxed as financial insti-

F, Income Apportionment, accordingly. Section 38

completes and files Schedule F-2 with Form 355S.

tutions under M.G.L. Ch. 63 sec. 2D) are required

manufacturers and mutual fund service corpora-

to determine and pay the non-income measure of

Line 7

tions must also complete and enclose Form F-2.

excise on the 15th day of the 3rd month following

Form F-2 is available at or any

If the corporation is requesting alternative appor-

the close of their separate taxable year. If a mem-

Department of Revenue location.

tionment under M.G.L. Ch. 63, sec. 42, answer

ber’s non-income measure of excise is due on the

yes in line 8 and enclose Form AA-1. The return

The Department has issued further guidance on

same day as the combined report (if the mem-

and Schedule F must be completed and the tax

apportionment; see Regulation 830 CMR 63.38.1.

ber’s taxable year ends at the same time as the

must be paid according to the statutory three fac-

combined group’s taxable year), the member will

Line 3

tor formula. However, alternative treatment may

pay such non-income measure with the combined

be requested and a refund will be issued if such

An R&D corporation is a business corporation

report. S corporations that pay the non-income

treatment is granted by the Commissioner of Rev-

whose principal business activity in Massachu-

measure of excise with Form 355U file Form 355S,

enue. For further information on alternative appor-

setts is research and development and which (a)

completing all the questions on page 1, enter ‘0’

Form 355s - Massachusetts S Corporation Excise Return - 2012 Page 9

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