Income Subject to Massachusetts Income Tax

(a) Income Derived from or Effectively Connected with a Trade or Business, Including Any Employment Carried on in Massachusetts . This income is defined as the income that is earned by, credited to, accumulated for or otherwise attributable to the taxpayer's trade or business in the Commonwealth in any year or part thereof, regardless of the year in which the income is actually received by the taxpayer and regardless of the taxpayer's residence or domicile in the year it is received. All types of income, including investment income, derived from or effectively connected with the carrying on of a trade or business within Massachusetts are Massachusetts source income. The term may include gain from the sale of a business or an interest in a business, distributive share income, separation, sick or vacation pay, deferred compensation and nonqualified pension income not prevented from state taxation by the laws of the United States, and income from a covenant not to compete.

1. "Trade or business, including any employment." a. General Rule . Subject to the exception that applies to presence for business that is casual, isolated, or inconsequential, described at section 830 CMR 62.5A.1(3)(h), below, a non-resident has a trade or business, including any employment carried on in Massachusetts: i. If the non-resident, directly or through representatives or employees, maintains or operates or shares in maintaining or operating any place in Massachusetts where business affairs are systematically and regularly conducted; ii. If the non-resident owns an interest in a pass-through entity that, directly or through representatives or employees, or through other pass-through entities, maintains or operates or shares in maintaining or operating any place in Massachusetts where its business affairs are systematically and regularly conducted; iii. If the non-resident, directly or through representatives or employees, is present for business in Massachusetts either as an employee or as a sole proprietor or other self-employed individual, or if the non-resident owns an interest in a pass-through entity that, directly or through representatives or employees or through other pass-through entities, is present for business. All activities that are considered a "trade or business," including employment, under Massachusetts and/or federal tax law are subject to taxation in Massachusetts under G.L. c. 62, § 5A. Income from a trade or business generally includes that gross income against which trade or business expense deductions are allowable under sections 62 and 162 of the Code. See G.L. c. 62, § 1(l), IRC §§ 62, 162, Treas. Reg. §§ 1.161-1 - 1.162-29; iv. If the non-resident licenses intangibles, including trademarks or patents, directly or through representatives or employees, for use in Massachusetts on an ongoing basis. 2. Current residence or domicile of a non-resident taxpayer has no effect on the taxability of Massachusetts source income . All items of income that derive from the conduct of a trade or business or employment in Massachusetts, as those terms are defined in 830 CMR 62.5A.1(3)(a)(1), are Massachusetts source income, even if the taxpayer has not been present in Massachusetts during the year of receipt. Example (3)(a)(2). Taxpayer is a resident of New Hampshire and works in Massachusetts from 1984 through 2004. Upon retirement in 2004 Taxpayer receives a severance compensation package that includes $10,000 for severance pay and $5,000 for unused sick leave. The entire $15,000 package is derived from and attributable to Taxpayer's employment in Massachusetts. The entire $15,000 package is thus Massachusetts source income.

(b) Income from a Pass-Through Entity that is Derived from or Effectively Connected with a Trade or Business, Including Any Employment Carried on in Massachusetts.

1. General rule. The activities of a pass-through entity are attributed to its individual members. A non-resident member of a pass-through entity is therefore engaged in the conduct of the trade or business of the pass-though entity of which it is a member, and thus is taxable on the Massachusetts source income of the entity. The character of any item of income, loss, deduction or credit included in the member's distributive share is determined as if it were realized directly by the member from the source from which realized by the pass-through entity, or incurred in the same manner as incurred by the pass-through entity. The principles in this paragraph shall apply in the case of an ownership chain that runs through multiple pass-through entities. For example, if a non-resident individual is a member of a pass-through entity that, in turn, is a member of a lower-tier pass-through entity that is engaged in a trade or business in Massachusetts, then the non-resident will be taxable on its share of the Massachusetts source income derived from the trade or business conducted by the lower-tier entity. The income derived by a non-resident limited partner of a Massachusetts limited partnership engaged exclusively in buying, selling, dealing in or holding securities on its own behalf and not as a broker, is not subject to the Massachusetts income tax. See G.L. c. 62, § 17(b). The Massachusetts source income derived by a non-resident general partner of such a partnership is subject to Massachusetts income tax, provided the partnership is engaged in the conduct of a trade or business in the Commonwealth, or owns or leases real property in the Commonwealth. 2. Multiple pass-through entities that are not engaged in a unitary business. In the case of multiple pass-through entities that are not engaged in a unitary business, the pass-through entities must identify the Massachusetts income or loss, reporting that amount to its members, allocated or apportioned as appropriate pursuant to 830 CMR 62.5A.1(6). That income must retain its identity as Massachusetts source income, and be reported as such to members as it passes through multiple pass-through entities, without further apportionment. Example (3)(b)(2). Florida domiciled LLC ("Florida LLC") has three non-resident members. Florida LLC owns a Massachusetts domiciled LLC ("Massachusetts LLC") that invests in securities on its own behalf and is not engaged in a trade or business. Florida LLC owns a New York domiciled LLC ("New York LLC") that has an office in Boston that offers management services and advice to Massachusetts LLC and receives a fee from Massachusetts LLC based on a percentage of the portfolio value of Massachusetts LLC. Florida LLC also owns Real Estate LLC, commercially domiciled in Utah, but which owns an office tower in Boston and collects rents on that. Real Estate LLC is not engaged in a unitary business with the other members of the group. Taxation of non-resident members of Florida LLC. The Massachusetts source income of Real Estate LLC, determined pursuant to the allocation and apportionment rules of 830 CMR 62.5A.1(6), is identified and reported to Florida LLC, and is taxable to the non-resident members. It is not subject to further apportionment under 830 CMR 62.5A.1(6) at the level of Florida LLC. Income from Massachusetts LLC is not subject to Massachusetts taxation to the non-resident members, because Massachusetts LLC only invests in securities on its own behalf. The Massachusetts source income derived from New York LLC, determined pursuant to the allocation and apportionment rules of 830 CMR 62.5A.1(6)(a), is taxable because the management company is engaged in the conduct of a trade or business in Massachusetts. The income of the group is not subject to the apportionment provisions described at 830 CMR 62.5A.1(6)(b), below, because the entities subject to Massachusetts taxation are not engaged in a unitary business. 3. Multiple pass-through entities engaged in a unitary business. In the case of multiple pass-through entities that are engaged in a unitary business, the income of any entity in the structure that derives from or is effectively connected with the conduct of a trade or business or the ownership of real or tangible personal property in Massachusetts retains its character as it passes through the structure. Thus, business income of a pass-through entity does not convert to non-business income as it passes through a series of pass-through entities engaged in related business activities, as that term is defined in 830 CMR 62.5A.1(2), and is further explained in 830 CMR 62.5A.1(6). Investment income of a pass-through entity that would be taxable as business income if received directly by a non-resident member engaged in business in Massachusetts is treated as taxable income of the non-resident. Note that business income can include investment income that the pass-through entity or entities derives from an operational function. Example (3)(b)(3). A non-resident is a member of a Nevada LLC. The Nevada LLC sells computer software, and has an 80% ownership interest in a Partnership that develops computer software in Massachusetts. The partnership is treated as a partnership for federal and Massachusetts tax purposes. The income of the Partnership flows through the LLC to non-resident members. The LLC and the Partnership are functionally integrated, and are a unitary business. Subject to the apportionment rules found at 830 CMR 62.5A.1(6), below, the income of the Partnership that is passed through to the non-resident shareholders is Massachusetts source income.

(c) Specific types of Massachusetts source income . If a non-resident has a trade or business, including any employment, carried on in Massachusetts, Massachusetts source income includes, among other things:

1. Compensation for Personal Services . All types of compensation received for personal services performed in Massachusetts, regardless of where paid, are Massachusetts source income. Personal service compensation includes wages, salaries, commissions, fees, or payments in kind. In the case of compensation for personal services, the taxpayer must report all Massachusetts source income even though the taxpayer does not receive the entire amount of such income. For example, amounts withheld by an employer for federal or state income taxes, FICA contributions, medical insurance premiums not otherwise excluded from federal gross income, or other similar withholding deductions must be included in Massachusetts source income. 2. Stock options . A taxpayer must recognize income derived from nonqualified stock options that are connected with employment, or with the conduct of a trade or business, in Massachusetts in the year the income is recognized for federal purposes whether or not the taxpayer is a resident of Massachusetts during the year in which the income is reported and whether or not the taxpayer remains employed by the issuer of the option in the year of recognition of the income. The amount of such income that is taxable to Massachusetts is determined by applying the taxpayer's average Massachusetts apportionment percentage (based on the taxpayer's employment or conduct of business within or without Massachusetts, as described in 830 CMR 62.5A.1(5)) for the period between the option grant date and the option exercise date to the income that derives from the exercise of the option, measured by the share price at exercise minus the option share price, multiplied by the number of shares. A non-resident will generally not be taxable on income that derives from sales of stock acquired pursuant to the exercise of a qualified stock option, namely, an incentive stock option under IRC § 422 or an employee stock purchase plan option under IRC § 423, except in the case of a disqualifying disposition of such stock. Example (3)(c)(2). Taxpayer works in Massachusetts from 1997 until 2004. Taxpayer lives in Massachusetts in 1997, and then moves to Rhode Island, continuing to work in Massachusetts, with some work days spent in Rhode Island. Taxpayer is granted stock options according to the following schedule Grant Date # of shares Option Price/share Exercise Date Price at Exercise/share Income from exercise 11/19/1997 150 $14.68 12/9/2004 $108.5625 $14,082 11/18/1998 1,200 13.82 5/28/2004 94.0625 96,291 11/17/1999 1,500 25.22 12/9/2004 108.5625 125,014 Taxpayer had the following apportionment percentages for the years during which the options were unexercised: 1997, 100% (taxpayer was a resident during 1997 and worked exclusively in Massachusetts during that year); 1998, 83%; 1999, 93.45%; 2000, 89.36%; 2001, 91.27%; 2002, 95.71%; 2003, 93.47%; 2004, 97.44%. Calculation of apportioned stock option income is as follows: a. For grant of 11/19/1997. Average apportionment percentage for 1997-2004, the period the option exists and is unexercised, is 92.96%, which represents the sum of the apportionment percentages, 1997 - 2004, divided by 8, the number of years in the period. The calculation is thus: .9296 * $14,082 (income from exercise) = $13,091 Massachusetts taxable income in 2004. b. For grant of 11/18/1998. Average apportionment percentage for 1998-2004, the period the option exists and is unexercised, is 91.96%, which represents the sum of the apportionment percentages, 1998 - 2004, divided by 7, the number of years in the period. The calculation is thus: .9196 * $96,291 (income from exercise) = $88,549 Massachusetts taxable income in 2004. c. For grant of 11/17/1999. Average apportionment percentage for 1999-2004, the period the option exists and is unexercised, is 93.45%, which represents the sum of the apportionment percentages, 1999 - 2004, divided by 6, the number of years in the period. The calculation is thus: .9345 * $125,014 (income from exercise) = $116,826 Massachusetts taxable income in 2004. The total Massachusetts source income derived from these options in 2004 is $218,466. 3 . Shares of stock issued by a corporation as compensation . If a taxpayer obtains an ownership interest in a trade or business as part of the taxpayer's compensation attributable to the period the taxpayer is employed or conducting the trade or business in Massachusetts, the income that the taxpayer recognizes from this element of compensation for federal tax purposes is Massachusetts source income in the year of federal recognition whether or not the taxpayer is a resident of Massachusetts at that time and whether or not the taxpayer continues to conduct a trade or business or be employed in Massachusetts. This rule applies to an ownership interest in any business entity, including a C corporation, S corporation, general partnership, limited liability partnership, limited partnership, or limited liability company. Example (3)(c)(3). Executive works for C Corporation in Massachusetts in 2003 and is promised one thousand shares of stock as a bonus in 2003, but the stock is not actually issued until 2004, after Executive has been transferred to C Corporation's Boise, Idaho headquarters. The receipt of this stock is attributable to Executive's employment in Massachusetts and is taxable as Massachusetts source income to a non-resident in 2004, the year of federal recognition. 4. Payments from a covenant not to compete . Income derived from a covenant not to compete is Massachusetts source income to the extent that it is derived from or effectively connected with any trade or business, including any employment carried on by the taxpayer in Massachusetts. Example (3)(c)(4). Franchise Owner owns several franchises of a fast food chain in Massachusetts, each of which is a separate corporation. Franchise Owner sells her interest in the corporations and executes an agreement with the purchaser not to open any competing fast food restaurant near the existing stores. The covenant not to compete provides for payments over a period of three years. Franchise Owner moves to another state and never returns to Massachusetts. Since all the income from the covenant not to compete derives both from the Franchise Owner's former conduct of and her sale of a trade or business in Massachusetts, it is Massachusetts source income for the duration of the covenant, notwithstanding Franchise Owner's change in domicile or lack of business activity in Massachusetts for the years of receipt. 5. Nonqualified pension income . a. Nonqualified pension income is Massachusetts source income to the extent that it is derived from or effectively connected with any trade or business, including employment, carried on by the taxpayer in Massachusetts. Example (3)(c)(5.1). Taxpayer worked in Massachusetts from 1985 through 2002 and retires, moving out of state. A portion of her pension package includes non-qualified benefits that non-domiciliary states are permitted to tax under federal law. Those benefits are paid in 2003 and years thereafter. Because this taxable pension income is derived from Taxpayer's employment in Massachusetts, it is Massachusetts source income taxable to Taxpayer in the year of receipt. Example (3)(c)(5.2). Same facts as in Example (3)(c)(5.1), but Taxpayer worked for the same company in various states from 1985 through 2002. Taxpayer is allowed to source her non-qualified pension benefits to Massachusetts in the same proportion as her period of Massachusetts employment credited toward her pension bears to the total period of employment credited toward her pension. The apportionment calculation for this example must be based on the entire employment period from 1985 through 2002, assuming that all of those years were credited toward Taxpayer's pension. 6. Severance and accumulated sick leave . Severance and accumulated sick leave is Massachusetts source income to the extent that it is derived from or effectively connected with any trade or business, including employment carried on by the taxpayer in Massachusetts. Example (3)(c)(6). See Example (3)(a)(2). 7. Deferred Compensation . Deferred compensation is Massachusetts source income to the extent it is derived from or effectively connected with a trade or business including employment carried on in Massachusetts. For purposes of this regulation, deferred compensation is all compensation for services paid or made available to the taxpayer in a tax year following the year in which the services were performed, but does not include qualified pension income as defined in 830 CMR 62.5A.1(4)(e), nor shall it be deemed to include income from qualified tax-deferred retirement plans that is exempt from Massachusetts taxation under any other provision of federal or Massachusetts law. A non-resident whose deferred compensation income is derived from or effectively connected with a trade or business or employment carried on by the non-resident both in Massachusetts and elsewhere may apportion the deferred compensation income under 830 CMR 62.5A.1(5). Example (3)(c)(7.1). LLP is a limited liability partnership that conducts its business out of its Massachusetts headquarters. It consists of twenty partners. In 2002, ten partners withdraw, leaving ten Active Partners and ten Withdrawn Partners. Upon withdrawal, the ten Withdrawn Partners cease to be members of the partnership, and move out of state. The Withdrawn Partners receive annual payments for ten years after withdrawal. Because these payments are attributable to the partners' conduct of a trade or business in Massachusetts, they are taxable Massachusetts source income to the non-residents. Example (3)(c)(7.2). Same facts as in Example (3)(b)(7.1), except that from 1998 through 2002 the partnership had one or more non-resident individual partners and had income derived from business activities in another state, and that other state had jurisdiction to levy an income tax on the partnership or partners. Five-Year Partner was a partner during the period 1998 through 2002. The partnership should apply the average apportionment percentage of the partnership under 830 CMR 62.5A.1(6) during the period 1998 through 2002 and notify the Five-Year Partner of the Massachusetts source income portion of his annual payments. 8. Sale of a business or an interest in a business . Income from a trade or business may include income that results from the sale of a business or an interest in a business. This rule generally applies to the sale of an interest in a sole proprietorship, general partnership, limited liability partnership, a general or limited partner's interest in a limited partnership (subject to the exception in the following sentence), or an interest in a limited liability company. It generally does not apply to the sale of a limited partner's interest in a publicly traded limited partnership, or to the sale of shares of stock in a C or S corporation, to the extent that the income from such gain is characterized for federal income tax purposes as capital gains. Nevertheless, gain from the disposition of a limited partner's interest in a publicly traded limited partnership or the disposition of shares of corporate stock will be considered Massachusetts source income if it is treated as compensation for federal income tax purposes. Such gain may also give rise to Massachusetts source income if, for example, the gain is otherwise connected with the taxpayer's conduct of a trade or business, including employment (as in a case where the stock is related to the taxpayer's compensation for services) or if the organizational form of a business is changed in anticipation of the disposition of one or more interests therein for the purpose of avoiding Massachusetts tax. Depending on the facts and circumstances of the case, gain from the sale of such corporate stock or limited partner's interest in a publicly traded limited partnership will be taxable to non-residents if it is determined that the taxpayer has engaged in a transaction or multiple transactions, the purpose of which is the avoidance of tax upon the gain (e.g. sham or step transaction, or prohibited assignment of income). Example (3)(c)(8.1). Limited Liability Partner, a non-resident, owns a 25% partnership interest in a Massachusetts limited liability partnership that operates a computer consulting business in Massachusetts. Partner contributed funds to the limited liability partnership upon its creation, but took no part in its management or operations. Partner sells his interest in the partnership and recognizes a capital gain for federal tax purposes. Partner is taxable in Massachusetts on the gain. Example (3)(c)(8.2) . Same facts as in Example (3)(c)(8.1), but the partnership had one or more nonresident individual partners, had income derived from business activities in another state, and such other state had the jurisdiction to levy an income tax on the partnership or partners. Non-resident Limited Liability Partner may apportion the gain on the sale of the partnership interest. The proper method for determining apportionment is to use the average of the apportionment percentages under 830 CMR 62.5A.1(6), taken from each partnership Form 3, during the period the partner owned the partnership interest. Example (3)(c)(8.3). Limited Partner, a non-resident, purchased an interest in a limited partnership that was not publicly traded, but that had Massachusetts source income. After two years, Limited Partner sells her interest. Limited partner is taxable on the apportioned share of gain from the disposition, apportioned by averaging the apportionment percentages of the partnership under 830 CMR 62.5A.1(6) during the two years Limited Partner owned her shares Example (3)(c)(8.4). Investor is an out-of-state employee of NationalCorp, a C corporation doing business in Massachusetts. Investor works in NationalCorp's Massachusetts offices. Investor purchases stock of NationalCorp as an ordinary investment unrelated in any way to his compensation. The gain on Investor's sale of the stock is not Massachusetts source income. Example (3)(c)(8.5). Employee works in Massachusetts and is granted a bonus of restricted stock, subject to risk of forfeiture, with vesting conditioned on her employer's reaching certain projected increases in corporate earnings. Employee does not make an election to include the value of the stock in gross income in the year of the transfer under IRC § 83(b). Three years later Employee moves out of state, and sells the stock before it becomes substantially vested, triggering inclusion of the gain in income as compensation for federal income tax purposes. Employee's gain is Massachusetts source income taxable to Employee. 9. Taxable Unemployment Compensation or Disability Income. All unemployment compensation and disability income included in Massachusetts gross income and derived from employment in Massachusetts is Massachusetts source income.

(d) Income from Ownership of Any Interest in Real or Tangible Personal Property . All income derived from the ownership of any interest in real or tangible personal property located in Massachusetts is Massachusetts source income. For purposes of this regulation, the ownership of an interest in real property located within Massachusetts includes the ownership of an interest in a partnership to the extent that the partnership holds an interest in real property located in Massachusetts. Income from the ownership of any interest in real or tangible personal property located in Massachusetts includes income and gains derived from the following:

1. real property located in Massachusetts. This category includes the ownership of an interest in a partnership, to the extent that the partnership holds an interest in real property located in Massachusetts. Example (3)(d)(1.1). A Vermont resident owns real estate located in Massachusetts that is sold for a profit. The Vermont resident will be subject to Massachusetts income tax on the net gain derived from the sale. Example (3)(d)(1.2). A New York resident receiving rental income from real estate located in Massachusetts will be subject to Massachusetts income tax on such income. Example (3)(d)(1.3). A Connecticut resident owns real estate located in Massachusetts. She sells the property for a gain and as part of the consideration for the sale receives a note from the buyer for 20% of the purchase price. Under the note the buyer will pay principal and interest in installments over the next five years. Both the gain and interest received will be subject to Massachusetts income tax, whether or not the non-resident elects to defer recognition of the income under the installment sale provisions set forth in G.L. c. 62, § 63. Example (3)(d)(1.4). Texas General Partnership has three non-resident partners. The Partnership owns shares in a REIT that is formed as a corporation that are sold on a secondary market, such as through an investment firm, which it has purchased at arms length. Income from the REIT is not treated as income from real estate, but rather as income from certain intangibles not subject to Massachusetts income tax for non-residents, according to the rule at 830 CMR 62.5A.1(4)(b). As in all cases, such income may be taxable to non-residents under the sham transaction rule. Example (3)(d)(1. 5 ). MallPartners is a partnership with three non-resident partners that owns malls throughout the country, including a mall in Massachusetts. Income derived from the Massachusetts mall is Massachusetts source income derived from real property, and is taxable to the non-resident partners. Example (3)(d)(1.6). Non-resident is a partner in a partnership that owns ten acres of land in Massachusetts. Non-resident sells his interest in the partnership. Non-resident is taxable on the gain from the sale. a. Like-kind exchanges under Code section 1031. Massachusetts does not tax gain from the sale of real property that is deferred under the like-kind exchange provisions of Code section 1031. However, when the taxpayer subsequently disposes of the property acquired in such an exchange, the amount of the gain that reflects appreciation of Massachusetts real estate is Massachusetts source income. 2 . tangible personal property having a situs in Massachusetts ; 3. any interest in a Massachusetts cooperative housing corporation ; 4. any interest in a Massachusetts timesharing or similar arrangement ; 5. another interest in Massachusetts real or tangible personal property. This category includes income from extractive rights for timber or minerals.

(e ) Income from Lottery or Wagering Transactions . All winnings from lottery or wagering transactions within Massachusetts are Massachusetts source income.

Example (3)(e)(1.1). A Maine resident who purchases a Massachusetts lottery ticket and wins a prize will be subject to Massachusetts income tax on the full amount of the winnings.

Example (3)(e)(1.2). A New Hampshire resident visits a horseracing track in Massachusetts, places a bet on a horse and wins. The full amount of the winnings will be subject to Massachusetts income tax.

(f) Income from Patents, Copyrights and Other Similar Intangibles .

1. Royalty Income . Royalty income from the licensing of a patent or copyright, and income from the licensing of a design, idea or other similar intangible, to a person for use in Massachusetts is Massachusetts source income. For this purpose, "royalty income" shall include payments derived from the licensing or sale of an intangible where the amount is contingent on productivity, use, or disposition of the intangible (royalty-type payments) irrespective of whether such transaction may be treated as a "sale" of all substantial rights in the intangible for certain tax purposes. Example (3)(f)(1). A non-resident scientist develops a formula for a new drug product, patents the formula and grants a license to a pharmaceutical company, which produces the product at its Springfield, Massachusetts plant. The entire income from the licensing agreement is Massachusetts source income to the scientist. 2. Non-royalty-type Income from Sale or Exchange of Intangible . Income derived from non-royalty-type payments from the sale or exchange of a patent, copyright, design, idea or other similar intangible by a non-resident is Massachusetts source income if derived from or effectively connected with a trade or business including employment carried on in Massachusetts.

(g) Other Income . All other types of income that fall within the definition of Massachusetts source income.

(h) Presence for Business, Casual, Isolated and Inconsequential for non-resident individuals . Notwithstanding the provisions of 830 CMR 62.5A.1(3)(a), a non-resident individual does not have a trade or business, including any employment, carried on in Massachusetts if the non-resident's presence for business in Massachusetts is casual, isolated and inconsequential. A non-resident's presence for business in Massachusetts will ordinarily be considered casual, isolated and inconsequential if the non-resident's presence for business in Massachusetts is ancillary to the non-resident's primary business or employment duties performed at a base of operations outside of Massachusetts, as with occasional presence in Massachusetts for management reporting or planning, training, attendance at conferences or symposia, and other similar activities that are secondary to the individual's primary out-of-state duties.

Example (3)(h)(1.1) . A former politician, a resident of California, now earns a living speaking at various functions across the country. She spends one day in Massachusetts delivering a speech at a convention in Lowell, Massachusetts and earns $ 30,000. This non-resident is considered to be carrying on business in Massachusetts because the fee is earned as a direct consequence of the Massachusetts activity, and this activity is not merely ancillary to her business conducted outside of Massachusetts.

Example (3)(h)(1.2). A dentist employed by a health maintenance organization in Portland, Maine, comes to Massachusetts for a paid six-week training course in pediatric dentistry. Her presence for business in Massachusetts is ancillary to her primary employment duties elsewhere and is therefore casual, isolated and inconsequential. She is not considered to be carrying on employment in Massachusetts.

Example (3)(h)(1.3). A New York attorney, practicing law as a sole practitioner primarily in New York City, is retained by a Massachusetts business in connection with a pending lawsuit in a Massachusetts court. All of the trial preparation occurs in New York but the attorney appears in court in Massachusetts every day for four weeks. This non-resident is considered to be carrying on business in Massachusetts while in the Commonwealth because the duties performed in Massachusetts are not merely ancillary to his primary business outside Massachusetts.