Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2014

Deductions from Gross Income

Fiscal Year 2014 Resource Summary (in Millions)
Deductions from Gross Income 150.6 164.0 171.6

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item description amount
Deductions from Gross Income 171.6
2.201 Charitable Contributions and Gifts Deduction
In computing net income, corporations may deduct charitable donations up to 10% of taxable incomes computed without the deductions. There is a carryover of excess contributions available for five succeeding taxable years.

Origin:  IRC, S. 170 (b)(2)(A), (d)(2)(A)
Estimate:  $48.8
2.203 Net Operating Loss Carry-Over
There has been a statutory expansion of the general NOL carry-forward period from 5 to 20 years for business corporations, for taxable years beginning on or after January 1, 2010. There has also been a change to the calculation of an NOL carry-forward, and for tax years beginning on or after January 1, 2010; all carry-forward losses of eligible business corporations are to be carried forward on a post-apportioned basis, applying the apportionment percentages of the corporations for the taxable year in which the losses are sustained. Financial institutions, public utilities, and insurance companies, which do not belong to regular corporate tax types, are not allowed to deduct NOL.

Origin:  IRC, S. 172; M.G.L. c. 63, S. 30.5; TIR 10- 15.
Estimate:  $122.8
2.204 Excess Natural Resource Depletion Allowance
Taxpayers in extractive industries (mining or drilling for natural resources) may deduct a percentage of gross mining income as a depletion allowance ("percentage depletion") even if the cost basis of the property has been reduced to zero. The deduction may not exceed 50% (in some cases, 100%) of net income from the property. In the case of oil and gas, percentage depletion is available only to domestic oil and gas sold by "independent producers" (nonintegrated companies). The excess of the deduction, which is available using the percentage of gross income method of depletion over a depletion deduction based on cost, is a tax expenditure.

Origin:  IRC, S. 613, 613A; M.G.L. c. 63, S. 30.3.
Estimate:  $0.1
2.205 Deduction for Certain Dividends of Cooperatives
Farmers' cooperatives and certain corporations acting as cooperatives may deduct patronage dividends and other amounts from gross income. Cooperatives meeting certain requirements may deduct dividends on capital stocks and certain payments to patrons such as investment income. Under generally accepted rules for taxing corporations, the corporation cannot deduct dividends paid to shareholders.

Origin:  IRC, S. 1381-1383
Estimate:  N.A.
2.206 Economic opportunity areas; tax deduction for renovation of abandoned buildings
Businesses renovating eligible buildings in Economic Opportunity Areas may deduct 10% of the costs of renovation from gross incomes. This deduction may be in addition to any other deduction for which the cost of renovation may qualify. To be eligible for this deduction, renovation costs must be related to buildings designated as abandoned by the Economic Assistance Coordinating Council.

Origin:  M.G.L. c. 63, S.38O
Estimate:  Negligible


IRCFederal Internal Revenue Code (26 U.S.C.)
M.G.L. Massachusetts General Laws
U.S.C United States Code
ESTIMATES All estimates are in $ millions.

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