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| U32. For a unitary business group, MBT Section 201(3) requires the deduction of items of income and related deductions including dividends between members of the group when computing the business income tax base. Section 203(3) requires the ... |
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It is possible different items will be excluded from each tax base. A unitary business is required to file a combined return. MCL 208.1511. This section also requires the elimination of all transactions between members of the unitary business group that affect the business income tax base, modified gross receipts tax base and the apportionment formula. The elimination of all transactions between members will effectively accomplish the inter-member eliminations required under Sections 201(3) and 203(3). It is irrelevant whether the same items are excluded from both tax bases. What controls is that the transactions between members are eliminated. Because business income and gross receipts are statutorily unique, it is likely different components of the eliminated transactions will affect the computation of one tax base but not the other. For example, the elimination of income will impact the calculation of both tax bases because income received affects both business income and gross receipts. However, a transaction that includes the elimination of an expense that does not meet the definition of a "purchases from other firms" will affect only the business income tax base.
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