Mass. Gen. Laws ch. 63, § 42

Alternative method of determining net income

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Section 42. If the allocation and apportionment provisions of this chapter are not reasonably adapted to approximate the net income derived from business carried on within this commonwealth, a corporation may apply to the commissioner to have its income derived from business carried on within this commonwealth determined by a method other than that set forth in section thirty-eight. Such application shall be made by attaching to its duly-filed return a statement of the reasons why the corporation believes that the allocation and apportionment provisions of this chapter are not reasonably adapted to approximate its net income derived from business carried on within this commonwealth and a description of the method of allocation sought by it. A corporation which so applies shall, upon receipt of a request therefor from the commissioner, file with the commissioner, under oath of its treasurer, a statement of such additional information as the commissioner may require.

If, in the judgment of the commissioner the allocation and apportionment provisions of this chapter are not reasonably adapted to approximate the corporation's net income derived from business carried on within this commonwealth, the commissioner shall by reasonable methods determine the amount of net income derived from business activity carried on within this commonwealth. The amount thus determined shall be the net income taxable under this chapter and the foregoing determination shall be in lieu of the determination required by section thirty-eight. If an alternative method is used by the commissioner hereunder, the commissioner, in his discretion, with respect to the two next succeeding taxable years, may require similar information from such corporation if it shall appear that the allocation and apportionment provisions of this chapter are not reasonably adapted to approximate for the applicable year the corporation's net income derived from business carried on within this commonwealth and may by reasonable methods determine such income in the same manner as if the corporation had applied to have its income so determined.

Notes of Decisions

Cited in 9 cases, 1978–2003 · leading case: Gillette Co. v. Commissioner of Revenue

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Gillette Co. v. Commissioner of Revenue (1997) mass · cites it 6× “On appeal, Gillette claims that the board erred in ruling (1) that the unitary method was not authorized under G. L. c. 63, § 42; and (2) that requiring unitary businesses to use the “statutory method” did not violate the due process and commerce clauses of the United States…”

Becton, Dickinson & Co. v. State Tax Commission (1978) mass · cites it 5× “Becton, Dickinson alleges that the statutory formula is not reasonably adapted to approximate income derived from its Massachusetts operations and that it is therefore entitled, under G. L. c. 63, § 42, to depart from the statutory income-allocation method and to calculate its…”

W. R. Grace & Co. v. Commissioner of Revenue (1979) mass · cites it 3× “3 Finally, G. L. c. 63, § 42, as amended through St.”

Dow Chemical Co. v. Commissioner of Revenue (1979) mass · cites it 2× “are not reasonably adapted to approximate the net income derived from business carried on within the Commonwealth,” the taxpayer may proceed under G. L. c. 63, § 42, to attempt to use another method shown to be more reasonable.”

Becton, Dickinson & Co. v. Department of Revenue (1981) mass · cites it 2× “63, § 38, and that it had not sustained its burden of proof that it was entitled to use a different method under G. L. c. 63, § 42. We affirm the decision of the board.”

Polaroid Corp. v. Commissioner of Revenue (1984) mass “In such a situation we conclude that the Legislature did not intend by its amendment of § 39A to grant authority to the commissioner to engage in a practice that was then thought to be constitutionally impermissible.”

Northeast Petroleum Corp. v. Commissioner of Revenue (1985) mass “When the taxpayer filed its Form 355A Massachusetts corporate excise return for the year ending June 30, 1977, it also filed a statement in accordance with G. L. c. 63, § 42, requesting approval of the use of an alternative method of apportioning its income to Massachusetts.”

Tenneco Inc. v. Commissioner of Revenue (1987) mass “Tenneco’s inability to seek an alternative apportionment of its net income under G. L. c. 63, § 42, for the years at issue did not violate the equal protection clause.”

W.R. Grace & Co.-Conn. v. Commissioner of Revenue (2003) massappct · cites it 3× “63, § 38, or whether, as Grace argues, it should be calculated according to an alternative method pursuant to G. L. c. 63, § 42. 1 1. Facts. We summarize the facts based on the board’s findings that are not contested.”

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