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Combined Return Instructions

2012 Form 355U

Income Excise for Taxpayers Subject to Combined Reporting

This form is to be submitted on behalf of every combined group that is filing pursuant to M.G.L. c.

63 § 32B. Enter the name of the principal reporting corporation and that corporation’s Federal

Identification number. Also enter the principal reporting corporation’s address as shown on its

federal income tax return and the name and phone number of an individual with whom a DOR

representative may discuss any questions or issues that come up in processing this return or

allocating payments made by the various combined group members.

The principal reporting corporation is the common parent of the combined group or, if no such

corporation exists or such common parent is not a taxable member, the taxable member of the

group that reasonably expects to have the largest amount of Massachusetts taxable net income

on a recurring basis. See 830 CMR 63.32B.2 (11) for additional information about the

determination of the principal reporting corporation and the requirements and obligations of such

corporation.

General Information

Question 1. Check one box only. A financial group is a combined group all of whose members,

including members not taxable on their income in Massachusetts, are entities that are financial

institutions within the meaning of M.G.L. c. 63, s. 1. A non-financial group is a combined group

none of whose members, including non-taxable members, are financial institutions A mixed group

is any combined group that includes at least one member that is a financial institution and at least

one member that is not a financial institution.

Question 2. Check one box only. If the combined group is making no affirmative election (i.e., the

default method of filing) and chooses “neither,” the combined group that is under common control

and engaged in a unitary business will be determined on a “water’s edge” basis (i.e., with only

certain non-U.S. corporations included in the combined group). See Regulation 830 CMR

63.32B.2 (5).

If the combined group is entitled to make an affiliated group election and affirmatively makes this

election, the combined group is determined on a water’s edge basis but is expanded to include

affiliated corporations that constitute the “Massachusetts affiliated group,” as defined in 830 CMR

63.32B.2(2) and (10). The composition of the combined group as a “Massachusetts affiliated

group” is not dependent upon whether the group is engaged in a unitary business but can have

the effect of converting income that is otherwise allocable income into apportionable income as

well as other specific, significant tax consequences. a combined group is not entitled to make an

affiliated group election unless it includes a federal affiliated group filing a consolidated return for

federal income tax purposes, though the “Massachusetts affiliated group” that is subject to the

election is not necessarily co-extensive with such a federal affiliated group. For example, the

Massachusetts affiliated group can include (1) S corporations, certain insurance companies,

REITs, RICs and non-U.S. corporations; (2) corporations that are under indirect or direct common

ownership of greater than 50% (instead of the 80% vote-and-value standard used for purposes of

filing a federal consolidated income tax return); and (3) the members of two or more affiliated

groups where each group files a consolidated return for federal income tax purposes. A combined

group is not entitled to make an affiliated group election if it is making or is subject to a previously

made worldwide election. See Regulation 830 CMR 63.32B.2 (10) for the rules that apply in the

context of a Massachusetts affiliated group election.

If the combined group is entitled to make the worldwide election and affirmatively makes this

election, the combined group that is under common control and engaged in a unitary business will

be determined on a worldwide basis (i.e., with no limitations on the non-U.S. corporations

included in the combined group). When a combined group makes a worldwide election the

Instructions For Form 355u - Income Excise For Taxpayers Subject To Combined Reporting - 2012

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