Under Chapter 63, the computation of Massachusetts net income required by Section 30.5(b), is an intermediate step in computing Massachusetts taxable net income, upon which the income measure of the corporate excise is based. Section 30.5(b)(ii) allows corporations to deduct Massachusetts NOL carry over in determining Massachusetts net income for a taxable year. Once net income is computed, Section 38(a) allows corporations to deduct 95 percent of certain dividends received in determining Massachusetts taxable net income. Thus, under Chapter 63, corporations are required to apply the Massachusetts NOL carry over deduction before using the Massachusetts dividends received deduction.
Massachusetts corporate excise Schedule E, the Taxable Income section of the various Massachusetts corporate excise forms, condenses the computation of Massachusetts net income and Massachusetts taxable net income into a single computation of "Income taxable in Mass." (Item 18 of Schedule E). In so doing, Schedule E lists the dividends received deduction (Item 10) before the NOL carry over deduction (Item 11). Notwithstanding the order in which the two deductions are listed on Schedule E, corporations must apply the NOL carry over deduction before applying the dividends received deduction when determining Massachusetts taxable net income for any taxable year.
Commissioner of Revenue
January 22, 1991
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