2.200 Deductions from Gross Income

Deductions from Gross Income

2.200

201.0

213.3

216.8

224.0

231.3

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2.201
Charitable Contributions and Gifts Deduction

In calculating net income, corporations may deduct charitable donations up to 10% of taxable income computed without the deduction. The Tax Cuts and Jobs Act (TCJA; enacted December 22, 2017) changed the limitation and the charitable deduction is no longer allowed for contributions to a college or university in exchange for athletic event seating rights. There is a carryover of excess contributions available for 5 succeeding taxable years.

IRC § 170

34.8

2.203
Net Operating Loss (NOL) Carry-Forward

The net operating loss (NOL) deduction is a current-year deduction for losses sustained in prior years. Losses incurred in years a corporation is not subject to the corporate excise in Massachusetts are not allowed to be carried forward. While the Internal Revenue Code provides a federal deduction for NOLs, Massachusetts does not conform to those rules; rather the General Laws provide for a specific Massachusetts deduction.

The deduction was enacted in 1988. Prior to 2010, NOLs incurred by Massachusetts corporate excise filers could be carried forward for not more than 5 years, and could not be carried back. Losses incurred in taxable years beginning on or after January 1, 2010 can be carried forward for 20 years, and cannot be carried back.

IRC § 172; M.G.L. c. 63, § 30.5

194.0

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 taxable 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.

IRC §§ 613, 613A; M.G.L. c. 63, § 30.3

2.5

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 incomes. Cooperatives meeting certain requirements may deduct dividends on capital stocks and certain payments to patrons such as investment incomes. Under generally accepted rules for taxing corporations, the corporations cannot deduct dividends paid to shareholders.

IRC §§ 1381-1383

N.A.

2.206
Deduction for Renovation of Abandoned Buildings as Part of Certified Project

Businesses renovating eligible buildings that are part of a project certified by the Economic Assistance Coordinating Council (EACC) 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 EACC. Previously, the deduction was available only for improvements to abandoned buildings located in Economic Opportunity Areas (EOA), as designated by the EACC. However, in 2016, the legislature enacted "An Act Relative To Job Creation And Workforce Development", which eliminated the EOA requirement, and inserted the requirement that the EACC needs to only certify a project. These changes are effective for tax years beginning on or after January 1, 2019.

M.G.L. c. 63, §38O

Negligible

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