Definitions

(2) Definitions . Unless the context requires otherwise, for the purposes of 830 CMR 62.5A.1, the following definitions apply:

Code , as defined in G.L. c. 62, § 1, which refers to the federal Internal Revenue Code, with certain modifications.

Corporate trust , any partnership, association, or trust, the beneficial interest of which is represented by transferable shares, which is subject to tax imposed by G.L. c. 62 as a corporate trust.

Domicile , the place which is an individual's true, fixed and permanent home, determined by established common law principles and the facts and circumstances in each case.

Entertainer , an individual employee, partner or sole proprietor who receives compensation to perform, entertain, amuse, or inform (as, for example, a lecturer) at one or more discrete events.

Federal Gross Income , gross income as defined under the Code.

Massachusetts Cooperative Housing Corporation , a corporation organized or existing under G.L. c. 157B, or G.L. c. 157, § 3A.

Massachusetts Gross Income , federal gross income as modified by G.L. c. 62, § 2(a).

Massachusetts Source Income , Massachusetts gross income derived from or effectively connected with (1) any trade or business, including any employment, carried on by a non-resident in Massachusetts, whether or not the non-resident is actively engaged in a trade or business or employment in Massachusetts in the year in which the income is received; (2) the participation in any lottery or wagering transaction in Massachusetts; or (3) the ownership of any interest in real or tangible personal property located in Massachusetts.

Massachusetts Timesharing Arrangement , an arrangement under which a taxpayer purchases a right to use accommodations located in Massachusetts for a specific period of less than a year's duration during any given year over a period of greater than three years.

Member , may include a shareholder of an S corporation; a partner in a partnership, including a limited partner in a limited partnership, or a partner in a limited liability partnership; a member of a limited liability company; or a beneficiary of an estate or trust other than a corporate trust.

Non-Resident , any natural person who is not a resident or inhabitant.

Partner , a member of an entity organized as a general partnership, limited liability partnership, or limited partnership, or a member of any business entity subject to tax as a partnership for Massachusetts purposes.

Partnership , an unincorporated association of two or more individuals or entities organized to carry on, as co-owners, a business for profit. A partnership includes any business entity treated as a partnership for Massachusetts tax purposes, such as LLCs that are classified as partnerships for federal tax purposes. Businesses subject to Massachusetts tax on their income at the entity level, such as a corporate trust or an LLC that elects to be taxed as a corporation for federal tax purposes, are not treated as partnerships for Massachusetts tax purposes.

Part-year resident , a taxpayer who moves to Massachusetts or establishes a permanent place of abode in Massachusetts and becomes a tax resident during the tax year, or a taxpayer who terminates his or her status as a Massachusetts resident and establishes a residence outside of the state during the tax year.

Pass-through entity , includes a limited partnership, limited liability partnership, general partnership, a limited liability company that is treated as a partnership for Massachusetts tax purposes, an S corporation, and a trust not taxed at the entity level, including a grantor-type trust, but not including a corporate trust, and an estate not taxed at the entity level.

Person , an individual, corporation, society, association, partnership or other entity.

Presence for Business in Massachusetts , physical presence in Massachusetts for the purpose of engaging in any activity, the object of which is financial profit, gain, benefit, or advantage, direct or indirect.

Professional Athlete who is Not a Member of a Professional Athletic Team , an individual employee, partner or sole proprietor who receives compensation to compete in athletics (other than as a member of a professional athletic team) at one or more discrete sporting events. For rules that apply to non-resident professional team athletes, see 830 CMR 62.5A.2.

Related business activities , as more fully defined in 830 CMR 62.5A.1(6)(d), include activities where there is a sharing or exchange of value between the segments of a single entity or multiple entities such that the activities are mutually beneficial, interdependent, integrated, or such that they otherwise contribute to one another. The term also includes the short-term investment of capital in a non-unitary business segment or activity, or any other investment that serves an operational function.

Resident or Inhabitant , any natural person domiciled in Massachusetts or any natural person who is not domiciled in Massachusetts but who maintains a permanent place of abode in Massachusetts and spends in the aggregate more than 183 days of the tax year in Massachusetts, including days spent partially in and partially out of Massachusetts.

S corporation , an S corporation as defined in the Code.

Sham transaction , a transaction that does not have (i) a valid, good faith business purpose other than tax avoidance; and (ii) economic substance apart from the asserted tax benefit.

Sham transaction rule , the rule, set forth at G.L. c. 62C, § 3A, that permits the commissioner, in his discretion, to disallow the asserted tax consequences of a transaction by asserting that it is a sham transaction; in such cases the taxpayer has the burden of proving by clear and convincing evidence that it is not a sham transaction, as more fully described in G.L. c. 62C, § 3A.

Tiered Structure, a pass-through entity that has a pass-through entity as a member. As between two entities, the pass-through entity that is a member is the upper-tier entity, and the entity of which it is a member is the lower-tier entity. A tiered pass-through entity arrangement may have two or more tiers; in such cases, a single entity can be both a lower-tier and an upper-tier entity.

Trust , a trust as defined under Massachusetts law, but for purposes of this regulation, not including a corporate trust.

Unitary business , a group of related businesses under common ownership that have one or more of the following factors: (1) functional integration; (2) centralization of management; and (3) economies of scale. Evidence of a unitary business includes facts indicating that there is a flow of value among the entities, or that capital transactions among the businesses serve an operational rather than an investment function.