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2020 Schedule U-E Instructions

Massachusetts Unitary or Affiliated Group Check one box for the type of group. A financial group is a com-
Income bined group engaged in a unitary business or a Massachusetts af-
The combined group’s income as determined on Schedule U-CI is filiated group all of whose members, including members not
subject to further modification in determining the combined taxable on their income in Massachusetts, are entities that qualify
group’s taxable income subject to apportionment for Massachu- as financial institutions under the definition in MGL ch 63, § 1. A
setts purposes. non-financial group is a group none of whose members, including
non-taxable members, are financial institutions. A mixed group is
Schedule U-E is divided in two parts: any group that includes at least one member that is a financial in-
Part 1 completes the calculation of the combined group’s taxable stitution and at least one member that is not a financial institution.
income. If the combined group includes two or more Schedules U-E, repre-
senting multiple unitary businesses, only those members partici-
Part 2 details the calculation of the denominators of the property, pating in the unitary business that is to be referenced on the U-E in
payroll and sales factors that will be used by each member in de- question should be considered in determining which box to check.
termining its apportioned share of the combined group’s taxable
income. Check box to indicate whether any member of the combined group
is taxable on its income in another state. In any case where the
The combined report that is filed by the combined group must in- combined group has not made an affiliated group election, check
clude at least one Schedule U-E. A group of corporations engaged box only if a member of the combined group is taxable in another
in more than one unitary business and not making or subject to an state with respect to the operation of the combined group’s unitary
affiliated group election must divide the group income and file sep- business. Note that if no member of the combined group is taxable
arate Schedules U-E for each unitary business. If an affiliated in another state, combined reporting is still required but special in-
group election has not been made, only the property, payroll and come attribution rules will apply. See 830 CMR 63.32B.2(7)(k).
receipts of each member that relate to the unitary business that
generates the combined group’s taxable income are used to ap- If the combined group includes at least one financial institution
portion such income. (e.g., it is a group consisting only of financial institutions or is a
mixed group), check one box to indicate the method to be used by
Once Schedule U-E has been completed, the combined group’s the group to allocate income from investment assets and trading
taxable income is then apportioned (or attributed in cases where assets. If the combined group does not include a financial institu-
no apportionment is permissible) to the taxable group members tion, do not check either option. If this section applies, see MGL
using numerators calculated on each separate taxable group ch 63, § 2A(d)(xii) for an explanation of the referenced income al-
member’s Schedule U-MSI (based on each individual member’s location methods.
Massachusetts attributes) and denominators representing attrib-
utes of all members of the combined group as determined on Line Instructions
Schedule U-E.
Part 1. Taxable Income
General Instructions Lines 1 through 13
Enter the name of the principal reporting corporation, that corpo- Report the income and expenses of the unitary business engaged
ration’s Federal Identification number, the beginning and ending in by the combined group, or in the case of a combined group sub-
dates of the combined group’s taxable year and the Principal ject to an affiliated group election, report all of the income and ex-
Business Activity code applicable to the unitary business of the penses of the combined group. Note that line 8 may be a negative
combined group. In the case of an affiliated group election, enter number and that the total in line 11 will reflect that negative amount,
the Principal Business Activity code applicable to the primary busi- if applicable. If only one Schedule U-E is being filed, the amounts
ness conducted by the combined group. on lines 1 through 11 must match the amounts on Schedule U-CI,
lines 1 through 11.
Enter the unitary business identifier. This is a numeric value (the
number must be greater than zero) used to associate supporting Line 14
and supplementary schedules with a specific Schedule U-E. If an Enter the total of all interest received on state and municipal oblig-
affiliated group election has been made or if the group is not en- ations not reported in U.S. net income but includible in the com-
gaged in more than one unitary business, enter 1. If the group sep- bined group’s taxable income.
arately calculates and apportions income from two or more
different unitary businesses, enter 1 on Schedule U-E for the first Line 15
such business and 2 on Schedule U-E for the second such busi- Massachusetts does not allow a deduction for state, local and for-
ness, etc. eign income, franchise, excise or capital stock taxes. Any such
All of the Schedules ABI and ABIE that relate to deductions taken taxes that have been deducted from U.S. net income should be
on Schedule U-E with a unitary business identifier of 1 must also entered here and added back into the combined group’s taxable
have an identifier of 1. All of the Schedules ABI and ABIE that re- income.
late to deductions taken on Schedule U-E with a unitary business Line 16
identifier of 2 must also have an identifier of 2. All of the Sched-
ules U-MSI that apportion income from the unitary business refer- For Massachusetts purposes, depreciation is to be claimed on all
enced on Schedule U-E with a unitary business identifier of 1 assets, regardless of when they are placed in service, using the
must also have identifier of 1. method used for U.S. income tax purposes prior to the enactment
of Internal Revenue Code (IRC) § 168(k). Enter the difference be-

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tween the amount deducted for U.S. income tax purposes and the voting stock is allowed a 95% deduction for any dividends not
amount deductible for Massachusetts purposes. If the deprecia- eliminated under the rules stated in 830 CMR 63.32B.2(6)(c) 4.
tion calculated for Massachusetts purposes exceeds the amount
The amount of this deduction may not exceed the amount refer-
deducted for U.S. income tax purposes, this will be a negative
enced on line 4.
amount.
Line 26
Line 17
If one or more members of the combined group has intangible ex-
A taxpayer must add back to net income any related member intan- penses and costs paid or accrued to any related party and quali-
gible expenses and costs, including losses incurred in connection fies to deduct these expenses under MGL ch 63 §§ 31J and 31K,
with factoring or discounting transactions. See 830 CMR 63.31.1. enter the amount of the deduction claimed here and complete
This rule also applies to any amortization deductions claimed Schedule ABIE. No deduction is allowed for any amount not
under IRC § 179 when the deduction derives from the acquisition added back into income and referenced on line 17. Note that each
of intangible property from a related member. See DD 07-9. Schedule ABIE must have the same unitary business identifier as
the Schedule U-E to which it relates. The total amount of the de-
To the extent that the combined group’s deductions as reported on
duction claimed must match the total on line 5 of all Schedules
this schedule include such expenses, enter the amount on this line.
ABIE with the same unitary business identifier and may not ex-
Note that expenses between members of the same combined
ceed the amount added back on line 17.
group that relate to the unitary business are eliminated and should
not be deductions included in the calculation of the combined Line 27
group’s taxable income. See 830 CMR 63.32B.2(13). If one or
If one or more members of the combined group has interest ex-
more taxable members of the combined group qualify for an excep-
penses and costs paid or accrued to any related party and quali-
tion to the add back requirement, complete Schedule ABIE for each
fies to deduct these expenses under MGL ch 63 §§ 31J and 31K,
such taxpayer. Such exceptions are to be referenced on line 26.
enter the amount of the deduction claimed here and complete
Line 18 Schedule ABI. No deduction is allowed for any amount not added
back into income and referenced on line 18. Note that each
A taxpayer must add back to net income any related member in-
Schedule ABI must have the same unitary business identifier as
terest expenses and costs, including losses incurred in connection
the Schedule U-E to which it relates. The total amount of the de-
with factoring or discounting transactions. See 830 CMR 63.31.1.
duction claimed must match the total on line 4 of all Schedules
To the extent that the combined group’s deductions as reported
ABI with the same unitary business identifier and may not exceed
on this schedule include such expenses, enter the amount on this
the amount added back on line 18.
line. Note that expenses as between members of the same com-
bined group that related to the unitary business are eliminated Line 28
and should not be deductions included in the calculation of the
Enter any allowable U.S. wage credit used in calculating U.S. Form
combined group’s taxable income. If one or more individual tax-
1120, line 13.
able members of the combined group qualify for an exception to
the add back requirement, complete Schedule ABI for each such Line 29
taxpayer. See 830 CMR 63.32B.2-(13). Such exceptions are to be The adjustments to be referenced on this line include basis ad-
referenced on line 27. justments and other state-federal tax differences that were not
Line 19 previously taken into account.
Reserved. Enter 0. Charitable contributions that are considered in the calculation of the
combined group’s taxable income are limited as provided in IRC §
Line 20 170 but the limitation is determined by reference to the combined
The deduction allowed to a corporation for any expenses that group’s taxable income. See 830 CMR 63.32B.2(6)(c) 6. Where
qualify for the Massachusetts research credit must be reduced by the total of the group’s contributions that would otherwise be de-
the Massachusetts research credit determined for the current tax- ductible exceeds the amount allowable, the contributions of the in-
able year. Enter the amount of the Massachusetts research credit dividual members are allowed on a pro-rata basis and the
that was generated during the current taxable year under either disallowed amounts are deductible against the other income of
MGL ch 63, § 38M or 38W on this line. the individual member that made the charitable contribution in
question, subject to a separately calculated limitation with respect
Line 22 to that other income. Amounts disallowed as a deduction that can-
Reserved. Enter 0. not be deducted from the separate income of the member are car-
ried forward to future years.
Line 23
Massachusetts allows a deduction of 10% of the total cost of ren- This line may also be used to reflect other differences in limitations
ovating an abandoned building in an economic opportunity area. that are to be applied to Massachusetts tax calculations, such as
Enter the amount of the deduction on this line. deductions that are to be based on a percentage of income as de-
termined under the IRC. See 830 CMR 63.32B.2(6)(c)10.
Line 24 Enter amounts reducing Massachusetts net income as positive
Reserved. Enter 0. amounts.
Line 25 Line 30
A financial institution or business corporation that receives a divi- Subtract the total of lines 22 through 29 from the amount on line 21.
dend from another corporation in which it owns at least 15% of the

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Line 31                                                                      If  the  combined  group  includes  one  or  members  which  are  not
Enter the amount of capital gain or loss (including capital gains            U.S. corporations and a worldwide election has not been made,
and losses of both taxable and non-taxable members) included in              the  denominator  of  each  factor  must  include  only  the  property,
line 30. To the extent that adjustments on Schedule U-E represent            payroll and receipts of such non-U.S. corporations that relate to
adjustments  to  capital  gain  or  loss  as  reported  on  a  member’s      the  income  they  include  in  the  combined  report.  See  830  CMR
U.S. tax return, the amount of capital gain or loss on this line must        63.32B.2(7)(f). See also 830 CMR 63.32B.2(5)(b)3, as it pertains
also be adjusted.                                                            to non-U.S. corporations that are included in the combined group
                                                                             only with respect to certain inter-affiliate income.
Line 32
                                                                             A group of corporations engaged in more than one unitary busi-
Enter the amount of IRC § 1231 gain or loss (including § 1231                ness that is not subject to an affiliated group election must divide
gains and losses of both taxable and non-taxable members) in-                the collective income of the different businesses and file separate
cluded in line 30. To the extent that adjustments on Schedule U-E            Schedules U-E for each unitary business.
represent adjustments to these gains or losses as reported on a
member’s federal tax return, the amount of § 1231 gain or (loss)             In such cases, the group of corporations that is engaged in more
must also be adjusted.                                                       than one unitary business must divide the group’s property, payroll
                                                                             and sales between the different unitary businesses to which they
Line 33                                                                      relate. For the rules that govern the apportionment of income in
Subtract the total of lines 31 and 32 from line 30.                          the context of a combined group, see 830 CMR 63.32B.2(7).
Line 34                                                                      Line 37
Enter the amount of the combined group’s net capital loss (if any)           All combined group members that are financial institutions within
that is not deductible in determining whether or not apportionment           the meaning of MGL ch 63, § 1, whether or not taxable on their in-
factors  are  inapplicable  under  830  CMR  563.38.1(11).  If  the          come in Massachusetts, must determine the average value of their
amount on line 31 (the combined group’s capital gain or loss to be           loans and combine the totals. Loans from one member of the uni-
apportioned) is greater than or equal to 0, enter 0.                         tary group to another (or as between combined group members in
                                                                             the case where the group is subject to an affiliated group election)
If the amount on line 31 is a loss and the amount on line 32 (the
                                                                             are eliminated from the calculation. Loans and other financial insti-
combined group’s IRC § 1231 gain or loss) is also a loss (or 0),
                                                                             tution property owned by members that are not financial institu-
enter, as a positive adjustment, the amount of the loss on line 31.
                                                                             tions are not included in this calculation.
If line 31 is a loss and line 32 is a gain, combine those amounts; if
the total is greater than 0, enter 0 on line 34, otherwise, enter a          Line 38
positive  adjustment,  equal  to  the  excess  of  the  loss  on  line  31   All members that are financial institutions taxable within the mean-
over the gain on line 32.                                                    ing of MGL ch 63, § 1 must determine the average value of their
                                                                             credit card receivables or other financial institution property and
Line 35                                                                      combine the totals. Loans from one member of the unitary group
Combine the amounts on line 30 and line 34.                                  to another (or as between combined group members in the case
                                                                             where the group is subject to an affiliated group election) are to be
Line 36                                                                      eliminated from the calculation. Loans and other financial institu-
Enter 10% of .33% of the amount on line 35.                                  tion property owned by members that are not financial institutions
                                                                             are not included in this calculation.
Part 2. Apportionment Denominators
The denominators to be used to apportion the income of the com-              Line 40
bined group are determined by adding the separately determined               If the combined group whose income is being apportioned includes
denominators for all members of the combined group but disregard-            at least one member which is not a financial institution, enter 20%
ing intercompany transactions that relate to the unitary business            of the amount shown in line 39. If the group is composed solely of
(or,  in  the  case  of  an  affiliated  group  election,  all  intercompany financial institutions, enter 100% of line 39.
transactions). Each member, including any non-taxable member,
is to determine its denominators under the terms of the statutory            Line 41
apportionment provisions that apply to that member under MGL                 Enter  the  average  total  value  of  tangible  property  owned  by  all
ch 63, except that if the combined group includes one or more fi-            members of the combined group.
nancial institutions, each member of the group is to include in its
                                                                             Line 42
receipts for sales factor purposes interest and other receipts as
described in MGL ch 63, § 2A(d)(i) through (d)(xi) in both the nu-           Tangible property rented by each member is valued at eight times
merator and the denominator of its apportionment calculation.                the annual net rental rate paid less any sub-rentals  received.
If the combined group has not made an affiliated group election,             Lines 45 through 58
only property, payroll and receipts of each member that relate to            These  lines  total  the  members’  worldwide  receipts  from  various
the unitary business generating the income to be apportioned are             sources applicable for apportioning income of groups containing
to be used to apportion the combined group’s taxable income. If              financial institutions. If the combined group includes at least one
one  or  more  members  of  the  group  have  property,  payroll  and        financial institution, whether or not that member is a taxable mem-
sales that are not used in, or are not part of, the unitary business,        ber, all members of the group must determine and include in their
that property, payroll and sales must be excluded from both the              sales factor calculations their receipts from loans and other finan-
numerator and the denominator of the apportionment calculations              cial instruments as defined in MGL ch 63, § 2A(d).
used to apportion the combined group’s taxable income.

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Enter the total of all members’ receipts on the appropriate lines. If no
member of the group is a financial institution, enter 0 on each line.
Lines 59 through 62
These lines total the members’ worldwide receipts from sources
applicable for apportioning income from corporations generally.
Enter the member’s total receipts from the sale of tangible prop-
erty, sales of services, rents and royalties or from other sources,
to the extent not already reported in lines 45 through 58, above.
Note: Certain amounts are subject to the rules of exclusion from
the sales factor, as set forth in 830 CMR 63.38.1(9)(d)1.f. For ex-
ample, in the case of a service or license of intangible property
where the taxpayer is not taxable in the state to which the sale is
to  be  assigned,  the  sale  amount  should  be  excluded  from  the
sales factor calculation.

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