(a) General. An exempt corporation is subject to tax under M.G.L. c. 63, § 39 on its Massachusetts unrelated business taxable income. However, the property or net worth of the exempt corporation shall not be subject to tax under M.G.L. c. 63, § 39. Also, the exempt corporation shall not be subject to the minimum excise. The provisions of M.G.L. c. 63, § 39 and 830 CMR 63.39.1 shall be applicable to determine whether a foreign corporation exempt from taxation under § 501 of the Code is subject to the tax jurisdiction of Massachusetts.
(b) Massachusetts Unrelated Business Taxable Income. An exempt corporation's Massachusetts unrelated business taxable income is its federal unrelated business taxable income with the modifications referenced in 830 CMR 63.38T.1(3)(c).
(c) Adjustments. An exempt corporation shall add back to its unrelated business taxable income items that must be added back to income pursuant to chapter 63. For example, any federal net operating loss deduction claimed under section 172 of the Code must be added back by such corporations. Further, to the extent that it has unrelated business taxable income, an exempt corporation may deduct items that are deductible under chapter 63 that are directly connected with carrying on its unrelated trade or business, such as, where appropriate, the Massachusetts net operating loss (NOL) and carryover deduction provided in M.G.L. c. 63, § 30(5). Carryover of the NOL generated in any taxable years in which an exempt corporation was not subject to taxation in Massachusetts on its unrelated business taxable income shall not be allowed.
(d) Apportionment. If an exempt corporation has unrelated business taxable income that is taxable both within and without the commonwealth it may apportion its net income to the commonwealth pursuant to M.G.L. c. 63, § 38. The apportionment factors shall be determined only with respect to the unrelated business activity of the exempt corporation.
(e) Credits. The credits allowed to corporations under M.G.L. c. 63 are allowed to exempt corporations. However, the credits must be determined only with respect to the unrelated business activity of the corporation.
(f) Local Property Tax. The exempt corporation is not a domestic corporation or a foreign corporation for purposes of M.G.L. c. 59.
(g) Effective Date. This provision, 830 CMR 63.38T.1(3), is effective for tax years beginning on or after January 1, 2006.