Section 33 Non-Resident Business Sales Clarification 1

Section 5A of chapter 62 of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by adding the following subsection:-
         
          (e) Any trade or business conducted in the commonwealth by a pass-through entity shall be treated as the business of its nonresident owner, whether such ownership interest is held directly or indirectly through one or more other pass-through entities. A non-resident that recognizes gain from the sale of such ownership interest shall either allocate or apportion that gain depending upon whether the pass-through entity also conducted business in another state. Apportionment, if applicable, shall be based upon the business attributes of the pass-through entity. The commissioner shall adopt regulations providing for the implementation of this section, including with respect to the method of apportionment which shall be based upon the method set forth under section 38 of chapter 63. The commissioner may promulgate regulations requiring withholding by the pass-through entity with respect to the taxes owed on gain from the sale of an interest in such pass-through entity. For purposes of this section, a "pass-through entity" is a partnership as defined in section 1, an S corporation as defined under section 1361 of the Code, or any trust whose income, loss, deductions or credits flow through to its beneficiaries for Massachusetts tax purposes.

This section, together with a related section, includes the sale of a business or an interest in a business in the Massachusetts source income of a non-resident that is subject to tax.