September 3, 1981

********** ("Investment Club") is an investment club which is organized as a partnership. It is composed of a group of individuals who pool their funds to invest in stocks and other securities.

For federal income tax purposes, an unincorporated club used only for investment purposes may elect not to be treated as a partnership. (I.R.C. s. 761(a); U.S. Treas. Reg. 1.761-2). An investment club which makes this election does not have to file a federal partnership return. Members of the investment club must report their share of income, deductions, and credits on their individual federal income tax returns.

You inquire whether the Investment Club, which for federal income tax purposes has elected not to be treated as a partnership, must file a Massachusetts partnership return of income.

Under Massachusetts tax laws every partnership which has a usual place of business in Massachusetts and federal gross income in excess of $100 must file a partnership return. (G.L. c. 62C, ss. 6 and 7).

The election under Internal Revenue Code Section 761 not to be treated as a partnership is not available to the Investment Club under Massachusetts tax statutes and therefore the Investment Club must file a Massachusetts Partnership Return of Income (Form 3). The Form 3, which is an information return, must state the partnership's income or losses from sources taxable under Chapter 62, any deductions or credits attributable thereto, the names and addresses of the partners and the distributive shares of various classes of partnership income, losses, deductions or credits apportioned to each. Every member of the partnership must report his distributive share of the income of the partnership on a Massachusetts Income Tax Return (Form 1 or Form 1-NR, as appropriate).

Very truly yours

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH:RSF:mf

LR 81-83