Form 355 - Massachusetts Corporation Excise Return

Line by Line Instructions

years or more. A corporation may not claim the

both credits carried over from the prior year and

Lines 1 through 5

credit for property it leases to others as a lessor.

credits which expired unused.

Enter in column a the amount of credit available

for use in the current year. Credits available which

Line 4

Example

are subject to the 3-year carryover limitation are

If any of the property included in lines 2a through

Manufacturing Corporation begins business in year

entered on the line appropriate for the tax year in

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

1 and generates $30,000 in ITC. In year 2, Manu-

which the credit was generated. Credits no longer

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

facturing Corporation generates $10,000 in ITC. It

subject to the 3-year time limit are shown on line 5.

ing property must be entered here and applied as

generates no credits in years 3 or 4. All property is

If carryover credits were offset against potential

a reduction to the basis in calculating the Mass-

acquired in the first month of the year and has a

recaptures in Part 2, the amount actually available

achusetts credit.

useful life of 10 years. In each year, Manufactur-

should reflect the reduction by those offsets.

ing’s excise before credits is $7,000 and it uses

Line 6

$3,500 of ITC (a total of $14,000 in credits used)

Enter in, column b, the amount of credits originat-

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

all of which is from the earliest available credit (the

ing in each tax year being used in the current year.

after any basis reduction.

M.G.L. Ch. 63, sec. 32C limits the amount of these

year 1 amount). Under the provisions of M.G.L.

credits that may be used in any year by prohibiting

Ch. 63, sec. 32C, a further $3,500 in ITC becomes

Line 7

a taxpayer from taking credits that will reduce the

available for carryforward to any future period in

If qualifying property is placed in service and dis-

tax below 50% of the excise due before credits. If

each of the 4 tax years (a total of $14,000, all of

posed of or otherwise ceases to be in qualified

the taxpayer has available and will be taking other

which is also from the earliest available credit,

service before the end of the same tax year, the

credits that are also subject to the section 32C lim-

which is the year 1 amount). At the end of year 4,

amount of credits available is reduced. Multiply the

itation (e.g. the Brownfields Credit under sec 38Q)

the remainder of the year 1 credit ($30,000 less

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

the maximum amount of investment tax credit al-

$14,000 used less $14,000 converted equals

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

lowed is reduced by the amount of such other

$2,000) expires unused.

of which is the number of months remaining in

credits taken. Taxpayers may chose which credits

the useful life of the asset when it is disposed of

At the beginning of January in year 5, Manufac-

to use but the total of all such credits subject to the

or otherwise ceases to qualify and denominator of

turing sells all of its assets, triggering recapture.

section 32C limitation may not exceed 50% of the

which is the total number of months in the assets’

The potential recapture on the year 1 assets is

excise before credits. Credits may also not reduce a

useful life. For example, an item that is depreciated

$30,000 × 72 ÷ 120 = $18,000. This is partially

corporation’s tax below the $456 minimum excise.

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

offset by the $2,000 of the expired credits. A fur-

a useful life of 84 months.

Enter in column c, the amount of credits originat-

ther $14,000 is offset by reducing the unlimited

ing in each tax year converted to unlimited carry-

Line 8

carryforward generated in year 1 that is still avail-

over status. Credits that could have been used

able and unused. There is a net recapture tax of

Subtract the amount of the credit reduction in line

except for the 50% limitation in M.G.L. Ch. 63, sec

$2,000 related to the year 1 assets.

7 from the tentative credit in line 6.

32C may be used in any subsequent year, without

The potential recapture on the year 2 assets is

regard to the normal 3 year time limit provided in

Part 2. Recapture of Unused Credit

$10,000 × 84 ÷ 120 = $7,000. This is offset by re-

Ch.63, sec. 31A. The taxpayer may choose which

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

ducing the carryover available from year 2 by the

credits to treat as converted to unlimited status,

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

same amount. There is no recapture tax related to

but the total of all such credits designated for un-

difference between the credit taken and the credit

the year 2 assets. Manufacturing still has $3,000

limited carryover may not exceed 50% of the cur-

allowed for actual use must be added back in the

of year 2 credits available for use. They will expire

rent year excise before credits.

excise calculation in the year the property is dis-

at the end of the current year.

posed of. Recapture tax is not due if the credit

Enter in lines 2 through 4, column d the amount

Completing the Schedule

with respect to the property disposed of were

of credits originating in each tax year and still

never used to offset excise, whether or not the

Enter $25,000 in line 1 (the total potential ITC re-

subject to the 3-year time limit which are carried

credits are still available for use. Recapture does

capture from all years).

over to future years. Note that any credits on line

not apply if the property has been in qualified use

1(a) not used or converted expire at the end of the

Enter $2,000 in line 2a (the amount of credits ex-

for more than 12 years.

current year.

pired unused).

For each item disposed of or otherwise ceasing to

Enter $7,000 in line 2b (the amount of the reduc-

Part 4. Reconciliation of

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

tion in year 2 credits).

Massachusetts Tangible Property

reduction in the amount of the original credit. This

Enter $14,000 in line 2e (the amount of the re-

Corporations claiming an ITC in Part 1 or claiming

is the credit originally allowed times a fraction,

duction in the unlimited carryover).

an ITC carryforward in Part 3, whether or not used

the numerator of which is the number of months

in the current year, must complete Part 4 based

remaining in the useful life of the asset when it is

Enter $2,000 in line 3 (the total recapture tax

on the book value of their capital assets located in

disposed of and the denominator of which is the

added to excise this year).

Massachusetts.

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

Part 3. Calculation of Available

termined for U.S. tax depreciation purposes.

Excise Calculation

Credits

Next determine whether or not the credits allowed

Enter the amount of each credit available for use

but not earned have been used to reduce excise.

The excise calculation schedule is used to calculate

in the current year based on the year generated. If

The potential recapture tax for each asset is then

the various measures of the Massachusetts corpo-

carryover credits were offset against potential re-

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

ration excise. These are:

captures in Part 2, the amount available should

same type generated in the same tax period that

reflect the reduction by those offsets.

have never been used to reduce excise. Include

Form 355 - Massachusetts Corporation Excise Return - 2012 Page 14

Related Articles

Related forms

Related Categories