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Massachusetts Excess Deductions Against Trade or Business Income
Extracted from PDF file 2023-massachusetts-schedule-c-2.pdf, last modified November 2023Excess Deductions Against Trade or Business Income
Schedule C-2 Excess Deductions Against Trade or Business Income Generally, taxpayers may not use excess 5.0% deductions to offset interest (other than from Massachusetts banks), dividends and capital gains income. However, where the taxpayer files a Massachusetts Schedule C or a Massachusetts Schedule E, Massachusetts law allows such offsets if the following requirements are met: • The excess 5.0% deductions must be adjusted gross income deductions allowed under MGL Ch. 62, § 2(d); and 2023 • These excess deductions may only be used to offset income that is effectively connected with the active conduct of a trade or business or any income allowed under IRC § 469(d)(1)(B) to offset (losses) from passive activities. To determine if you have excess deductions, complete lines 1 through 6. If line 6 is 0 or greater, you have no excess deductions. If line 6 is less than 0, you have excess deductions and should complete the remainder of Schedule C-2. 1 Total 5.0% income or (loss) (from Form 1, line 10; Form 1-NR/PY, line 12; Form NRCR, line 5a; or Form 2, line 7) . . . . . . 1 2 5.0% interest exemption (total Massachusetts bank interest or the interest exemption amount, whichever is smaller, from Form 1, line 5a or line 5b; or Form 1-NR/PY, line 7a or line 7b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Abandoned Building Renovation Deduction (from Schedule C, line 30; Schedule E, line 57; or Form 2, Schedule E, line 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Combine lines 1, 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Additional adjusted gross income deductions (from Form 1 or Form 1-NR/PY, Schedule Y, total of lines 2 through 10 and 18; or Form 2, line 8. See Form 2 instructions).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Subtract line 5 from line 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 If line 6 is 0 or greater, you have no excess deductions. Omit remainder of schedule. If line 6 is less than 0, enter in lines 7a and 7b any of the following amounts included in Schedule B, line 13c (Forms 1, 1-NR/PY or MA NRCR); or Schedule B, line 15c (Form 2): a. Schedule B capital gains effectively connected with the active conduct of your trade or business (attach statement) 7a b. Schedule B capital gains from passive activities allowed to offset (losses) from passive activities in the current taxable year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b Add lines 7a and 7b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Allowable deduction. Enter the smaller of line 6 (considered as a positive amount) or line 7 here and in Schedule B, line 14 (Forms 1, 1-NR/PY or MA NRCR); or Schedule B, line 16 (Form 2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 9 Combine lines 6 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10 If line 9 is 0 or greater, you have no excess deductions. Omit remainder of schedule. If line 9 is less than 0, enter in lines 10a and 10b any of the following amounts included in Schedule B, line 7 (Forms 1, 1-NR/PY, or MA NRCR) or Schedule B, line 9 (Form 2): a. Interest (other than from Massachusetts banks) and dividends effectively connected with the active conduct of .your trade or business (attach statement). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10a b. Interest (other than from Massachusetts banks) and dividends from passive activities allowed to offset (losses) from passive activities in the current taxable year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10b Add lines 10a and 10b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 Allowable deduction. Enter the smaller of line 9 (considered as a positive amount) or line 10 here and in Schedule B, line 8 of Forms 1, 1-NR/PY or MA NRCR; or Form 2, Schedule B, line 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Combine lines 9 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 If line 12 is 0 or greater, you have no excess deductions. Omit remainder of schedule. If line 12 is less than 0, enter in lines 13a and 13b any of the following amounts included in Schedule D, line 13 (Forms 1, 1-NR/PY, or MA NRCR) or Schedule Schedule D, line 12 (Form 2): a. Long-term capital gains effectively connected with the active conduct of your trade or business (attach statement). . 13a b. Long-term capital gains from passive activities allowed to offset (losses) from passive activities in the current taxable year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13b Add lines 13a and 13b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Allowable deduction. Enter the smaller of line 12 (considered as a positive amount) or line 13 here and in Schedule D, line 18 of Forms 1, 1-NR/PY or MA NRCR; or Form 2, Schedule D, line 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule C-2
More about the Massachusetts Schedule C-2 Individual Income Tax TY 2023
We last updated the Excess Deductions Against Trade or Business Income in January 2024, so this is the latest version of Schedule C-2, fully updated for tax year 2023. You can download or print current or past-year PDFs of Schedule C-2 directly from TaxFormFinder. You can print other Massachusetts tax forms here.
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TaxFormFinder has an additional 126 Massachusetts income tax forms that you may need, plus all federal income tax forms. These related forms may also be needed with the Massachusetts Schedule C-2.
| Form Code | Form Name |
|---|---|
| Schedule CB | Circuit Breaker Credit |
| Schedule C | Profit or Loss from Business |
| Schedule CMS | Credit Manager Schedule |
| Schedule CG | Combined Reporting Allocation Schedule |
| Schedule CIR | Consolidated Return Income Reconciliation |
| Schedule CRS | Credit Recapture Schedule |
View all 127 Massachusetts Income Tax Forms
Form Sources:
Massachusetts usually releases forms for the current tax year between January and April. We last updated Massachusetts Schedule C-2 from the Department of Revenue in January 2024.
About the Individual Income Tax
The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.
Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!
Historical Past-Year Versions of Massachusetts Schedule C-2
We have a total of thirteen past-year versions of Schedule C-2 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
2011 Schedule C-2
sched. C-2
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