Examples

(b) Example 2. Qualified Investments to a Community Partnership Fund. On December 30, 2014, Mary Smith, a Massachusetts resident, makes a qualified investment to a community partnership fund by mailing to the fund a check for $18,000. The fund distributes Mary’s $18,000 to a community partner dedicated to undertaking development projects in the city in which Mary lives on February 5, 2015. DHCD certifies that Mary made a qualified investment ( i.e., the $18,000 she gave to the community partnership fund) and issues her an interim certificate on February 20, 2015. The total credit certified on the certificate is $9,000. Pursuant to 830 CMR 62.6M.1(5), Mary may claim the $9,000 credit on her 2014 Massachusetts income tax return, as 2014 is the taxable year in which Mary makes a qualified investment. The fact that the community partnership fund to which Mary made her qualified investment subsequently distributes the $18,000 to a community partner in 2015 or the fact that DHCD issues Mary a certificate in 2015 are not determinative of the taxable year in which the credit shall be claimed under 830 CMR 62.6M.1(5).

(c) Example 3. Qualified Investments by Organizations Exempt From Tax Under Code § 501. On May 12, 2015, Nonprofit Unincorporated Association (“NUA”) makes a $25,000 qualified investment to a community partnership fund that, in turn, on July 21, 2015, distributes the money equally ($12,500 each) to 2 community partners. DHCD certifies that NUA made a qualified investment of $25,000 and issues NUA an interim certificate on August 3, 2015. The total credit certified on the certificate is $12,500. In 2015, NUA has unrelated business taxable income that results in a tax liability before credits of $1,000. The qualified investment NUA made to the community partnership fund is unrelated to the business activity that gave rise to NUA’s taxable income. Nevertheless, in determining NUA’s refund amount, the Commissioner will first apply NUA’s $12,500 credit against NUA’s $1,000 tax liability and refund the remaining $11,500 to NUA, pursuant to 830 CMR 62.6M.1(14).

(d) Example 4. Donor Advised Funds. On May 10, 2014, Fred Jones, a Massachusetts resident, makes an irrevocable contribution of $100,000 to the donor advised fund (“DAF”) he established through XYZ organization (“XYZ”), a public charity exempt from taxation under Code § 501. Fred advises XYZ on how to invest the assets in the DAF so that they may grow prior to being granted and recommends, among other grants, periodic grants of varying amounts from the DAF to community partners located in the city in Massachusetts in which he resides. The final decision as to the distribution of the $100,000 rests with XYZ, however; no distribution from the DAF is made unless XYZ agrees to or approves of it. On October 3, 2014, XYZ makes three $5,000 grants from the DAF established by Fred. Two of those grants qualify as qualified investments as they are made to 2 separate community partners located in Fred’s city. DHCD certifies that XYZ made 2 qualified investments and issues XYZ two interim certificates on October 25, 2014. The total credit certified on each certificate is $2,500, for a total allowable credit for 2014 of $5,000. Pursuant to 830 CMR 62.6M.1(13), XYZ files a Massachusetts income tax return for 2014 and claims a $ 5,000 refund, as XYZ has no unrelated business taxable income for tax year 2014. Fred, on the other hand, is entitled to claim no credit or refund on his 2014 Massachusetts income tax return for the $100,000 contribution he made to his DAF, as a DAF is not a community partner or a community partnership fund and, thus, contributions to a DAF are not “qualified investments.”

(e) Example 5. Qualified Investments by a Nonresident Taxpayer. Jack Cline, a resident of New York with no Massachusetts source income, as defined in M.G.L. c. 62, § 5A, whose only ties to Massachusetts are that he has a daughter and grandchildren living in Massachusetts, makes a $30,000 qualified investment in 2016 directly to a Massachusetts community development corporation dedicated to improving the community his daughter and grandchildren live in and selected by DHCD to be a community partner. DHCD certifies that Jack made a qualified investment and issues him an interim certificate on June 20, 2016. The total credit certified on the certificate is $15,000. Although not otherwise required to file a 2016 nonresident income tax return in Massachusetts, Jack must file a Massachusetts nonresident return in order to receive a payment of the $15,000 refund, as stated in 830 CMR 62.6M.1(13).

REGULATORY AUTHORITY 830 CMR 62.6M.1 : M.G.L. c. 14, § 6(l); M.G.L. c. 62C, § 3; M.G.L. c. 62, § 6M; M.G.L. c. 63, § 38EE

REGULATORY HISTORY Date of Promulgation: July 18, 2014 New regulation promulgated 3/20/2020

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