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Mass Income State Tax Forms

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Mass Income State Tax Forms

Mass income state tax forms 7. Mass income state tax forms   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. Mass income state tax forms Custodian account for your child. Mass income state tax forms Penalty for failure to supply SSN. Mass income state tax forms Reporting backup withholding. Mass income state tax forms Savings account with parent as trustee. Mass income state tax forms Interest not reported on Form 1099-INT. Mass income state tax forms Nominees. Mass income state tax forms Incorrect amount. Mass income state tax forms Information reporting requirement. Mass income state tax forms Taxable InterestInterest subject to penalty for early withdrawal. Mass income state tax forms Money borrowed to invest in certificate of deposit. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms Savings Bonds Education Savings Bond Program U. Mass income state tax forms S. Mass income state tax forms Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. Mass income state tax forms How To Report Interest IncomeSchedule B (Form 1040A or 1040). Mass income state tax forms Reporting tax-exempt interest. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms savings bond interest previously reported. Mass income state tax forms Reminder Foreign-source income. Mass income state tax forms  If you are a U. Mass income state tax forms S. Mass income state tax forms citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U. Mass income state tax forms S. Mass income state tax forms law. Mass income state tax forms This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Mass income state tax forms Introduction This chapter discusses the following topics. Mass income state tax forms Different types of interest income. Mass income state tax forms What interest is taxable and what interest is nontaxable. Mass income state tax forms When to report interest income. Mass income state tax forms How to report interest income on your tax return. Mass income state tax forms In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. Mass income state tax forms Exceptions to this rule are discussed later in this chapter. Mass income state tax forms You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. Mass income state tax forms See Money borrowed to invest in certificate of deposit , later, and chapter 28. Mass income state tax forms Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends 8815 Exclusion of Interest From Series EE and I U. Mass income state tax forms S. Mass income state tax forms Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Mass income state tax forms S. Mass income state tax forms Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. Mass income state tax forms Recordkeeping. Mass income state tax forms You should keep a list showing sources and interest amounts received during the year. Mass income state tax forms Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. Mass income state tax forms Tax on unearned income of certain children. Mass income state tax forms    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Mass income state tax forms If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Mass income state tax forms If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Mass income state tax forms   Some parents can choose to include the child's interest and dividends on the parent's return. Mass income state tax forms If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Mass income state tax forms   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Mass income state tax forms Beneficiary of an estate or trust. Mass income state tax forms   Interest you receive as a beneficiary of an estate or trust is generally taxable income. Mass income state tax forms You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Mass income state tax forms , from the fiduciary. Mass income state tax forms Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Mass income state tax forms Social security number (SSN). Mass income state tax forms   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Mass income state tax forms This includes payers of interest. Mass income state tax forms If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Mass income state tax forms SSN for joint account. Mass income state tax forms   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Mass income state tax forms (For information on who owns the funds in a joint account, see Joint accounts , later. Mass income state tax forms ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Mass income state tax forms This is because only one name and SSN can be shown on Form 1099. Mass income state tax forms   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Mass income state tax forms For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Mass income state tax forms Custodian account for your child. Mass income state tax forms   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Mass income state tax forms For example, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian. Mass income state tax forms Penalty for failure to supply SSN. Mass income state tax forms   If you do not give your SSN to the payer of interest, you may have to pay a penalty. Mass income state tax forms See Failure to supply SSN under Penalties in chapter 1. Mass income state tax forms Backup withholding also may apply. Mass income state tax forms Backup withholding. Mass income state tax forms   Your interest income is generally not subject to regular withholding. Mass income state tax forms However, it may be subject to backup withholding to ensure that income tax is collected on the income. Mass income state tax forms Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Mass income state tax forms   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Mass income state tax forms For more information, see Backup Withholding in chapter 4. Mass income state tax forms Reporting backup withholding. Mass income state tax forms   If backup withholding is deducted from your interest income, the payer must give you a Form 1099-INT for the year indicating the amount withheld. Mass income state tax forms The Form 1099-INT will show any backup withholding as “Federal income tax withheld. Mass income state tax forms ” Joint accounts. Mass income state tax forms   If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest from the property is determined by local law. Mass income state tax forms Income from property given to a child. Mass income state tax forms   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Mass income state tax forms   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Mass income state tax forms Savings account with parent as trustee. Mass income state tax forms   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Mass income state tax forms The savings account legally belongs to the child. Mass income state tax forms The parents are not legally permitted to use any of the funds to support the child. Mass income state tax forms Form 1099-INT. Mass income state tax forms   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Mass income state tax forms This form shows you the interest you received during the year. Mass income state tax forms Keep this form for your records. Mass income state tax forms You do not have to attach it to your tax return. Mass income state tax forms   Report on your tax return the total interest income you receive for the tax year. Mass income state tax forms Interest not reported on Form 1099-INT. Mass income state tax forms   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Mass income state tax forms For example, you may receive distributive shares of interest from partnerships or S corporations. Mass income state tax forms This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. Mass income state tax forms , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Mass income state tax forms Nominees. Mass income state tax forms   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Mass income state tax forms   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Publication 550, or Schedule B (Form 1040A or 1040) instructions. Mass income state tax forms Incorrect amount. Mass income state tax forms   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Mass income state tax forms The new Form 1099-INT you receive will be marked “Corrected. Mass income state tax forms ” Form 1099-OID. Mass income state tax forms   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Mass income state tax forms For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Mass income state tax forms Exempt-interest dividends. Mass income state tax forms   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Mass income state tax forms (However, see Information reporting requirement , next. Mass income state tax forms ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Mass income state tax forms You do not reduce your basis for distributions that are exempt-interest dividends. Mass income state tax forms Information reporting requirement. Mass income state tax forms   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Mass income state tax forms This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Mass income state tax forms Note. Mass income state tax forms Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Mass income state tax forms See Alternative Minimum Tax (AMT) in chapter 30 for more information. Mass income state tax forms Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. Mass income state tax forms Interest on VA dividends. Mass income state tax forms   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Mass income state tax forms This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. Mass income state tax forms Individual retirement arrangements (IRAs). Mass income state tax forms   Interest on a Roth IRA generally is not taxable. Mass income state tax forms Interest on a traditional IRA is tax deferred. Mass income state tax forms You generally do not include it in your income until you make withdrawals from the IRA. Mass income state tax forms See chapter 17. Mass income state tax forms Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Mass income state tax forms The following are some sources of taxable interest. Mass income state tax forms Dividends that are actually interest. Mass income state tax forms   Certain distributions commonly called dividends are actually interest. Mass income state tax forms You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Mass income state tax forms  The “dividends” will be shown as interest income on Form 1099-INT. Mass income state tax forms Money market funds. Mass income state tax forms   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. Mass income state tax forms Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Mass income state tax forms Certificates of deposit and other deferred interest accounts. Mass income state tax forms   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Mass income state tax forms You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Mass income state tax forms The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Mass income state tax forms If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Mass income state tax forms Interest subject to penalty for early withdrawal. Mass income state tax forms   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Mass income state tax forms You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Mass income state tax forms See Penalty on early withdrawal of savings in chapter 1 of Publication 550 for more information on how to report the interest and deduct the penalty. Mass income state tax forms Money borrowed to invest in certificate of deposit. Mass income state tax forms   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Mass income state tax forms You must report the total interest you earn on the certificate in your income. Mass income state tax forms If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Mass income state tax forms See Interest Expenses in chapter 3 of Publication 550. Mass income state tax forms Example. Mass income state tax forms You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Mass income state tax forms The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Mass income state tax forms The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Mass income state tax forms The bank also gives you a statement showing that you paid $310 interest for 2013. Mass income state tax forms You must include the $575 in your income. Mass income state tax forms If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. Mass income state tax forms Gift for opening account. Mass income state tax forms   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Mass income state tax forms   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Mass income state tax forms For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Mass income state tax forms The value is determined by the cost to the financial institution. Mass income state tax forms Example. Mass income state tax forms You open a savings account at your local bank and deposit $800. Mass income state tax forms The account earns $20 interest. Mass income state tax forms You also receive a $15 calculator. Mass income state tax forms If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Mass income state tax forms You must report $35 interest income on your tax return. Mass income state tax forms Interest on insurance dividends. Mass income state tax forms   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Mass income state tax forms However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Mass income state tax forms Prepaid insurance premiums. Mass income state tax forms   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms obligations. Mass income state tax forms   Interest on U. Mass income state tax forms S. Mass income state tax forms obligations, such as U. Mass income state tax forms S. Mass income state tax forms Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Mass income state tax forms Interest on tax refunds. Mass income state tax forms   Interest you receive on tax refunds is taxable income. Mass income state tax forms Interest on condemnation award. Mass income state tax forms   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Mass income state tax forms Installment sale payments. Mass income state tax forms   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Mass income state tax forms That interest is taxable when you receive it. Mass income state tax forms If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Mass income state tax forms See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. Mass income state tax forms Interest on annuity contract. Mass income state tax forms   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Mass income state tax forms Usurious interest. Mass income state tax forms   Usurious interest is interest charged at an illegal rate. Mass income state tax forms This is taxable as interest unless state law automatically changes it to a payment on the principal. Mass income state tax forms Interest income on frozen deposits. Mass income state tax forms   Exclude from your gross income interest on frozen deposits. Mass income state tax forms A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Mass income state tax forms   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Mass income state tax forms If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income in chapter 1 of Publication 550, for information about reporting this interest income exclusion on your tax return. Mass income state tax forms   The interest you exclude is treated as credited to your account in the following year. Mass income state tax forms You must include it in income in the year you can withdraw it. Mass income state tax forms Example. Mass income state tax forms $100 of interest was credited on your frozen deposit during the year. Mass income state tax forms You withdrew $80 but could not withdraw any more as of the end of the year. Mass income state tax forms You must include $80 in your income and exclude $20 from your income for the year. Mass income state tax forms You must include the $20 in your income for the year you can withdraw it. Mass income state tax forms Bonds traded flat. Mass income state tax forms   If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Mass income state tax forms The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Mass income state tax forms When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Mass income state tax forms Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. Mass income state tax forms See Bonds Sold Between Interest Dates , later, for more information. Mass income state tax forms Below-market loans. Mass income state tax forms   In general, a below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Mass income state tax forms See Below-Market Loans in chapter 1 of Publication 550 for more information. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms Savings Bonds This section provides tax information on U. Mass income state tax forms S. Mass income state tax forms savings bonds. Mass income state tax forms It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Mass income state tax forms For other information on U. Mass income state tax forms S. Mass income state tax forms savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. Mass income state tax forms O. Mass income state tax forms Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. Mass income state tax forms O. Mass income state tax forms Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. Mass income state tax forms O. Mass income state tax forms Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. Mass income state tax forms treasurydirect. Mass income state tax forms gov/indiv/indiv. Mass income state tax forms htm. Mass income state tax forms Accrual method taxpayers. Mass income state tax forms   If you use an accrual method of accounting, you must report interest on U. Mass income state tax forms S. Mass income state tax forms savings bonds each year as it accrues. Mass income state tax forms You cannot postpone reporting interest until you receive it or until the bonds mature. Mass income state tax forms Accrual methods of accounting are explained in chapter 1 under Accounting Methods . Mass income state tax forms Cash method taxpayers. Mass income state tax forms   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Mass income state tax forms S. Mass income state tax forms savings bonds when you receive it. Mass income state tax forms The cash method of accounting is explained in chapter 1 under Accounting Methods. Mass income state tax forms But see Reporting options for cash method taxpayers , later. Mass income state tax forms Series HH bonds. Mass income state tax forms    These bonds were issued at face value. Mass income state tax forms Interest is paid twice a year by direct deposit to your bank account. Mass income state tax forms If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Mass income state tax forms   Series HH bonds were first offered in 1980 and last offered in August 2004. Mass income state tax forms Before 1980, series H bonds were issued. Mass income state tax forms Series H bonds are treated the same as series HH bonds. Mass income state tax forms If you are a cash method taxpayer, you must report the interest when you receive it. Mass income state tax forms   Series H bonds have a maturity period of 30 years. Mass income state tax forms Series HH bonds mature in 20 years. Mass income state tax forms The last series H bonds matured in 2009. Mass income state tax forms Series EE and series I bonds. Mass income state tax forms   Interest on these bonds is payable when you redeem the bonds. Mass income state tax forms The difference between the purchase price and the redemption value is taxable interest. Mass income state tax forms Series EE bonds. Mass income state tax forms   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Mass income state tax forms   Before July 1980, series E bonds were issued. Mass income state tax forms The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Mass income state tax forms Paper series EE and series E bonds are issued at a discount. Mass income state tax forms The face value is payable to you at maturity. Mass income state tax forms Electronic series EE bonds are issued at their face value. Mass income state tax forms The face value plus accrued interest is payable to you at maturity. Mass income state tax forms As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Mass income state tax forms   Owners of paper series EE bonds can convert them to electronic bonds. Mass income state tax forms These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Mass income state tax forms Series I bonds. Mass income state tax forms   Series I bonds were first offered in 1998. Mass income state tax forms These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Mass income state tax forms The face value plus all accrued interest is payable to you at maturity. Mass income state tax forms Reporting options for cash method taxpayers. Mass income state tax forms   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Mass income state tax forms Method 1. Mass income state tax forms Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. Mass income state tax forms (However, see Savings bonds traded , later. Mass income state tax forms )  Note. Mass income state tax forms Series EE bonds issued in 1983 matured in 2013. Mass income state tax forms If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Mass income state tax forms The last series E bonds were issued in 1980 and matured in 2010. Mass income state tax forms If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Mass income state tax forms Method 2. Mass income state tax forms Choose to report the increase in redemption value as interest each year. Mass income state tax forms You must use the same method for all series EE, series E, and series I bonds you own. Mass income state tax forms If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Mass income state tax forms    If you plan to cash your bonds in the same year you will pay for higher education expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Mass income state tax forms To learn how, see Education Savings Bond Program, later. Mass income state tax forms Change from method 1. Mass income state tax forms   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Mass income state tax forms In the year of change you must report all interest accrued to date and not previously reported for all your bonds. Mass income state tax forms   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Mass income state tax forms Change from method 2. Mass income state tax forms   To change from method 2 to method 1, you must request permission from the IRS. Mass income state tax forms Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Mass income state tax forms You have typed or printed the following number at the top: “131. Mass income state tax forms ” It includes your name and social security number under “131. Mass income state tax forms ” It includes the year of change (both the beginning and ending dates). Mass income state tax forms It identifies the savings bonds for which you are requesting this change. Mass income state tax forms It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Mass income state tax forms   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Mass income state tax forms   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Mass income state tax forms On the statement, type or print “Filed pursuant to section 301. Mass income state tax forms 9100-2. Mass income state tax forms ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Mass income state tax forms    By the date you file the original statement with your return, you must also send a signed copy to the address below. Mass income state tax forms   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Mass income state tax forms O. Mass income state tax forms Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Mass income state tax forms   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW  Washington, DC 20224   Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. Mass income state tax forms In that case, follow the form instructions for an automatic change. Mass income state tax forms No user fee is required. Mass income state tax forms Co-owners. Mass income state tax forms   If a U. Mass income state tax forms S. Mass income state tax forms savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Mass income state tax forms One co-owner's funds used. Mass income state tax forms    If you used your funds to buy the bond, you must pay the tax on the interest. Mass income state tax forms This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Mass income state tax forms Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Mass income state tax forms The co-owner who redeemed the bond is a “nominee. Mass income state tax forms ” See Nominee distributions under How To Report Interest Income in chapter 1 of Publication 550 for more information about how a person who is a nominee reports interest income belonging to another person. Mass income state tax forms Both co-owners' funds used. Mass income state tax forms   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Mass income state tax forms Community property. Mass income state tax forms   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Mass income state tax forms If you file separate returns, each of you generally must report one-half of the bond interest. Mass income state tax forms For more information about community property, see Publication 555. Mass income state tax forms Table 7-1. Mass income state tax forms   These rules are also shown in Table 7-1. Mass income state tax forms Ownership transferred. Mass income state tax forms   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Mass income state tax forms But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Mass income state tax forms   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Mass income state tax forms Purchased jointly. Mass income state tax forms   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Mass income state tax forms The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Mass income state tax forms This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Mass income state tax forms   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Mass income state tax forms But the new co-owner will report only his or her share of the interest earned after the transfer. Mass income state tax forms   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Mass income state tax forms    Table 7-1. Mass income state tax forms Who Pays the Tax on U. Mass income state tax forms S. Mass income state tax forms Savings Bond Interest IF . Mass income state tax forms . Mass income state tax forms . Mass income state tax forms THEN the interest must be reported by . Mass income state tax forms . Mass income state tax forms . Mass income state tax forms you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Mass income state tax forms you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Mass income state tax forms you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Mass income state tax forms you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Mass income state tax forms If you file separate returns, both you and your spouse generally report one-half of the interest. Mass income state tax forms Example 1. Mass income state tax forms You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Mass income state tax forms The bond was issued to you and your spouse as co-owners. Mass income state tax forms You both postpone reporting interest on the bond. Mass income state tax forms You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Mass income state tax forms At that time neither you nor your spouse has to report the interest earned to the date of reissue. Mass income state tax forms Example 2. Mass income state tax forms You bought a $1,000 series EE savings bond entirely with your own funds. Mass income state tax forms The bond was issued to you and your spouse as co-owners. Mass income state tax forms You both postpone reporting interest on the bond. Mass income state tax forms You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Mass income state tax forms You must report half the interest earned to the date of reissue. Mass income state tax forms Transfer to a trust. Mass income state tax forms   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Mass income state tax forms However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Mass income state tax forms You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Mass income state tax forms   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Mass income state tax forms See Savings bonds traded , later. Mass income state tax forms Decedents. Mass income state tax forms   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Mass income state tax forms This is explained in chapter 1 of Publication 550. Mass income state tax forms Savings bonds traded. Mass income state tax forms   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Mass income state tax forms (You cannot trade series I bonds for series HH bonds. Mass income state tax forms After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Mass income state tax forms ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Mass income state tax forms When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Mass income state tax forms Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Mass income state tax forms Example. Mass income state tax forms You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Mass income state tax forms You reported the $223 as taxable income on your tax return. Mass income state tax forms At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Mass income state tax forms You hold the series HH bonds until maturity, when you receive $2,500. Mass income state tax forms You must report $300 as interest income in the year of maturity. Mass income state tax forms This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Mass income state tax forms (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Mass income state tax forms ) Choice to report interest in year of trade. Mass income state tax forms   You could have chosen to treat all of the previously unreported accrued interest on the series EE or series E bonds traded for series HH bonds as income in the year of the trade. Mass income state tax forms If you made this choice, it is treated as a change from method 1. Mass income state tax forms See Change from method 1 under Series EE and series I bonds, earlier. Mass income state tax forms Form 1099-INT for U. Mass income state tax forms S. Mass income state tax forms savings bonds interest. Mass income state tax forms   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Mass income state tax forms Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Mass income state tax forms However, your Form 1099-INT may show more interest than you have to include on your income tax return. Mass income state tax forms For example, this may happen if any of the following are true. Mass income state tax forms You chose to report the increase in the redemption value of the bond each year. Mass income state tax forms The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Mass income state tax forms You received the bond from a decedent. Mass income state tax forms The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Mass income state tax forms Ownership of the bond was transferred. Mass income state tax forms The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Mass income state tax forms You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Mass income state tax forms The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Mass income state tax forms (See Co-owners , earlier in this chapter, for more information about the reporting requirements. Mass income state tax forms ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Mass income state tax forms The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Mass income state tax forms (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Mass income state tax forms , for the year of distribution. Mass income state tax forms )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. Mass income state tax forms Publication 550 includes examples showing how to report these amounts. Mass income state tax forms    Interest on U. Mass income state tax forms S. Mass income state tax forms savings bonds is exempt from state and local taxes. Mass income state tax forms The Form 1099-INT you receive will indicate the amount that is for U. Mass income state tax forms S. Mass income state tax forms savings bond interest in box 3. Mass income state tax forms Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Mass income state tax forms S. Mass income state tax forms savings bonds during the year if you pay qualified higher educational expenses during the same year. Mass income state tax forms This exclusion is known as the Education Savings Bond Program. Mass income state tax forms You do not qualify for this exclusion if your filing status is married filing separately. Mass income state tax forms Form 8815. Mass income state tax forms   Use Form 8815 to figure your exclusion. Mass income state tax forms Attach the form to your Form 1040 or Form 1040A. Mass income state tax forms Qualified U. Mass income state tax forms S. Mass income state tax forms savings bonds. Mass income state tax forms   A qualified U. Mass income state tax forms S. Mass income state tax forms savings bond is a series EE bond issued after 1989 or a series I bond. Mass income state tax forms The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Mass income state tax forms You must be at least 24 years old before the bond's issue date. Mass income state tax forms For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Mass income state tax forms    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Mass income state tax forms Beneficiary. Mass income state tax forms   You can designate any individual (including a child) as a beneficiary of the bond. Mass income state tax forms Verification by IRS. Mass income state tax forms   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. Mass income state tax forms Qualified expenses. Mass income state tax forms   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Mass income state tax forms   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Mass income state tax forms   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Mass income state tax forms Eligible educational institutions. Mass income state tax forms   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the U. Mass income state tax forms S. Mass income state tax forms Department of Education. Mass income state tax forms Reduction for certain benefits. Mass income state tax forms   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Mass income state tax forms Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). Mass income state tax forms Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Mass income state tax forms Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Mass income state tax forms Any tax-free payments (other than gifts or inheritances) received for educational expenses, such as Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Mass income state tax forms Any expense used in figuring the American Opportunity and lifetime learning credits. Mass income state tax forms Amount excludable. Mass income state tax forms   If the total proceeds (interest and principal) from the qualified U. Mass income state tax forms S. Mass income state tax forms savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Mass income state tax forms If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Mass income state tax forms   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Mass income state tax forms The numerator of the fraction is the qualified higher educational expenses you paid during the year. Mass income state tax forms The denominator of the fraction is the total proceeds you received during the year. Mass income state tax forms Example. Mass income state tax forms In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. Mass income state tax forms S. Mass income state tax forms savings bond they bought in April 1997. Mass income state tax forms They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. Mass income state tax forms In 2013, they paid $4,000 of their daughter's college tuition. Mass income state tax forms They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. Mass income state tax forms They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. Mass income state tax forms They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. Mass income state tax forms Modified adjusted gross income limit. Mass income state tax forms   The interest exclusion is limited if your modified adjusted gross income (modified AGI) is: $74,700 to $89,700 for taxpayers filing single or head of household, and $112,050 to $142,050 for married taxpayers filing jointly or for a qualifying widow(er) with dependent child. Mass income state tax forms You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status. Mass income state tax forms   Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040, line 37, or Form 1040A, line 21) figured before the interest exclusion, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion and deduction, Exclusion of income for bona fide residents of American Samoa, Exclusion for income from Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for tuition and fees, Deduction for student loan interest, and Deduction for domestic production activities. Mass income state tax forms   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. Mass income state tax forms If you claim any of the exclusion or deduction items listed above (except items 6, 7, and 8), add the amount of the exclusion or deduction (except items 6, 7, and 8) to the amount on line 5 of the worksheet, and enter the total on Form 8815, line 9, as your modified AGI. Mass income state tax forms   If you have investment interest expense incurred to earn royalties and other investment income, see Education Savings Bond Program in chapter 1 of Publication 550. Mass income state tax forms Recordkeeping. Mass income state tax forms If you claim the interest exclusion, you must keep a written record of the qualified U. Mass income state tax forms S. Mass income state tax forms savings bonds you redeem. Mass income state tax forms Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. Mass income state tax forms You can use Form 8818 to record this information. Mass income state tax forms You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. Mass income state tax forms S. Mass income state tax forms Government. Mass income state tax forms Taxation of interest. Mass income state tax forms   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. Mass income state tax forms You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. Mass income state tax forms   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. Mass income state tax forms Treasury bills. Mass income state tax forms   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. Mass income state tax forms They are generally issued at a discount in the amount of $100 and multiples of $100. Mass income state tax forms The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. Mass income state tax forms Generally, you report this interest income when the bill is paid at maturity. Mass income state tax forms If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. Mass income state tax forms Treasury notes and bonds. Mass income state tax forms   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. Mass income state tax forms Maturity periods for Treasury bonds are longer than 10 years. Mass income state tax forms Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. Mass income state tax forms Generally, you report this interest for the year paid. Mass income state tax forms For more information, see U. Mass income state tax forms S. Mass income state tax forms Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. Mass income state tax forms For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. Mass income state tax forms O. Mass income state tax forms Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Mass income state tax forms treasurydirect. Mass income state tax forms gov/indiv/indiv. Mass income state tax forms htm. Mass income state tax forms For information on series EE, series I, and series HH savings bonds, see U. Mass income state tax forms S. Mass income state tax forms Savings Bonds , earlier. Mass income state tax forms Treasury inflation-protected securities (TIPS). Mass income state tax forms   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. Mass income state tax forms For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. Mass income state tax forms Bonds Sold Between Interest Dates If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. Mass income state tax forms You must report that part of the sales price as interest income for the year of sale. Mass income state tax forms If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. Mass income state tax forms When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond. Mass income state tax forms See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. Mass income state tax forms Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. Mass income state tax forms But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. Mass income state tax forms For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. Mass income state tax forms Annuity. Mass income state tax forms   If you buy an annuity with life insurance proceeds, the annuity payments you receive are taxed as pension and annuity income from a nonqualified plan, not as interest income. Mass income state tax forms See chapter 10 for information on pension and annuity income from nonqualified plans. Mass income state tax forms State or Local Government Obligations Interest on a bond used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. Mass income state tax forms Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. Mass income state tax forms Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. Mass income state tax forms For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of Publication 550. Mass income state tax forms Information reporting requirement. Mass income state tax forms   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. Mass income state tax forms This is an information reporting requirement only. Mass income state tax forms It does not change tax-exempt interest to taxable interest. Mass income state tax forms Original Issue Discount (OID) Original issue discount (OID) is a form of interest. Mass income state tax forms You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. Mass income state tax forms A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. Mass income state tax forms OID is the difference between the stated redemption price at maturity and the issue price. Mass income state tax forms All debt instruments that pay no interest before maturity are presumed to be issued at a discount. Mass income state tax forms Zero coupon bonds are one example of these instruments. Mass income state tax forms The OID accrual rules generally do not apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). Mass income state tax forms See Discount on Short-Term Obligations in chapter 1 of Publication 550. Mass income state tax forms De minimis OID. Mass income state tax forms   You can treat the discount as zero if it is less than one-fourth of 1% (. Mass income state tax forms 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Mass income state tax forms This small discount is known as “de minimis” OID. Mass income state tax forms Example 1. Mass income state tax forms You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. Mass income state tax forms One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Mass income state tax forms Because the $20 discount is less than $25, the OID is treated as zero. Mass income state tax forms (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. Mass income state tax forms ) Example 2. Mass income state tax forms The facts are the same as in Example 1, except that the bond was issued at $950. Mass income state tax forms The OID is $50. Mass income state tax forms Because the $50 discount is more than the $25 figured in Example 1, you must include the OID in income as it accrues over the term of the bond. Mass income state tax forms Debt instrument bought after original issue. Mass income state tax forms   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. Mass income state tax forms If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. Mass income state tax forms See Market Discount Bonds in chapter 1 of Publication 550. Mass income state tax forms Exceptions to reporting OID. Mass income state tax forms   The OID rules discussed in this chapter do not apply to the following debt instruments. Mass income state tax forms Tax-exempt obligations. Mass income state tax forms (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms savings bonds. Mass income state tax forms Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). Mass income state tax forms Obligations issued by an individual before March 2, 1984. Mass income state tax forms Loans between individuals if all the following are true. Mass income state tax forms The lender is not in the business of lending money. Mass income state tax forms The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. Mass income state tax forms Avoiding any federal tax is not one of the principal purposes of the loan. Mass income state tax forms Form 1099-OID. Mass income state tax forms   The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. Mass income state tax forms Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. Mass income state tax forms It also will show, in box 2, the stated interest you must include in your income. Mass income state tax forms A copy of Form 1099-OID will be sent to the IRS. Mass income state tax forms Do not file your copy with your return. Mass income state tax forms Keep it for your records. Mass income state tax forms   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. Mass income state tax forms But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. Mass income state tax forms Form 1099-OID not received. Mass income state tax forms   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. Mass income state tax forms gov that list total OID on certain debt instruments and have information that will help you figure OID. Mass income state tax forms For the latest OID tables, go to www. Mass income state tax forms irs. Mass income state tax forms gov and enter “OID tables” in the Search box. Mass income state tax forms If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. Mass income state tax forms Nominee. Mass income state tax forms   If someone else is the holder of record (the registered owner) of an OID instrument belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID. Mass income state tax forms Refiguring OID shown on Form 1099-OID. Mass income state tax forms   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. Mass income state tax forms You bought the debt instrument after its original issue and paid a premium or an acquisition premium. Mass income state tax forms The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). Mass income state tax forms For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Publication 1212. Mass income state tax forms Refiguring periodic interest shown on Form 1099-OID. Mass income state tax forms   If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates , earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument. Mass income state tax forms Certificates of deposit (CDs). Mass income state tax forms   If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID. Mass income state tax forms   This also applies to similar deposit arrangements with banks, building and loan associations, etc. Mass income state tax forms , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. Mass income state tax forms Bearer CDs. Mass income state tax forms   CDs issued after 1982 generally must be in registered form. Mass income state tax forms Bearer CDs are CDs not in registered form. Mass income state tax forms They are not issued in the depositor's name and are transferable from one individual to another. Mass income state tax forms   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. Mass income state tax forms More information. Mass income state tax forms   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. Mass income state tax forms When To Report Interest Income When to report your interest income depends on whether you use the cash method or an accrual method to report income. Mass income state tax forms Cash method. Mass income state tax forms   Most individual taxpayers use the cash method. Mass income state tax forms If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. Mass income state tax forms However, there are special rules for reporting the discount on certain debt instruments. Mass income state tax forms See U. Mass income state tax forms S. Mass income state tax forms Savings Bonds and Original Issue Discount (OID) , earlier. Mass income state tax forms Example. Mass income state tax forms On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. Mass income state tax forms You are not in the business of lending money. Mass income state tax forms The note stated that principal and interest would be due on August 31, 2013. Mass income state tax forms In 2013, you received $2,508. Mass income state tax forms 80 ($2,000 principal and $508. Mass income state tax forms 80 interest). Mass income state tax forms If you use the cash method, you must include in income on your 2013 return the $508. Mass income state tax forms 80 interest you received in that year. Mass income state tax forms Constructive receipt. Mass income state tax forms   You constructively receive income when it is credited to your account or made available to you. Mass income state tax forms You do not need to have physical possession of it. Mass income state tax forms For example, you are considered to receive interest, dividends, or other earnings on any deposit or account in a bank, savings and loan, or similar financial institution, or interest on life insurance policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. Mass income state tax forms This is true even if they are not yet entered in your passbook. Mass income state tax forms   You constructively receive income on the deposit or account even if you must: Make withdrawals in multiples of even amounts, Give a notice to withdraw before making the withdrawal, Withdraw all or part of the account to withdraw the earnings, or Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity. Mass income state tax forms Accrual method. Mass income state tax forms   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. Mass income state tax forms Interest is earned over the term of the debt instrument. Mass income state tax forms Example. Mass income state tax forms If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. Mass income state tax forms You would report the interest as follows: 2011, $80; 2012, $249. Mass income state tax forms 60; and 2013, $179. Mass income state tax forms 20. Mass income state tax forms Coupon bonds. Mass income state tax forms   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. Mass income state tax forms It does not matter when you mail the coupon for payment. Mass income state tax forms How To Report Interest Income Generally, you report all your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. Mass income state tax forms You cannot use Form 1040EZ if your taxable interest income is more than $1,500. Mass income state tax forms Instead, you must use Form 1040A or Form 1040. Mass income state tax forms Form 1040A. Mass income state tax forms   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. Mass income state tax forms Your taxable interest income is more than $1,500. Mass income state tax forms You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). Mass income state tax forms You received interest from a seller-financed mortgage, and the buyer used the property as a home. Mass income state tax forms You received a Form 1099-INT for U. Mass income state tax forms S. Mass income state tax forms savings bond interest that includes amounts you reported before 2013. Mass income state tax forms You received, as a nominee, interest that actually belongs to someone else. Mass income state tax forms You received a Form 1099-INT for interest on frozen deposits. Mass income state tax forms You are reporting OID in an amount less than the amount shown on Form 1099-OID. Mass income state tax forms You received a Form 1099-INT for interest on a bond you bought between interest payment dates. Mass income state tax forms You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550). Mass income state tax forms List each payer's name and the amount of interest income received from each payer on line 1. Mass income state tax forms If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. Mass income state tax forms   You cannot use Form 1040A if you must use Form 1040, as described next. Mass income state tax forms Form 1040. Mass income state tax forms   You must use Form 1040 instead of Form 1040A or Form 1040EZ if: You forfeited interest income because of the early withdrawal of a time deposit; You acquired taxable bonds after 1987, you choose to reduce interest income from the bonds by any amortizable bond premium, and you are deducting the excess of bond premium amortization for the accrual period over the qualified stated interest for the period (see Bond Premium Amortization in chapter 3 of Publication 550); or You received tax-exempt interest from private activity bonds issued after August 7, 1986. Mass income state tax forms Schedule B (Form 1040A or 1040). Mass income state tax forms   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. Mass income state tax forms Your taxable interest income is more than $1,500. Mass income state tax forms You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). Mass income state tax forms You received interest from a seller-financed mortgage, and the buyer used the property as a home. Mass income state tax forms You received a Form 1099-INT for U. Mass income state tax forms S. Mass income state tax forms savings bond interest that includes amounts you reported before 2013. Mass income state tax forms You received, as a nominee, interest that actually belongs to someone else. Mass income state tax forms You received a Form 1099-INT for interest on frozen deposits. Mass income state tax forms You received a Form 1099-INT for interest on a bond you bought between interest payment dates. Mass income state tax forms You are reporting OID in an amount less than the amount shown on Form 1099-OID. Mass income state tax forms Statement (2) in the preceding list under Form 1040 is true. Mass income state tax forms In Part I, line 1, list each payer's name and the amount received from each. Mass income state tax forms If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. Mass income state tax forms Reporting tax-exempt interest. Mass income state tax forms   Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including tax-exempt interest on zero coupon municipal bonds) and exempt-interest dividends from a mutual fund as shown on Form 1099-INT, box 8, and on Form 1099-DIV, box 10. Mass income state tax forms Add these amounts to any other tax-exempt interest you received. Mass income state tax forms Report the total on line 8b of Form 1040A or 1040. Mass income state tax forms   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. Mass income state tax forms Do not add tax-exempt interest in the total on Form 1040EZ, line 2. Mass income state tax forms   Form 1099-INT, box 9, and Form 1099-DIV, box 11, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. Mass income state tax forms These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. Mass income state tax forms Do not add the amounts in Form 1099-INT, box 9 and Form 1099-DIV, box 11 to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. Mass income state tax forms    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. Mass income state tax forms Form 1099-INT. Mass income state tax forms   Your taxable interest income, except for interest from U. Mass income state tax forms S. Mass income state tax forms savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. Mass income state tax forms Add this amount to any other taxable interest income you received. Mass income state tax forms You must report all of your taxable interest income even if you do not receive a Form 1099-INT. Mass income state tax forms Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. Mass income state tax forms Your identifying number may be truncated on any paper Form 1099-INT you receive. Mass income state tax forms   If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. Mass income state tax forms See Penalty on early withdrawal of savings in chapter 1 of Publication 550. Mass income state tax forms   Box 3 of Form 1099-INT shows the interest income you received from U. Mass income state tax forms S. Mass income state tax forms savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Mass income state tax forms Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in your interest income. Mass income state tax forms If part of the amount shown in box 3 was previously included in your interest income, see U. Mass income state tax forms S. Mass income state tax forms savings bond interest previously reported , later. Mass income state tax forms   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. Mass income state tax forms Report the amount from box 4 on Form 1040EZ, line 7; on Form 1040A, line 36; or Form 1040, line 62 (federal income tax withheld). Mass income state tax forms   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. Mass income state tax forms See chapter 28 for more information about investment expenses. Mass income state tax forms   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. Mass income state tax forms You may be able to take a credit for the amount shown in box 6 unless you deduct this amount on line 8 of Schedule A (Form 1040). Mass income state tax forms To take the credit, you may have to file Form 1116, Foreign Tax Credit. Mass income state tax forms For more information, see Publication 514, Foreign Tax Credit for Individuals. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms savings bond interest previously reported. Mass income state tax forms   If you received a Form 1099-INT for U. Mass income state tax forms S. Mass income state tax forms savings bond interest, the form may show interest you do not have to report. Mass income state tax forms See Form 1099-INT for U. Mass income state tax forms S. Mass income state tax forms savings bonds interest , earlier, under U. Mass income state tax forms S. Mass income state tax forms Savings Bonds. Mass income state tax forms   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Mass income state tax forms Then follow these steps. Mass income state tax forms Several lines above line 2, enter a subtotal of all interest listed on line 1. Mass income state tax forms Below the subtotal enter “U. Mass income state tax forms S. Mass income state tax forms Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. Mass income state tax forms Subtract these amounts from the subtotal and enter the result on line 2. Mass income state tax forms More information. Mass income state tax forms   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. Mass income state tax forms Prev  Up  Next   Home   More Online Publications
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The Mass Income State Tax Forms

Mass income state tax forms Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Mass income state tax forms Employee-owners. Mass income state tax forms Other rules. Mass income state tax forms Other rules. Mass income state tax forms Property Exchanged for StockNonqualified preferred stock. Mass income state tax forms Liabilities. Mass income state tax forms Election to reduce basis. Mass income state tax forms Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Mass income state tax forms S. Mass income state tax forms Real Property Interest Accounting MethodsSection 481(a) adjustment. Mass income state tax forms Accounting Periods Recordkeeping Income, Deductions, and Special ProvisionsCosts of Going Into Business Related Persons Income From Qualifying Shipping Activities Election to Expense Qualified Refinery Property Deduction to Comply With EPA Sulfur Regulations Energy-Efficient Commercial Building Property Deduction Corporate Preference Items Dividends-Received Deduction Extraordinary Dividends Below-Market Loans Charitable Contributions Capital Losses Net Operating Losses At-Risk Limits Passive Activity Limits Figuring TaxTax Rate Schedule Alternative Minimum Tax (AMT) Credits Recapture Taxes Accumulated Earnings Tax Distributions to ShareholdersMoney or Property Distributions Distributions of Stock or Stock Rights Constructive Distributions Reporting Dividends and Other Distributions How To Get Tax Help Businesses Taxed as Corporations The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996. Mass income state tax forms Business formed before 1997. Mass income state tax forms   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Mass income state tax forms Business formed after 1996. Mass income state tax forms   The following businesses formed after 1996 are taxed as corporations. Mass income state tax forms A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Mass income state tax forms A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Mass income state tax forms An insurance company. Mass income state tax forms Certain banks. Mass income state tax forms A business wholly owned by a state or local government. Mass income state tax forms A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Mass income state tax forms Certain foreign businesses. Mass income state tax forms Any other business that elects to be taxed as a corporation. Mass income state tax forms For example, a limited liability company (LLC) can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. Mass income state tax forms For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Mass income state tax forms S corporations. Mass income state tax forms   Some corporations may meet the qualifications for electing to be S corporations. Mass income state tax forms For information on S corporations, see the instructions for Form 1120S, U. Mass income state tax forms S. Mass income state tax forms Income Tax Return for an S Corporation. Mass income state tax forms Personal service corporations. Mass income state tax forms   A corporation is a personal service corporation if it meets all of the following requirements. Mass income state tax forms Its principal activity during the “testing period” is performing personal services (defined later). Mass income state tax forms Generally, the testing period for any tax year is the prior tax year. Mass income state tax forms If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: The last day of its tax year, or The last day of the calendar year in which its tax year begins. Mass income state tax forms Its employee-owners substantially perform the services in (1), above. Mass income state tax forms This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners. Mass income state tax forms Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Mass income state tax forms Personal services. Mass income state tax forms   Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts. Mass income state tax forms Employee-owners. Mass income state tax forms   A person is an employee-owner of a personal service corporation if both of the following apply. Mass income state tax forms He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period. Mass income state tax forms He or she owns any stock in the corporation at any time during the testing period. Mass income state tax forms Other rules. Mass income state tax forms   For other rules that apply to personal service corporations see Accounting Periods, later. Mass income state tax forms Closely held corporations. Mass income state tax forms   A corporation is closely held if all of the following apply. Mass income state tax forms It is not a personal service corporation. Mass income state tax forms At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. Mass income state tax forms “Individual” includes certain trusts and private foundations. Mass income state tax forms Other rules. Mass income state tax forms   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Mass income state tax forms Property Exchanged for Stock If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. Mass income state tax forms This rule applies both to individuals and to groups who transfer property to a corporation. Mass income state tax forms It also applies whether the corporation is being formed or is already operating. Mass income state tax forms It does not apply in the following situations. Mass income state tax forms The corporation is an investment company. Mass income state tax forms You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Mass income state tax forms The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt. Mass income state tax forms Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. Mass income state tax forms For more information, see section 1. Mass income state tax forms 351-3 of the Regulations. Mass income state tax forms Control of a corporation. Mass income state tax forms   To be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock. Mass income state tax forms Example 1. Mass income state tax forms You and Bill Jones buy property for $100,000. Mass income state tax forms You both organize a corporation when the property has a fair market value of $300,000. Mass income state tax forms You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Mass income state tax forms No gain is recognized by you, Bill, or the corporation. Mass income state tax forms Example 2. Mass income state tax forms You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. Mass income state tax forms This represents only 75% of each class of stock of the corporation. Mass income state tax forms The other 25% was already issued to someone else. Mass income state tax forms You and Bill recognize a taxable gain of $200,000 on the transaction. Mass income state tax forms Services rendered. Mass income state tax forms   The term property does not include services rendered or to be rendered to the issuing corporation. Mass income state tax forms The value of stock received for services is income to the recipient. Mass income state tax forms Example. Mass income state tax forms You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Mass income state tax forms Right after the exchange, you own 85% of the outstanding stock. Mass income state tax forms No gain is recognized on the exchange of property. Mass income state tax forms However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Mass income state tax forms Property of relatively small value. Mass income state tax forms   The term property does not include property of a relatively small value when it is compared to the value of stock and securities already owned or to be received for services by the transferor if the main purpose of the transfer is to qualify for the nonrecognition of gain or loss by other transferors. Mass income state tax forms   Property transferred will not be considered to be of relatively small value if its fair market value is at least 10% of the fair market value of the stock and securities already owned or to be received for services by the transferor. Mass income state tax forms Stock received in disproportion to property transferred. Mass income state tax forms   If a group of transferors exchange property for corporate stock, each transferor does not have to receive stock in proportion to his or her interest in the property transferred. Mass income state tax forms If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Mass income state tax forms It may be treated as if the stock were first received in proportion and then some of it used to make gifts, pay compensation for services, or satisfy the transferor's obligations. Mass income state tax forms Money or other property received. Mass income state tax forms   If, in an otherwise nontaxable exchange of property for corporate stock, you also receive money or property other than stock, you may have to recognize gain. Mass income state tax forms You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Mass income state tax forms The rules for figuring the recognized gain in this situation generally follow those for a partially nontaxable exchange discussed in Publication 544 under Like-Kind Exchanges. Mass income state tax forms If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Mass income state tax forms See chapter 3 of Publication 544. Mass income state tax forms No loss is recognized. Mass income state tax forms Nonqualified preferred stock. Mass income state tax forms   Nonqualified preferred stock is treated as property other than stock. Mass income state tax forms Generally, it is preferred stock with any of the following features. Mass income state tax forms The holder has the right to require the issuer or a related person to redeem or buy the stock. Mass income state tax forms The issuer or a related person is required to redeem or buy the stock. Mass income state tax forms The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised. Mass income state tax forms The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Mass income state tax forms For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Mass income state tax forms Liabilities. Mass income state tax forms   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Mass income state tax forms There are two exceptions to this treatment. Mass income state tax forms If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Mass income state tax forms However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Mass income state tax forms If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities. Mass income state tax forms For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Mass income state tax forms Example. Mass income state tax forms You transfer property to a corporation for stock. Mass income state tax forms Immediately after the transfer, you control the corporation. Mass income state tax forms You also receive $10,000 in the exchange. Mass income state tax forms Your adjusted basis in the transferred property is $20,000. Mass income state tax forms The stock you receive has a fair market value (FMV) of $16,000. Mass income state tax forms The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Mass income state tax forms Gain is realized as follows. Mass income state tax forms FMV of stock received $16,000 Cash received 10,000 Liability assumed by corporation 5,000 Total received $31,000 Minus: Adjusted basis of property transferred 20,000 Realized gain $11,000   The liability assumed is not treated as money or other property. Mass income state tax forms The recognized gain is limited to $10,000, the cash received. Mass income state tax forms Loss on exchange. Mass income state tax forms   If you have a loss from an exchange and own, directly or indirectly, more than 50% of the corporation's stock, you cannot deduct the loss. Mass income state tax forms For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Mass income state tax forms Basis of stock or other property received. Mass income state tax forms   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Mass income state tax forms Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Mass income state tax forms Decrease this amount by any cash you received, the fair market value of any other property you received, and any loss recognized on the exchange. Mass income state tax forms Also decrease this amount by the amount of any liability the corporation or another party to the exchange assumed from you, unless payment of the liability gives rise to a deduction when paid. Mass income state tax forms    Further decreases may be required when the corporation or another party to the exchange assumes from you a liability that gives rise to a deduction when paid, if the basis of the stock would otherwise be higher than its fair market value on the date of the exchange. Mass income state tax forms This rule does not apply if the entity assuming the liability acquired either substantially all of the assets or the trade or business with which the liability is associated. Mass income state tax forms The basis of any other property you receive is its fair market value on the date of the trade. Mass income state tax forms Basis of property transferred. Mass income state tax forms   A corporation that receives property from you in exchange for its stock generally has the same basis you had in the property, increased by any gain you recognized on the exchange. Mass income state tax forms However, the increase for the gain recognized may be limited. Mass income state tax forms For more information, see section 362 of the Internal Revenue Code. Mass income state tax forms Election to reduce basis. Mass income state tax forms   In a section 351 transaction, if the adjusted basis of the property transferred exceeds the property's fair market value, the transferor and transferee may make an irrevocable election to treat the basis of the stock received by the transferor as having a basis equal to the fair market value of the property transferred. Mass income state tax forms The transferor and transferee make this election by attaching a statement to their tax returns filed by the due date (including extensions) for the tax year in which the transaction occurred. Mass income state tax forms However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Mass income state tax forms R. Mass income state tax forms B. Mass income state tax forms 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Mass income state tax forms    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Mass income state tax forms Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Mass income state tax forms Paid-in capital. Mass income state tax forms   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Mass income state tax forms These contributions are not taxable to the corporation. Mass income state tax forms Basis. Mass income state tax forms   The corporation's basis of property contributed to capital by a shareholder is the same as the basis the shareholder had in the property, increased by any gain the shareholder recognized on the exchange. Mass income state tax forms However, the increase for the gain recognized may be limited. Mass income state tax forms For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Mass income state tax forms   The basis of property contributed to capital by a person other than a shareholder is zero. Mass income state tax forms   If a corporation receives a cash contribution from a person other than a shareholder, the corporation must reduce the basis of any property acquired with the contribution during the 12-month period beginning on the day it received the contribution by the amount of the contribution. Mass income state tax forms If the amount contributed is more than the cost of the property acquired, then reduce, but not below zero, the basis of the other properties held by the corporation on the last day of the 12-month period in the following order. Mass income state tax forms Depreciable property. Mass income state tax forms Amortizable property. Mass income state tax forms Property subject to cost depletion but not to percentage depletion. Mass income state tax forms All other remaining properties. Mass income state tax forms   Reduce the basis of property in each category to zero before going on to the next category. Mass income state tax forms   There may be more than one piece of property in each category. Mass income state tax forms Base the reduction of the basis of each property on the following ratio:   Basis of each piece of property   Bases of all properties (within that category) If the corporation wishes to make this adjustment in some other way, it must get IRS approval. Mass income state tax forms The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Mass income state tax forms Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Mass income state tax forms A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Mass income state tax forms After the end of the year, the corporation must file an income tax return. Mass income state tax forms This section will help you determine when and how to pay and file corporate income taxes. Mass income state tax forms For certain corporations affected by Presidentially declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. Mass income state tax forms The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Mass income state tax forms For more information, visit www. Mass income state tax forms irs. Mass income state tax forms gov/newsroom/article/0,,id=108362. Mass income state tax forms 00. Mass income state tax forms Income Tax Return This section will help you determine when and how to report a corporation's income tax. Mass income state tax forms Who must file. Mass income state tax forms   Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Mass income state tax forms Which form to file. Mass income state tax forms   A corporation generally must file Form 1120, U. Mass income state tax forms S. Mass income state tax forms Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Mass income state tax forms Certain organizations and entities must file special returns. Mass income state tax forms For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Mass income state tax forms Electronic filing. Mass income state tax forms   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Mass income state tax forms Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Mass income state tax forms However, in certain instances, these corporations can request a waiver. Mass income state tax forms For more information regarding electronic filing, visit www. Mass income state tax forms irs. Mass income state tax forms gov/efile. Mass income state tax forms When to file. Mass income state tax forms   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Mass income state tax forms A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Mass income state tax forms A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Mass income state tax forms Example 1. Mass income state tax forms A corporation's tax year ends December 31. Mass income state tax forms It must file its income tax return by March 15th. Mass income state tax forms Example 2. Mass income state tax forms A corporation's tax year ends June 30. Mass income state tax forms It must file its income tax return by September 15th. Mass income state tax forms   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Mass income state tax forms Extension of time to file. Mass income state tax forms   File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, to request an extension of time to file a corporation income tax return. Mass income state tax forms The IRS will grant the extension if you complete the form properly, file it, and pay any tax due by the original due date for the return. Mass income state tax forms   Form 7004 does not extend the time for paying the tax due on the return. Mass income state tax forms Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Mass income state tax forms The interest is figured from the original due date of the return to the date of payment. Mass income state tax forms   For more information, see the instructions for Form 7004. Mass income state tax forms How to pay your taxes. Mass income state tax forms   A corporation must pay its tax due in full no later than the 15th day of the 3rd month after the end of its tax year. Mass income state tax forms Electronic Federal Tax Payment System (EFTPS). Mass income state tax forms   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Mass income state tax forms For more information on EFTPS and enrollment, visit www. Mass income state tax forms eftps. Mass income state tax forms gov or call 1-800-555-4477. Mass income state tax forms Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Mass income state tax forms Note. Mass income state tax forms Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Mass income state tax forms Penalties Generally, if the corporation receives a notice about interest and penalties after it files its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. Mass income state tax forms Do not attach an explanation when the corporation's return is filed. Mass income state tax forms See the instructions for your income tax return. Mass income state tax forms Late filing of return. Mass income state tax forms    A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. Mass income state tax forms If the corporation is charged a penalty for late payment of tax (discussed next) for the same period of time, the penalty for late filing is reduced by the amount of the penalty for late payment. Mass income state tax forms The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Mass income state tax forms The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Mass income state tax forms Late payment of tax. Mass income state tax forms    A corporation that does not pay the tax when due may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Mass income state tax forms The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Mass income state tax forms Trust fund recovery penalty. Mass income state tax forms   If income, social security, and Medicare taxes that a corporation must withhold from employee wages are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Mass income state tax forms The penalty is the full amount of the unpaid trust fund tax. Mass income state tax forms This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Mass income state tax forms   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying these taxes, and who acted willfully in not doing so. Mass income state tax forms   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Mass income state tax forms A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Mass income state tax forms   Willfully means voluntarily, consciously, and intentionally. Mass income state tax forms A responsible person acts willfully if the person knows the required actions are not taking place. Mass income state tax forms   For more information on withholding and paying these taxes, see Publication 15 (Circular E), Employer's Tax Guide, and Publication 51, (Circular A), Agricultural Employer's Tax Guide. Mass income state tax forms Other penalties. Mass income state tax forms   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Mass income state tax forms See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Mass income state tax forms Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Mass income state tax forms If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Mass income state tax forms This section will explain how to avoid this penalty. Mass income state tax forms When to pay estimated tax. Mass income state tax forms   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Mass income state tax forms Example 1. Mass income state tax forms Your corporation's tax year ends December 31. Mass income state tax forms Installment payments are due on April 15, June 15, September 15, and December 15. Mass income state tax forms Example 2. Mass income state tax forms Your corporation's tax year ends June 30. Mass income state tax forms Installment payments are due on October 15, December 15, March 15, and June 15. Mass income state tax forms   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Mass income state tax forms How to figure each required installment. Mass income state tax forms   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Mass income state tax forms You will generally use one of the following two methods to figure each required installment. Mass income state tax forms You should use the method that yields the smallest installment payments. Mass income state tax forms Note. Mass income state tax forms In these discussions, “return” generally refers to the corporation's original return. Mass income state tax forms However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Mass income state tax forms Method 1. Mass income state tax forms   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Mass income state tax forms Method 2. Mass income state tax forms   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Mass income state tax forms   To use Method 2: The corporation must have filed a return for the previous year, The return must have been for a full 12 months, and The return must have shown a positive tax liability (not zero). Mass income state tax forms Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Mass income state tax forms   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Mass income state tax forms Other methods. Mass income state tax forms   If a corporation's income is expected to vary during the year because, for example, its business is seasonal, it may be able to lower the amount of one or more required installments by using one or both of the following methods. Mass income state tax forms The annualized income installment method. Mass income state tax forms The adjusted seasonal installment method. Mass income state tax forms Use Schedule A of Form 1120-W to determine if using one or both of these methods will lower the amount of any required installments. Mass income state tax forms Refiguring required installments. Mass income state tax forms   If after the corporation figures and deposits its estimated tax it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments to see if an underpayment penalty may apply. Mass income state tax forms An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Mass income state tax forms Underpayment penalty. Mass income state tax forms   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Mass income state tax forms The penalty is figured separately for each installment due date. Mass income state tax forms The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Mass income state tax forms This is true even if the corporation is due a refund when its return is filed. Mass income state tax forms Form 2220. Mass income state tax forms   Use Form 2220, Underpayment of Estimated Tax by Corporations, to determine if a corporation is subject to the penalty for underpayment of estimated tax and to figure the amount of the penalty. Mass income state tax forms   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Mass income state tax forms The amount of the underpayment. Mass income state tax forms The period during which the underpayment was due and unpaid. Mass income state tax forms The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Mass income state tax forms   A corporation generally does not have to file Form 2220 with its income tax return because the IRS will figure any penalty and bill the corporation. Mass income state tax forms However, even if the corporation does not owe a penalty, complete and attach the form to the corporation's tax return if any of the following apply. Mass income state tax forms The annualized income installment method was used to figure any required installment. Mass income state tax forms The adjusted seasonal installment method was used to figure any required installment. Mass income state tax forms The corporation is a large corporation figuring its first required installment based on the prior year's tax. Mass income state tax forms How to pay estimated tax. Mass income state tax forms   A corporation is generally required to use EFTPS to pay its taxes. Mass income state tax forms See Electronic Federal Tax Payment System (EFTPS), earlier. Mass income state tax forms Also see the Instructions for Form 1120-W. Mass income state tax forms Quick refund of overpayments. Mass income state tax forms   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Mass income state tax forms Use Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund of an overpayment of estimated tax. Mass income state tax forms A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Mass income state tax forms Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Mass income state tax forms File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. Mass income state tax forms Do not file Form 4466 before the end of the corporation's tax year. Mass income state tax forms An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Mass income state tax forms The IRS will act on the form within 45 days from the date you file it. Mass income state tax forms U. Mass income state tax forms S. Mass income state tax forms Real Property Interest If a domestic corporation acquires a U. Mass income state tax forms S. Mass income state tax forms real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Mass income state tax forms The amount paid includes cash, the fair market value of other property, and any assumed liability. Mass income state tax forms If a domestic corporation distributes a U. Mass income state tax forms S. Mass income state tax forms real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Mass income state tax forms A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Mass income state tax forms For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U. Mass income state tax forms S. Mass income state tax forms Withholding Tax Return for Dispositions by Foreign Persons of U. Mass income state tax forms S. Mass income state tax forms Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Mass income state tax forms S. Mass income state tax forms Real Property Interests. Mass income state tax forms Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Mass income state tax forms Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Mass income state tax forms In all cases, the method used must clearly show taxable income. Mass income state tax forms Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Mass income state tax forms Accrual method. Mass income state tax forms   Generally, a corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. Mass income state tax forms A corporation engaged in farming operations also must use the accrual method. Mass income state tax forms   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Mass income state tax forms However, qualifying taxpayers and eligible businesses of qualifying small business taxpayers are excepted from using the accrual method for eligible trades or businesses and may account for inventoriable items as materials and supplies that are not incidental. Mass income state tax forms   Under the accrual method, an amount is includable in income when: All the events have occurred that fix the right to receive the income, which is the earliest of the date: The required performance takes place, Payment is due, or Payment is received; and The amount can be determined with reasonable accuracy. Mass income state tax forms   Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when: All events that determine the liability have occurred, The amount of the liability can be figured with reasonable accuracy, and Economic performance takes place with respect to the expense. Mass income state tax forms   There are exceptions to the economic performance rule for certain items, including recurring expenses. Mass income state tax forms See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Mass income state tax forms Nonaccrual experience method. Mass income state tax forms   Accrual method corporations are not required to maintain accruals for certain amounts from the performance of services that, on the basis of their experience, will not be collected, if: The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million. Mass income state tax forms   This provision does not apply if interest is required to be paid on the amount or if there is any penalty for failure to pay the amount timely. Mass income state tax forms Percentage of completion method. Mass income state tax forms   Long-term contracts (except for certain real property construction contracts) must generally be accounted for using the percentage of completion method described in section 460 of the Internal Revenue Code. Mass income state tax forms Mark-to-market accounting method. Mass income state tax forms   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Mass income state tax forms Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Mass income state tax forms Any security not held as inventory at the close of the tax year is treated as sold at its FMV on the last business day of the tax year. Mass income state tax forms Any gain or loss must be taken into account in determining gross income. Mass income state tax forms The gain or loss taken into account is treated as ordinary gain or loss. Mass income state tax forms   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Mass income state tax forms Change in accounting method. Mass income state tax forms   A corporation can change its method of accounting used to report taxable income (for income as a whole or for the treatment of any material item). Mass income state tax forms The corporation must file Form 3115, Application for Change in Accounting Method. Mass income state tax forms For more information, see Form 3115 and Publication 538. Mass income state tax forms Section 481(a) adjustment. Mass income state tax forms   The corporation may have to make an adjustment under section 481(a) of the Internal Revenue Code to prevent amounts of income or expense from being duplicated or omitted. Mass income state tax forms The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Mass income state tax forms However, a corporation can elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. Mass income state tax forms The corporation must complete the appropriate lines of Form 3115 to make the election. Mass income state tax forms See the Instructions for Form 3115. Mass income state tax forms Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Mass income state tax forms A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Mass income state tax forms Generally, corporations can use either a calendar year or a fiscal year as its tax year. Mass income state tax forms Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Mass income state tax forms For more information, see Publication 538. Mass income state tax forms Personal service corporation. Mass income state tax forms   A personal service corporation must use a calendar year as its tax year unless: It elects to use a 52–53 week tax year that ends with reference to the calendar year; It can establish a business purpose for a different tax year and obtains approval of the IRS. Mass income state tax forms See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. Mass income state tax forms Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Mass income state tax forms   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Mass income state tax forms See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Mass income state tax forms Change of tax year. Mass income state tax forms   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Mass income state tax forms However, under certain conditions, a corporation can change its tax year without getting the consent. Mass income state tax forms For more information, see Form 1128 and Publication 538. Mass income state tax forms Recordkeeping A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Mass income state tax forms Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Mass income state tax forms Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. Mass income state tax forms The corporation should keep copies of all filed returns. Mass income state tax forms They help in preparing future and amended returns and in the calculation of earnings and profits. Mass income state tax forms Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Mass income state tax forms However, the following special provisions apply only to corporations. Mass income state tax forms Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Mass income state tax forms However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Mass income state tax forms Any costs not deducted can be amortized. Mass income state tax forms Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Mass income state tax forms Organizational costs are the direct costs of creating the corporation. Mass income state tax forms For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Mass income state tax forms Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Mass income state tax forms Related Persons A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. Mass income state tax forms Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Mass income state tax forms If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. Mass income state tax forms These rules also deny the deduction of losses on the sale or exchange of property between related persons. Mass income state tax forms Related persons. Mass income state tax forms   For purposes of this rule, the following persons are related to a corporation. Mass income state tax forms Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Mass income state tax forms An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Mass income state tax forms A trust fiduciary, when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. Mass income state tax forms An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Mass income state tax forms A partnership, if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. Mass income state tax forms Any employee-owner, if the corporation is a personal service corporation (see Personal service corporation, earlier), regardless of the amount of stock owned by the employee-owner. Mass income state tax forms Ownership of stock. Mass income state tax forms   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Mass income state tax forms Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries. Mass income state tax forms An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Mass income state tax forms Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Mass income state tax forms Any individual owning (other than by applying (2), above) stock in a corporation, is treated as also owning the stock owned directly or indirectly by that individual's partner. Mass income state tax forms To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Mass income state tax forms But stock constructively owned by an individual under (2) or (3) is not treated as actually owned by the individual for applying either (2) or (3) to make another person the constructive owner of that stock. Mass income state tax forms Reallocation of income and deductions. Mass income state tax forms   Where it is necessary to clearly show income or prevent tax evasion, the IRS can reallocate gross income, deductions, credits, or allowances between two or more organizations, trades, or businesses owned or controlled directly, or indirectly, by the same interests. Mass income state tax forms Complete liquidations. Mass income state tax forms   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Mass income state tax forms More information. Mass income state tax forms   For more information about the related person rules, see Publication 544. Mass income state tax forms Income From Qualifying Shipping Activities A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. Mass income state tax forms If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Mass income state tax forms Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Mass income state tax forms A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Mass income state tax forms A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Mass income state tax forms For more information regarding the election, see Form 8902. Mass income state tax forms Election to Expense Qualified Refinery Property A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed in service before January 1, 2014. Mass income state tax forms The deduction is allowed for the year in which the property is placed in service. Mass income state tax forms A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest. Mass income state tax forms For more information, see section 179C of the Internal Revenue Code and the related Regulations. Mass income state tax forms Deduction to Comply With EPA Sulfur Regulations A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA). Mass income state tax forms A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest. Mass income state tax forms For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Mass income state tax forms Energy-Efficient Commercial Building Property Deduction A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service before January 1, 2014. Mass income state tax forms In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Mass income state tax forms 1-2001 domestic building; The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50% or more. Mass income state tax forms The deduction is limited to $1. Mass income state tax forms 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Mass income state tax forms Other rules and limitations apply. Mass income state tax forms The corporation must reduce the basis of any property by any deduction taken. Mass income state tax forms The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Mass income state tax forms For more information, see section 179D of the Internal Revenue Code. Mass income state tax forms Also see Notice 2006-52, 2006-26 I. Mass income state tax forms R. Mass income state tax forms B. Mass income state tax forms 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Mass income state tax forms R. Mass income state tax forms B. Mass income state tax forms 725, and any successor. Mass income state tax forms Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Mass income state tax forms These items are known as corporate preference items and they include the following. Mass income state tax forms Gain on the disposition of section 1250 property. Mass income state tax forms For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Mass income state tax forms Percentage depletion for iron ore and coal (including lignite). Mass income state tax forms For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Mass income state tax forms Amortization of pollution control facilities. Mass income state tax forms For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Mass income state tax forms Mineral exploration and development costs. Mass income state tax forms For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Mass income state tax forms For more information on corporate preference items, see section 291 of the Internal Revenue Code. Mass income state tax forms Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Mass income state tax forms This section discusses the general rules that apply. Mass income state tax forms The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Mass income state tax forms For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Mass income state tax forms Dividends from domestic corporations. Mass income state tax forms   A corporation can deduct, within certain limits, 70% of the dividends received if the corporation receiving the dividend owns less than 20% of the corporation distributing the dividend. Mass income state tax forms If the corporation owns 20% or more of the distributing corporation's stock, it can, subject to certain limits, deduct 80% of the dividends received. Mass income state tax forms Ownership. Mass income state tax forms   Determine ownership, for these rules, by the amount of voting power and value of the paying corporation's stock (other than certain preferred stock) the receiving corporation owns. Mass income state tax forms Small business investment companies. Mass income state tax forms   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Mass income state tax forms Dividends from regulated investment companies. Mass income state tax forms   Regulated investment company dividends received are subject to certain limits. Mass income state tax forms Capital gain dividends received from a regulated investment company do not qualify for the deduction. Mass income state tax forms For more information, see section 854 of the Internal Revenue Code. Mass income state tax forms No deduction allowed for certain dividends. Mass income state tax forms   Corporations cannot take a deduction for dividends received from the following entities. Mass income state tax forms A real estate investment trust (REIT). Mass income state tax forms A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year. Mass income state tax forms A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. Mass income state tax forms Ex-dividend means the holder has no rights to the dividend. Mass income state tax forms A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 366 days. Mass income state tax forms Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Mass income state tax forms Dividends on deposits. Mass income state tax forms   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Mass income state tax forms They do not qualify for this deduction. Mass income state tax forms Limit on deduction for dividends. Mass income state tax forms   The total deduction for dividends received or accrued is generally limited (in the following order) to: 80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then 70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations). Mass income state tax forms Figuring the limit. Mass income state tax forms   In figuring the limit, determine taxable income without the following items. Mass income state tax forms The net operating loss deduction. Mass income state tax forms The domestic production activities deduction. Mass income state tax forms The deduction for dividends received. Mass income state tax forms Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Mass income state tax forms Any capital loss carryback to the tax year. Mass income state tax forms Effect of net operating loss. Mass income state tax forms   If a corporation has a net operating loss (NOL) for a tax year, the limit of 80% (or 70%) of taxable income does not apply. Mass income state tax forms To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Mass income state tax forms Example 1. Mass income state tax forms A corporation loses $25,000 from operations. Mass income state tax forms It receives $100,000 in dividends from a 20%-owned corporation. Mass income state tax forms Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Mass income state tax forms If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). Mass income state tax forms Therefore, the 80% of taxable income limit does not apply. Mass income state tax forms The corporation can deduct the full $80,000. Mass income state tax forms Example 2. Mass income state tax forms Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Mass income state tax forms Its taxable income is $85,000 before the deduction for dividends received. Mass income state tax forms After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Mass income state tax forms Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%). Mass income state tax forms Extraordinary Dividends If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. Mass income state tax forms The nontaxed part is any dividends-received deduction allowable for the dividends. Mass income state tax forms Extraordinary dividend. Mass income state tax forms   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Mass income state tax forms The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Mass income state tax forms Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Mass income state tax forms Treat all dividends received that have ex-dividend dates within a 365-consecutive-day period as extraordinary dividends if the total of the dividends exceeds 20% of the corporation's adjusted basis in the stock. Mass income state tax forms Disqualified preferred stock. Mass income state tax forms   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Mass income state tax forms   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Mass income state tax forms The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Mass income state tax forms The issue price of the stock exceeds its liquidation rights or stated redemption price. Mass income state tax forms The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock. Mass income state tax forms   These rules apply to stock issued after July 10, 1989, unless it was issued under a written binding contract in effect on that date, and thereafter, before the issuance of the stock. Mass income state tax forms More information. Mass income state tax forms   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Mass income state tax forms Below-Market Loans If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest. Mass income state tax forms A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Mass income state tax forms A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following: A loan in exchange for a note that requires payment of interest at the applicable federal rate, and An additional payment in an amount equal to the forgone interest. Mass income state tax forms Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Mass income state tax forms Foregone interest. Mass income state tax forms   For any period, forgone interest is equal to: The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Mass income state tax forms See Below-market loans, in chapter 4 of Publication 535 for more information. Mass income state tax forms Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Mass income state tax forms The contribution is deductible if made to, or for the use of, a qualified organization. Mass income state tax forms For more information on qualified organizations, see Publication 526, Charitable Contributions. Mass income state tax forms Also see, Exempt Organizations Select Check (EO Select Check) at www. Mass income state tax forms irs. Mass income state tax forms gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Mass income state tax forms Note. Mass income state tax forms You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Mass income state tax forms Cash method corporation. Mass income state tax forms   A corporation using the cash method of accounting deducts contributions in the tax year paid. Mass income state tax forms Accrual method corporation. Mass income state tax forms   A corporation using an accrual method of accounting can choose to deduct unpaid contributions for the tax year the board of directors authorizes them if it pays them by the 15th day of the 3rd month after the close of that tax year. Mass income state tax forms Make the choice by reporting the contribution on the corporation's return for the tax year. Mass income state tax forms A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Mass income state tax forms The declaration must include the date the resolution was adopted. Mass income state tax forms Limitations on deduction. Mass income state tax forms   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Mass income state tax forms Figure taxable income for this purpose without the following. Mass income state tax forms The deduction for charitable contributions. Mass income state tax forms The dividends-received deduction. Mass income state tax forms The deduction allowed under section 249 of the Internal Revenue Code. Mass income state tax forms The domestic production activities deduction. Mass income state tax forms Any net operating loss carryback to the tax year. Mass income state tax forms Any capital loss carryback to the tax year. Mass income state tax forms Farmers and ranchers. Mass income state tax forms    Corporations that are farmers and ranchers should see section 170(b)(2) of the Internal Revenue Code for special rules that may affect the deduction limit. Mass income state tax forms Carryover of excess contributions. Mass income state tax forms   You can carry over, within certain limits, to each of the subsequent 5 years any charitable contributions made during the current year that exceed the 10% limit. Mass income state tax forms You lose any excess not used within that period. Mass income state tax forms For example, if a corporation has a carryover of excess contributions paid in 2010 and it does not use all the excess on its return for 2011, it can carry any excess over to 2012, 2013, 2014, and 2015, if applicable. Mass income state tax forms Any excess not used in 2015 is lost. Mass income state tax forms Do not deduct a carryover of excess contributions in the carryover year until after you deduct contributions made in that year (subject to the 10% limit). Mass income state tax forms You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Mass income state tax forms Cash contributions. Mass income state tax forms   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Mass income state tax forms The record can be a bank record, receipt, letter, or other written communication from the donee indicating the name of the organization, the date of the contribution, and the amount of the contribution. Mass income state tax forms Keep the record of the contribution with the other corporate records. Mass income state tax forms Do not attach the records to the corporation's return. Mass income state tax forms For more information on cash contributions, see Publication 526. Mass income state tax forms Gifts of $250 or more. Mass income state tax forms   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Mass income state tax forms The acknowledgement should show the amount of cash contributed, a description of the property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. Mass income state tax forms The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Mass income state tax forms Keep the acknowledgement with other corporate records. Mass income state tax forms Do not attach the acknowledgement to the return. Mass income state tax forms Contributions of property other than cash. Mass income state tax forms   If a corporation (other than a closely-held or a personal service corporation) claims a deduction of more than $500 for contributions of property other than cash, a schedule describing the property and the method used to determine its fair market value must be attached to the corporation's return. Mass income state tax forms In addition the corporation should keep a record of: The approximate date and manner of acquisition of the donated property and The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution. Mass income state tax forms   Closely held and personal service corporations must complete and attach Form 8283, Noncash Charitable Contributions, to their returns if they claim a deduction of more than $500 for non-cash contributions. Mass income state tax forms For all other corporations, if the deduction claimed for donated property exceeds $5,000, complete Form 8283 and attach it to the corporation's return. Mass income state tax forms   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Mass income state tax forms A qualified appraisal is not required for the donation of cash, publicly traded securities, inventory, and any qualified vehicles sold by a donee organization without any significant intervening use or material improvement. Mass income state tax forms The appraisal should be maintained with other corporate records and only attached to the corporation's return when the deduction claimed exceeds $500,000; $20,000 for donated art work. Mass income state tax forms   See Form 8283 for more information. Mass income state tax forms Qualified conservation contributions. Mass income state tax forms   If a corporation makes a qualified conservation contribution, the corporation must provide information regarding the legal interest being donated, the fair market value of the underlying property before and after the donation, and a description of the conservation purpose for which the property will be used. Mass income state tax forms For more information, see section 170(h) of the Internal Revenue Code. Mass income state tax forms Contributions of used vehicles. Mass income state tax forms   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Mass income state tax forms The deduction is limited, and other special rules apply. Mass income state tax forms For more information, see Publication 526. Mass income state tax forms Reduction for contributions of certain property. Mass income state tax forms   For a charitable contribution of property, the corporation must reduce the contribution by the sum of: The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV. Mass income state tax forms   The reduction for the long-term capital gain applies to: Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption; Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property. Mass income state tax forms Larger deduction. Mass income state tax forms   A corporation (other than an S corporation) may be able to claim a deduction equal to the lesser of (a) the basis of the donated inventory or property plus one-half of the inventory or property's appreciation (gain if the donated inventory or property was sold at fair market value on the date of the donation), or (b) two times basis of the donated inventory or property. Mass income state tax forms This deduction may be allowed for certain contributions of: Certain inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants. Mass income state tax forms Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. Mass income state tax forms The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science. Mass income state tax forms Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States. Mass income state tax forms Contributions to organizations conducting lobbying activities. Mass income state tax forms   Contributions made to an organization that conducts lobbying activities are not deductible if: The lobbying activities relate to matters of direct financial interest to the donor's trade or business and The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor. Mass income state tax forms More information. Mass income state tax forms   For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 of the Internal Revenue Code, the related regulations, and Publication 526. Mass income state tax forms Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Mass income state tax forms In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Mass income state tax forms Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Mass income state tax forms A capital loss is carried to other years in the following order. Mass income state tax forms 3 years prior to the loss year. Mass income state tax forms 2 years prior to the loss year. Mass income state tax forms 1 year prior to the loss year. Mass income state tax forms Any loss remaining is carried forward for 5 years. Mass income state tax forms When you carry a net capital loss to another tax year, treat it as a short-term loss. Mass income state tax forms It does not retain its original identity as long term or short term. Mass income state tax forms Example. Mass income state tax forms A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Mass income state tax forms The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Mass income state tax forms The corporation treats this $6,000 as a short-term loss when carried back or forward. Mass income state tax forms The corporation carries the $6,000 short-term loss back 3 years. Mass income state tax forms In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. Mass income state tax forms It subtracts the $6,000 short-term loss first from the net short-term gain. Mass income state tax forms This results in a net capital gain for year 1 of $7,000. Mass income state tax forms This consists of a net short-term capital gain of $2,000 ($8,000 − $6,000) and a net long-term capital gain of $5,000. Mass income state tax forms S corporation status. Mass income state tax forms   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Mass income state tax forms Rules for carryover and carryback. Mass income state tax forms   When carrying a capital loss from one year to another, the following rules apply. Mass income state tax forms When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Mass income state tax forms In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Mass income state tax forms If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Mass income state tax forms You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back. Mass income state tax forms Refunds. Mass income state tax forms   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Mass income state tax forms If your corrected tax is less than the tax you originally owed, use either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U. Mass income state tax forms S. Mass income state tax forms Corporation Income Tax Return, to apply for a refund. Mass income state tax forms Form 1139. Mass income state tax forms    A corporation can get a refund faster by using Form 1139. Mass income state tax forms It cannot file Form 1139 before filing the return for the corporation's capital loss year, but it must file Form 1139 no later than 1 year after the year it sustains the capital loss. Mass income state tax forms Form 1120X. Mass income state tax forms   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Mass income state tax forms The corporation must file the Form 1120X within 3 years of the due date, includin