Source: https://www.mass.gov/directive/directive-86-36-security-corporations-election-for-voluntary-withdrawal-of-classification
Timestamp: 2018-08-14 17:17:48
Document Index: 589694857

Matched Legal Cases: ['§ 38', '§ 38', '§ 32', '§ 38', '§ 38', '§ 38']

Directive 86-36: Security Corporations Election For Voluntary Withdrawal Of Classification | Mass.gov
Directive Directive 86-36: Security Corporations Election For Voluntary Withdrawal Of Classification
FACTS: Flora Corporation is a domestic corporation. For the past several years, it has been engaged exclusively in buying, selling, dealing in, or holding securities on its own behalf and not as a broker, within the meaning of G.L. c. 63, § 38B, and has been classified as a security corporation.
During its current taxable year, Flora Corporation continues to qualify for tax treatment under G.L. c. 63, § 38B. Due to is peculiar facts and circumstances, however, it anticipates that its tax liability will be less if it is taxed under the general corporate excise imposed by G.L. c. 63, § 32.
ISSUE 1: May Flora Corporation elect to have its classification as a security corporation withdrawn even though it is engaged exclusively in buying, selling, dealing in, or holding securities on its own behalf and not as a broker.
ISSUE 2: What procedures must Flora Corporation follow in order to have its classification as a security corporation withdrawn?
DISCUSSION: In general, if a corporation is engaged exclusively in buying, selling, dealing in, or holding securities on its own behalf and not as a broker, it may elect tax treatment under G.L. c. 63, § 38B by applying to the Commissioner for classification as a security corporation. This election is voluntary. Accordingly, a corporation that has been classified as a security corporation may also elect to have that classification withdrawn by the Commissioner, even though it is still engaged exclusively in buying, selling, dealing in, or holding securities on its own behalf and not as a broker.
In order to have its classification withdrawn, a corporation must notify the Commissioner of its election in writing. This notice must be on corporate letterhead and must be signed by the president, vice-president or clerk of the corporation. The notice must also include the corporation's federal and Massachusetts identification numbers and a brief statement of the reason for the request.
A notice of withdrawal must be filed by a security corporation before the end of its taxable year. See generally G.L. c. 63, § 38B. A voluntary withdrawal is effective for the taxable year in which the notice is received by the Commissioner and for all succeeding taxable years of the corporation, unless and until the corporation successfully reapplies for classification as a security corporation.
Notice should be sent to the following address:
Attn: Security Corporation Unit
DIRECTIVE 1: Flora Corporation may elect to have its classification as a security corporation withdrawn even though it is engaged exclusively in buying, selling, dealing in, or holding securities on its own behalf and not as a broker.
DIRECTIVE 2: In order to have its classification as a security corporation withdrawn, Flora Corporation must notify the Commissioner in writing, in the manner described above. The notice must be filed by Flora before the end of its taxable year.
REFERENCE: G.L. c. 63, § 38B
DD 86-36