Schedule ABIE: Exceptions to the Add Back of Intangible Expenses (2025)
Massachusetts · Massachusetts DOR · Used for tax years 2025
Massachusetts Schedule ABIE is used to claim exceptions to the requirement to add back related-member intangible expenses and costs to net income, including losses from factoring or discounting transactions. It reports the exception amounts claimed and the total to enter on the a
Who files this form
Use 2025 Schedule ABIE to claim an exception to the requirement under MGL ch 63, §§ 31I and 31K to add back related member intangible expenses and costs to net income. This includes losses incurred in factoring or discounting transactions.
Complete a separate schedule for each transaction with a related member for which you claim an exception.
What you'll need
Have the information needed for your exception claim available:
- Taxpayer and related member names, Federal Identification numbers, and tax-year beginning and ending dates.
- Related member taxing jurisdictions and, if applicable, the unitary business identifier and principal reporting corporation information.
- The corporate return and schedule where the deduction is claimed.
- For Exceptions 1 and 2, the applicable tax returns and apportionment information needed to report tax rates, income, expenses, and apportionment percentages.
- For Exceptions 3 and 4, applicable agreement termination dates, written contract dates, and dates of any supporting written study or appraisal.
For Exception 3 or 4, you must prepare a supporting statement with your tax return in accordance with the Department’s public written statements. Make it available to the Commissioner upon request.
How to file
File electronically and include Schedule ABIE with your tax return. Paper returns will not be accepted.
Complete a separate schedule for each transaction for which you claim an exception. Add lines 1 through 4 in “Total Exceptions Claimed,” and enter the total on line 5 and on the appropriate corporate return.
For electronic filing questions, call 617-887-6367. See the Department’s electronic filing and payment requirements for more information.
Common mistakes
- Filing on paper: The form is e-file only. Paper returns will not be accepted.
- Using Exception 2 for an expense already claimed under Exception 1: Do not complete Exception 2 for the same intangible expense or cost.
- Completing Exception 2 without meeting its conditions: The related member must have reported the expense as income and, if applicable, the tax reported on that return must have exceeded the minimum tax.
- Including combined or unitary jurisdictions where prohibited: Do not include tax rates on Exception 1, line 3, or net income on Exception 2, line 8, for a jurisdiction where the related member files with the taxpayer on a combined or unitary basis.
- Entering more than 1 on Exception 2, line 14: The form expressly prohibits this.
- Using Exception 3 or 4 for a double tax exception claim: All double tax exception claims must be made through Exception 1 or 2.
- Selecting multiple bases for Exception 3 or 4: Fill in only one basis for each claim.
Questions people ask
Can I report several related member transactions on one schedule?
No. Complete a separate Schedule ABIE for each transaction with a related member for which you claim an exception.
What types of exceptions does the schedule cover?
Exception 1 is a full exception for intangible expenses or costs paid, accrued, or incurred to a related member taxed at a similar rate. Exception 2 is a partial exception for related member intangible expenses or costs. Exception 3 covers intangible expenses or costs based on a supporting statement. Exception 4 covers factoring or discounting losses based on a supporting statement.
What bases can I select for a supporting-statement claim?
Exception 3 lists business purpose or economic substance, the MGL ch 63, § 31K foreign treaty exception, and the conduit exception. Exception 4 lists business purpose or economic substance and the foreign treaty exception. Select only one basis for the claim.
What if the related member is taxable in only one jurisdiction?
For Exception 1, line 4, and Exception 2, line 11, enter “1” if the related member is taxable in only one jurisdiction and therefore is not subject to apportionment.
Where does the total exception amount go?
Add lines 1 through 4 in “Total Exceptions Claimed.” Enter the result on line 5 and on the appropriate corporate return.