Code of Massachusetts Regulations › 830 CMR - DEPARTMENT OF REVENUE › Title 830 CMR 62.00 - Income tax › Section 62.17A.2 - Restatement of Massachusetts Taxation of S Corporations and Their Shareholders

Current through Register 1525, July 5, 2024
(1)
(a)
Purpose of
			 Regulation
. 830 CMR 62.17A.2, sets forth the rules that apply to S
			 corporations under the personal income tax provisions of M.G.L. c. 62, and
			 those that apply under the corporate excise provisions of M.G.L. c. 63. It
			 includes Massachusetts law based upon statutory changes and changes in other
			 legal authority since the effective date of the predecessor regulation,
			 830
			 CMR 62.17A.1, which was promulgated July 6,
			 1990.
For federal income tax purposes, a corporation may elect S
				corporation status if it meets certain requirements under Internal Revenue Code
				§§ 1361 through 1363, including that the shareholders must consent to
				the election. Massachusetts recognizes federal S corporation status for
				purposes of M.G.L. c. 62 and M.G.L. c. 63, and has no separate S corporation
				election process. Among other things, 830 CMR 62.17A.2 explains the interaction
				between Federal and Massachusetts S corporation law.
(b)
Outline
. 830 CMR
			 62.17A.2 is organized as follows:
1. Purpose
			 of Regulation; Outline; Application of Regulation to Particular Tax
			 Periods;
2. Definitions;
3. General Rules;
4. Taxation of S Corporation Income to
			 Individual Shareholders under M.G.L. c. 62; Distributive Share
			 Income;
5. Shareholder Basis in S
			 Corporation Stock or Indebtedness;
6. Distributions from an S Corporation to its
			 Shareholders;
7. Post-termination
			 Transition Issues Applicable to S Corporation Shareholders;
8. S corporation Entity-level Taxation in
			 Massachusetts;
9. S corporations
			 that are Subject to Combined Reporting.
(c)
Application of Regulation to
			 Particular Tax Periods
. 830 CMR 62.17A.2, is generally a
			 restatement of Massachusetts law based upon statutory changes and changes in
			 other legal authority since the effective date of the predecessor regulation,
			 830
			 CMR 62.17A.1, which was promulgated July 6,
			 1990. As such, to the extent that the individual provisions of 830 CMR 62.17A.2
			 reflect statutory changes occurring since the effective date of
			 830
			 CMR 62.17A.1, 830 CMR 62.17A.2 applies to all
			 periods relating back to the effective date of such statutory change. In
			 certain cases, 830 CMR 62.17A.2 relates back to an earlier public written
			 statement issued by the Department of Revenue, and in such cases the rules
			 apply as directed in the earlier statement. Rules relating to the taxation of S
			 corporations that were formerly taxed as corporate trusts, or subject to a
			 separate-entity tax as QSubs, or to S corporations that are financial
			 institutions, apply as of the effective date of St. 2008, c. 173, which is
			 generally applicable to tax years beginning on or after January 1, 2009.
See
St. 2008, c. 173, § 101. For related provisions and
			 effective dates,
see
830 CMR
			 63.30.3:
Entity
			 Classification
under St. 2008, c. 173.
The predecessor regulation,
				830
				CMR 62.17A.1:
Massachusetts Taxation
				of S Corporations and Their Shareholders
, is hereby superseded. Rules
				stated in
				830
				CMR 62.17A.1, such as transitional rules that
				relate back to the original recognition of S corporations in Massachusetts in
				1986, remain applicable to the extent they do not conflict with provisions of
				830 CMR 62.17A.2, and to the extent they do not conflict with statutory
				amendments enacted or Department of Revenue rules announced after the
				promulgation date of
				830
				CMR 62.17A.1, namely July 6,
				1990.