Maine Income Modifications - Other Subtractions

Income Modifications - Other Subtractions
19_sch1_other_sub_mods_noncon.indd
Worksheet for Form 1040ME, Schedule 1, Line 2k
Income Modifications - Other Subtractions

99
*1902214*

Use this worksheet to list Other Subtraction Income Modifications - for amounts that are taxable by the federal government but not by Maine in
order to complete Form 1040ME, Schedule 1, line 2k. Include only items specifically listed below.
Include the taxpayer’s distributive share of each item from partnerships, S corporations and other pass-through entities.
See pages 2 through 4 for a description of each item listed below.
Name(s) as shown on Form 1040ME

1.

Net operating losses carried forward from previous tax years ......................................... 1.

2.

Interest from Maine Municipal General Obligation Bonds, Private Activity Bonds,

Your Social Security Number

.00

and Airport Authority Bonds included in federal adjusted gross income..........................2.

.00

3.

Military annuity payments made to a survivor of a deceased member of the military ..... 3.

.00

4.

Student loan payments made by your employer under the Maine educational
opportunity program ............................................................................................................ 4.

.00

Amount of the reduction in your salaries and wages expense deduction related
to claiming the federal Work Opportunity Credit or Empowerment Zone Credit ................. 5.

.00

6.

Holocaust victim settlement payments........................................................................... 6.

.00

7.

Family Development Account proceeds .......................................................................... 7.

.00

8.

Earnings from fishing operations contributed to a capital construction fund .................. 8.

.00

9.

Northern Maine Transmission Corporation investment income. .................................... 9.

.00

10. Municipal property tax benefits for senior citizens ....................................................... 10.

.00

5.

11.

Maine Waste Management & Recycling Program - interest income and
capital gains from the sale of program bonds ....................................................................11.

.00

12. All items of income, gain, interest, dividends, royalties and other items of
income of a pass-through financial institution due to an ownership share in the
financial institution. (EIN of financial institution ________________________ ) ............. 12.

.00

13. The total of capital gains and ordinary income resulting from depreciation
recapture from the sale of multi-family affordable housing property. ................................ 13.

.00

14. Maine seed capital credit distributions from a private venture capital fund .................... 14.

.00

15. Sale of eligible timberlands .......................................................................................... 15.

.00

16. New markets capital investment credit ......................................................................... 16.

.00

17. Total Other Subtractions (add lines 1 through 16 and enter the total here and on
Form 1040ME, Schedule 1, line 2k) .................................................................................. 17.

.00

Revised June, 2020

Worksheet for Form 1040ME, Schedule 1, Line 2k
Income Modifications - Other Subtractions
Line 1. Net operating loss (NOL) recapture. For Maine tax purposes, taxpayers may, in years subsequent to the year of the loss,
deduct an amount equal to the net operating loss carried back for federal tax purposes that was required to be added back to
Maine income under 36 M.R.S. §§ 5122(1)(H) and 5122(1)(M), except that this NOL deduction was suspended for tax years
beginning in 2009, 2010 and 2011. The carryover period for suspended NOL recapture subtraction modifications is equal to the
allowable federal NOL carryforward period plus the number of years the subtraction modification was suspended. Also include on
this line the amount of NOL carryforward resulting from excess business losses not allowed to be claimed for Maine tax purposes.
The deduction may not reduce Maine taxable income to less than zero and must be reduced by any Maine income that was
previously offset by the loss in the year of the loss. Individual shareholders of an electing S corporation may also recapture an NOL
addition modification claimed by the entity in a year the corporation was taxed as a C corporation. For more information on Maine’s
treatment of NOL’s, go to www.maine.gov/revenue/forms (select Income Tax Guidance Documents). 36 M.R.S. §§ 5122(2)(H),
5122(2)(P), 5122(2)(V), 5122(2)(W) and 5122(2)(CC).
Line 2. Interest from Maine Municipal General Obligation Bonds, Private Activity Bonds, and Airport Authority Bonds. If
included in federal adjusted gross income, enter interest from Maine municipal general obligation bonds, private activity bonds, and
bonds issued by a Maine airport authority.
Line 3. Military annuity payments made to a survivor of a deceased member of the military as a result of service in the active or
reserve components of the United States Army, Navy, Air Force, Marines or Coast Guard under a survivor benefit plan or reserve
component survivor benefit plan in accordance with 10 United States Code, Chapter 73 are exempt from Maine individual income
tax. The deduction must exclude any amount included in the Maine pension income deduction on Form 1040ME, Schedule 1, line
2d. 36 M.R.S. § 5122(2)(HH).
Line 4. Student loan payments made by employers. If you are a qualified employee for purposes of the educational opportunity
tax credit program, enter on this line the amount of qualified student loan payments made directly to a lender by your employer
on your behalf to the extent the payments are included in your federal adjusted gross income. Do not include amounts paid that
exceed the monthly loan amount that was due (see the Worksheet for Educational Opportunity Tax Credit). NOTE: You may claim
this deduction only if you received an associate or bachelor’s degree after 2007 or a graduate’s degree after 2015 and only with
respect to loan payments made during that part of the tax year you were a qualified employee. A qualified employee is a qualified
individual (generally, one who has met the graduation requirements of the program, is a Maine resident and who worked for an
employer in Maine). See the Worksheet for Educational Opportunity Tax Credit available at www.maine.gov/revenue/forms for more
information. 36 M.R.S. § 5122(2)(FF).
Line 5. Amount of the reduction in your salaries and wages expense deduction. A subtraction modification is allowed on the
Maine individual income tax return in an amount equal to the reduction in your salaries and wages expense deduction directly
related to claiming the federal Work Opportunity Credit or Empowerment Zone Credit. These amounts are reported on federal Form
5884, line 2 or federal Form 8844, line 2. (Owners of pass-through entities, enter your share of the amount from line 3 of these
forms to the extent not included on line 2). 36 M.R.S. § 5122(2)(B).
Line 6. Holocaust victim settlement payments. Settlement payments received by Holocaust victims are exempt from Maine
individual income tax. Enter on line 6 Holocaust victim settlement payments included in federal adjusted gross income. A
Holocaust victim is an individual who died, lost property, or was a victim of persecution between January 1, 1929 and December
31, 1945 in Nazi Germany or in any European country allied with or occupied by Nazi Germany as a result of discriminatory
laws, policies or actions targeted against discrete groups of individuals based on race, religion, ethnicity, sexual orientation or
national origin. A Holocaust victim includes the spouse or descendant of a Holocaust victim. The exemption applies only to the
first taxpayer (the Holocaust victim or the spouse or descendant of the Holocaust victim) receiving a Holocaust victim settlement
payment. Enter on this line the following settlement payments eligible for the exemption: 1) payment as a result of the taxpayer’s
status as a Holocaust victim; 2) payment as a result of the settlement of a Holocaust-related claim; and 3) interest on any
settlement payment accumulated through the date of payment. 36 M.R.S. § 5122(2)(O).
Line 7. Family Development Account proceeds. Individuals whose family income is below 200% of the poverty level may open
a family development account in connection with an approved community development organization. Account balances and
withdrawals are exempt from Maine individual income tax to the extent included in federal adjusted gross income. For more
information, contact the Finance Authority of Maine. 10 M.R.S. § 1077(4).
Line 8. Earnings from fishing operations. A subtraction modification is allowed on the Maine individual income tax return in an
amount equal to the amount of the reduction in federal taxable income related to vessel earnings from fishing operations that were
contributed to a capital construction fund. 36 M.R.S. § 5122(2)(I).

2

continued on page 3

Line 9. Northern Maine Transmission Corporation investment income. The Northern Maine Transmission Corporation is a
public instrumentality of the State. All bonds, notes or other evidences of indebtedness issued on behalf of the Northern Maine
Transmission Corporation are issued by a political subdivision or a body corporate and politic of the State and for an essential
public and governmental purpose. Those bonds, notes or other evidences of indebtedness, the interest on them and the income
from them, including any profit on their sale, and all activities of the corporation and fees, charges, funds, revenue, income and
other money of the corporation, whether or not pledged or available to pay or secure the payment of those bonds, notes or other
evidences of indebtedness or interest on them, are exempt from Maine individual income tax. Enter on line 9 the amount of
income from investments in the Northern Maine Transmission Corporation to the extent included in federal adjusted gross income.
10 M.R.S. § 9205.
Line 10. Municipal property tax benefits for senior citizens. A municipality, by ordinance, may adopt a program that permits
claimants who are at least 60 years of age to earn benefits up to a maximum $1,000 (or, if greater, 100 times the state minimum
hourly wage) by volunteering to provide services to the municipality. The amount of the benefits received during the tax year are
exempt from Maine individual income tax. Enter on line 10 the amount of volunteer benefits you received, up to the maximum
allowed, to the extent included in federal adjusted gross income. 36 M.R.S. §§ 5122(2)(EE) and 6232(1-A).
Line 11. Maine Waste Management and Recycling Program. Revenue obligation securities issued on behalf of the Maine Waste
Management and Recycling Program constitute a proper public purpose and the securities, their transfer and the income from
them, including any profits made on their sale, are exempt from Maine individual income tax. Enter the amount of interest income
and capital gains from the sale of bonds issued relative to the Maine Waste Management and Recycling Program to the extent
included in federal adjusted gross income. 38 M.R.S. § 2218.
Line 12. Income from ownership share in a financial institution. Enter on this line all items of income, gain, interest, dividends,
royalties and other items of income of a financial institution subject to the Maine franchise tax that are included in your federal
adjusted gross income due to an ownership share in the financial institution that is a partnership, S corporation, or entity
disregarded as separate from its owner. Also enter the employer identification number of the financial institution. 36 M.R.S. §
5122(2)(K).
Line 13. Income from depreciation recapture on the sale of multi-family affordable housing property. To the extent not otherwise
removed from Maine income, enter the total amount of capital gains and ordinary income resulting from depreciation recapture in
accordance with Internal Revenue Code sections 1245 and 1250 realized on the sale of multi-family affordable housing property
certified by the Maine State Housing Authority. A copy of the MSHA certificate must be attached to the return. 36 M.R.S. § 5122(2)(Z).
Line 14. Maine seed capital credit refundable distributions. Enter the refundable portion of the Maine seed capital investment tax
credit allowed under 36 M.R.S. § 5216-B to the extent included in federal adjusted gross income. Private venture capital funds may
claim the seed capital investment tax credit and the credit is refundable to those entities. The refundable portion of the credit is
excluded from Maine taxable income. 36 M.R.S. § 5122(2)(JJ).
Line 15. Sale of eligible timberlands. A subtraction modification is allowed on the Maine individual income tax return equal to the
applicable percentage of the gain from the sale of sustainably managed, eligible timberlands that is included in federal adjusted
gross income. Eligible timberlands must be held by the taxpayer for at least 10 years beginning on or after January 1, 2005. Use
lines 1) through 3) below to calculate the amount of the modification. 36 M.R.S. § 5122(2)(U).
1)
2)

Enter the gain recognized on the sale of eligible timberlands included in federal
adjusted gross income................................................................................................................

___________

Enter the applicable percentage amount shown below for the number of years the
eligible timberlands were held by the taxpayer beginning on or after January 1, 2005 ..............

___________

If the number of years eligible timberlands were held by the taxpayer since
January 1, 2005 is:
At least
10
11
12
13
14
3)

But not over
11
12
13
14
15

Enter
.0667
.1333
.2
.2667
.3333

Multiply line 1 by line 2. Enter on Line 15 of the Worksheet for Form 1040ME,
Schedule 1, Line 2k, Income Modifications - Other Subtractions ...............................................

___________

Line 16. New markets capital investment credit. A subtraction modification is allowed on the Maine individual income tax return equal
to any income recognized from the new markets capital investment credit that is included in federal adjusted gross income. 36
M.R.S. § 5122(2)(KK).
3