Special Rules Applicable to Pass-Through Entities

(b) Pass-Through Entities Taxed at Entity Level .A trust or subchapter S corporation subject to tax at the entity level in any year may claim the credit allowed under M.G.L. c. 62, § 6M or M.G.L. c. 63, § 38EE, as applicable, for the taxable year in which the qualified investment is made. Alternatively, the credit may be passed through to the entity’s beneficiaries or shareholders pro rata or pursuant to an executed agreement among the entity’s beneficiaries or shareholders documenting an alternative distribution method without regard to their sharing of other tax or economic attributes of the entity. These alternatives are mutually exclusive; an entity may not claim part of the credit against its own excise and pass the rest through to its beneficiaries or shareholders. Either (i) the entity or (ii) the beneficiaries or shareholders may claim the credit, but not both. If credits are passed through to beneficiaries or shareholders, any credits that cannot be applied in the taxable year for which a carryover is elected may be carried over and applied against the beneficiary’s or shareholder’s tax liability in succeeding taxable years. Carryovers may not be claimed at the entity level in such cases. The total aggregate amount of the credit passed through by such entity and claimed by its beneficiaries or shareholders in any taxable year shall not exceed the credit amount allowed by 830 CMR 62.6M.1(4).