Section 38 Non-Resident Business Sales Clarification 2

Section 38 of chapter 63 of the General Laws, as amended by section 31 of chapter 50 of the acts of 2023, is hereby amended by adding the following subsection:-
         
          (n) When a corporation recognizes gain on the sale of an interest in a pass-through entity that is doing business in the commonwealth either directly or through the ownership of one or more other pass-through entities, and the corporation and the pass-through entity that is doing business in the commonwealth directly were not engaged in a unitary business within the meaning of section 32B, the corporation shall either allocate or apportion the gain depending upon whether the pass-through entity doing business in the commonwealth directly also conducted business in another state. Apportionment, if applicable, shall be based upon the business attributes of the pass-through entity that was doing business in the commonwealth directly. The commissioner shall adopt regulations providing for the method of apportionment applying the rules set forth under this section. The commissioner may adopt regulations requiring withholding with respect to the taxes owed on gain from the sale of the pass-through entity interest. For purposes of this section, a "pass-through entity" shall mean "a partnership as defined in section 30, 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.