Source: https://www.mass.gov/regulations/830-CMR-63302-net-operating-loss-deductions-and-carry-forward
Timestamp: 2020-08-11 04:40:05
Document Index: 471478972

Matched Legal Cases: ['§ 30', '§ 30', '§ 30', '§ 30', '§ 30', '§ 52', '§ 31', '§ 30', '§ 38', '§ 38', '§ 30', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382', '§ 382']

830 CMR 63.30.2: Net Operating Loss Deductions and Carry Forward | Mass.gov
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Regulation 830 CMR 63.30.2: Net Operating Loss Deductions and Carry Forward
(1)	Statement of Purpose, Outline of Topics
(3)	Allowance of Net Operating Loss Deduction
(a) General Rule. In calculating net income for a taxable year, G.L. c. 63, § 30 allows an eligible business corporation to claim a deduction for net operating losses incurred in previous taxable years, i.e., a net operating loss carry forward. The statute provides a choice between two deductions, the net operating loss deduction, under M.G.L. c. 63, § 30.5(b) and the start-up corporation net operating loss deduction, under M.G.L. c. 63, § 30.5(c). Because the limitations on the net operating loss deduction set forth in M.G.L. c. 63, § 30.5(b)(1), (2), and (3) have expired, and because the start-up corporation net operating loss deduction allows for a shorter carry forward period than is allowed by the net operating loss deduction, the start-up corporation net operating loss deduction under M.G.L. c. 63, § 30.5(c) is functionally obsolete. Consequently, this regulation does not provide rules for taking the start-up corporation net operating loss deduction.
(c) Transition Rule for Former Utility Corporations. Eligible business corporations that were classified as utility corporations subject to tax under former M.G.L. c. 63, § 52A, may not carry forward or deduct a loss incurred in a tax year beginning before January 1, 2014. However, such eligible business corporations may carry forward a net operating loss incurred in a tax year beginning on or after January 1, 2014.
(e) Adjustments to Deductions; Adjustments Based on the Taking of Certain Credits. Certain Massachusetts statutes including, without limitation, M.G.L. c. 63, §§ 31E, 38H(b)(1), and 38M, require business corporations to make adjustments with respect to deductions or the taking of credits in determining their net income. In the event an eligible business corporation is required by statute to make such an adjustment, the eligible business corporation must make a corresponding adjustment in calculating its net operating loss.
(f) Disregard of Certain Other Deductions, Adjustments, and Credits. An eligible business corporation’s net operating loss is determined solely with reference to M.G.L. c. 63, § 30 and § 38(a)(1). Except as provided in 830 CMR 63.30.2(4)(e), any deduction, adjustment, or credit allowed by any other provision of M.G.L. c. 63, or by the Code, is disregarded in determining a net operating loss. Examples of such other items include, without limitation:
(b) Ordering Rules. A net operating loss carry forward must be deducted after all current deductions allowed in determining current taxable net income, including the dividends received deduction allowed by M.G.L. c. 63, § 38(a)(1). A net operating loss must be carried over to the earliest succeeding taxable year in which it may be used. The portion of such loss that may be carried over to a succeeding taxable year is the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable years to which such loss may have been carried. The portion of the net operating loss that is not used in the earliest succeeding taxable year may be carried over to a subsequent succeeding taxable year within the applicable carry forward period set forth at 830 CMR 63.30.2(5)(a).
2. Subtract from the net operating loss that is carried forward, as determined under 830 CMR 63.30.2(5)(c)1, the amount of such net operating loss that was previously deducted under the provisions of M.G.L. c. 63, § 30.5, in taxable years beginning after the taxable year in which the loss was incurred. The result is the amount of the net operating loss incurred in the taxable year that is available for carry forward.
Example 5. Assume the same facts as in Example 4 and that Betelgeuse does not have net income that is subject to the income measure of the Massachusetts corporate excise tax from 2012 through 2014. In 2012, Betelgeuse does no business in Massachusetts and is not taxable in the state. In 2013 and 2014, Betelgeuse resumes doing business in Massachusetts and is therefore taxable in the state but is protected from the imposition of the income measure of the corporate excise by Public Law 86-272 (note that Betelgeuse would nonetheless be subject to the non-income measure of the corporate excise or the minimum excise). In 2015, Betelgeuse continues its business activity in Massachusetts but is no longer protected by Public Law 86-272, and is thus subject to the income measure of the corporate excise. In 2015, Betelgeuse has net income of $8,000, determined without regard to the net operating loss deduction. Betelgeuse's Massachusetts apportionment percentage is 20% in 2015. Thus, Betelgeuse’s post-apportioned Massachusetts net income is $1,600 in 2015.
The maximum allowable amount of Betelgeuse's net operating loss deduction for 2015 is $1,600, namely, 100% of the corporation’s net income for purposes of applying the limitations on the net operating loss deduction, as set forth in 830 CMR 63.30.2(4)(c), determined by multiplying the corporation’s net income of $8,000 by its apportionment percentage of 20%.
(9)	Mergers and Changes of Ownership
1. Adjusted § 382 Limitation. The Code § 382 limitation shall be adjusted by multiplying the Code § 382 limitation by Massachusetts taxable net income, allocated or apportioned to Massachusetts, determined without regard to the net operating loss deduction, and dividing the resulting amount by federal taxable income (determined without regard to the federal net operating loss deduction). For corporations subject to combined reporting, the Adjusted § 382 limitation shall be calculated separately for each member of the combined group.
2. Carry Forward of Adjusted § 382 Limitation. If the Adjusted § 382 limitation exceeds the taxable income of the corporation in a given post-change year, the Adjusted § 382 limitation for the following year shall be increased by the amount of such excess.
3. The Adjusted § 382 limitation shall be determined without regard to Code § 382(n), which has no effect for Massachusetts tax purposes.
4. Carry Forward of Non-deducted Net Operating Loss Due to the Adjusted § 382 Limitation. Any amount of net operating loss that cannot be deducted because of the Adjusted § 382 limitation may be carried over as provided in 830 CMR 63.30.2(6).
New regulation promulgated 3/20/2020