Under MCL 208.1261 a "financial institution" is defined as a
bank holding company, a national bank, a state chartered bank, an office of
thrift supervision chartered bank or thrift institution, or a savings and loan
holding company other than a diversified savings and loan holding company as
defined in 12 USC 1467a(a)(F).
This definition also includes any subsidiary of a financial institution, owned
directly or indirectly, other than an insurance company as defined in MCL
208.1111(2), if that subsidiary is a member of a unitary business group with the
financial institution. MCL 208.1261(f)(ii). This broad language also encompasses
any disregarded entity owned by the financial institution. A unitary business
group of financial institutions is permitted by definition. MCL
208.1261(f)(iii).
Thus, if a financial institution or its subsidiary satisfies the control test
and one of the two relationship tests outlined in MCL 208.1117(6) with another
financial institution and its subsidiaries, the unitary business group will file
a combined return. MCL 208.1511. A unitary business group of financial
institutions will eliminate inter-group gross business when calculating the
gross business factor. MCL 208.1261(f) and MCL 208.167(4).
In contrast, financial institutions and their subsidiaries cannot file on a
unitary basis with non-financial institution entities even though they may be
unitary with such entities. When a financial institution or its subsidiary is
unitary with a non-financial institution, all intercompany transactions must be
eliminated along with
any business income attributable to [the financial institution or subsidiary]
from the business income tax base, any modified gross receipts attributable to
[the financial institution or subsidiary] from the modified gross receipts tax
base, and any sales attributable to [the financial institution or subsidiary]
from the apportionment formula. MCL 208.1511.
This calculation will be represented on the combined return of the unitary
group, but the financial institution member(s) will essentially be excluded from
that return. The financial institutions member(s) must then file either a
stand-alone return in accordance with MCL 208.1263 or a combined return with
other financial institutions as explained above.
In summation, a financial institution will file either a stand-alone return if
it is not unitary with another financial institution or has been excluded from
unitary group containing non-financial institution entity types, or a combined
return with other financial institution members of a unitary group.
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