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FAQ
Michigan Business Tax
Michigan Business Tax FAQ List of Topics
Statement on December 2008 MBT Act changes and amendments to the FAQ's
Important Note:
A39. How is the book-tax deduction, provided at MCL 208.1201(2)(i), calculated?
A40. What method must a fiscal year taxpayer that will no longer be a taxpayer under the MBT or CIT after December 31, 2011, use to calculate its final MBT return?
A41. What method must a fiscal year taxpayer with an MBT election use to file returns for its tax year ending in 2012?
A38. Can modified gross receipts (MGR) tax separately collected from customers by new motor vehicle dealers and new or used watercraft dealers be remitted with monthly sales, use and withholding returns?
A37.Is there a form to file to notify the Department that I will not be filing an MBT return (similar to form C-8030 for SBT)?
A36. Will an overpayment made in connection with a taxpayer's final SBT return be applied as timely against that taxpayer's first quarter MBT estimate, even though the overpayment may have been made after the due date for the first
A35. Will there be other E services available with the MBT, in addition to electronic filing?
A34. The first MBT annual returns could be due before MBT forms are released to the taxpayer public. Will penalties be waived for these first MBT returns if taxpayers make a good-faith guess as to liability?
A33. Can a taxpayer who claims an error was made in the calculation of an MBT quarterly estimated payment request a refund of that payment without filing an annual MBT return?
A32. Will Voluntary Disclosure continue with the Michigan Business Tax?
A31. When is the final short period Single Business Tax (SBT) return due for a fiscal year taxpayer? If the taxpayer chooses the annual method for calculating the final SBT liability, how does it file timely for the fiscal year that is required...
A30. Will a taxpayer be required to make a payment with an extension request or is the listing of estimated payments made going to be accepted as it is in the Single Business Tax?
A28. The SBT has a Notice of No Return, Form C-8030 to be filed by taxpayers who were not required to file. Will there be a similar MBT form?
A29. How must a fiscal year taxpayer calculate quarterly estimated payments if one quarter straddles the period in which the SBT ends and the MBT begins?
A26. (Answer rescinded, replaced by A30) Will a taxpayer be required to make a payment with an extension request or is the isting of estimated
A27. Does the $350,000 filing threshold apply to just the gross receipts tax or to both the gross receipts and business income taxes?
A22. Will taxpayers need to calculate the business income, modified gross receipts, and surcharge separately and pay 85% of each to meet the estimated tax payment safe harbor provision in order to avoid interest?
A23. How are quarterly estimates calculated?
A24. Will a safe harbor be allowed for 2008 estimates based on the 2007 SBT return?
A25. How does a taxpayer with a fiscal year end calculate tax under the MBT for estimate purposes?
A21. (Answer rescinded, replaced by A25) How does a taxpayer with a fiscal year end calculate tax under the MBT for estimate purposes?
A19. When are the first and second estimated MBT payments due for a fiscal year filer with an April 30, 2008 year end?
A20. Can a fiscal year filer request an extension for the first MBT return?
A16. Will SBT overpayments be applied to MBT?
A17. Will an estimated return be due for a taxpayer with a short taxable year of less than four months under the MBT?
A18. What is the filing threshold under the Michigan Business Tax Act (MBTA)?
A13. (Answer rescinded, replaced by A24) Will a safe harbor be allowed for 2008 estimates based on the 2007 SBT return?
A14. Will the business income tax and modified gross receipts tax be filed on a single return or on separate returns?
A15. May a taxpayer make estimated MBT payments on Form 160, the Combined Return for Michigan Taxes, and if so, how will the different due dates be reconciled?
A11. How does a Fiscal Year taxpayer file returns for their tax year ending in 2008?
A12. Will there be E services with MBT?
A10. When will forms be available for the Michigan Business Tax?
A01. (Answer rescinded, replaced by A22) Will taxpayers need to calculate the business income and modified gross receipts separately and pay 85% of…
A02. When does the MBT take effect?
A03. Who must file MBT quarterly estimates?
A04. When are MBT quarterly estimates due?
A05. (Answer rescinded, replaced by A23) How are quarterly estimates calculated?
A07. How can I get an extension of time to file an MBT Annual Return?
A08. How is the tax computed if my first taxable year is less than 12 months?
A09. If I'm registered for the SBT what do I need to do to register for the MBT?
Administrative
Ap5. Under MCL 208.1115, "sales" means "[f]or taxpayers not engaged in any other business activities, sales include interest, dividends, & other income from investment assets & activities & from trading assets & activities...
Ap4. What is the location of investment partnerships? Is it based on the residence of the general partner, the location of the brokerage firm, the residences of the majority of partners, or where the partnership was formed?
Ap3. Does the Michigan Business Tax Act (MBTA) provide for "throw back sales"?
Ap1. Is the occasional sale of assets by a taxpayer a "sale" for apportionment purposes?
Ap2. How are gross receipts, rents etc. received from real property apportioned?
Apportionment
B54. What is the definition of intangible asset as used in computing the business income tax base?
B55. Limited liability companies are included in the definition of "person" under the MBT. Assuming that the federal "check the box" rules are followed, does the business income adjustment set forth at section 201(2)(e), which requires...
B53. Are the qualified affordable housing deductions from business income and gross receipts under MCL 208.1201(7) and 208.1203(6) limited to qualified affordable housing projects ("QuAHPs") that purchase residential rental units after ...
B52. How is the book-tax deduction, provided at MCL 208.1201(2)(i), calculated?
B44. May taxpayers take the IRC 199 deduction for MBT purposes?
B45. Is the sale of stock by a stockholder in a closely held corporation back to the corporation or another stockholder subject to MBT?
B46. If a C corporation owns 56% of a flow-through entity, and the two meet the MBT definition of a unitary grou
B47. Can a taxpayer net the cost of purchased securities with the proceeds from those securities? For purposes of taxing the gain, is the cost the actual cost of the securities or the fair market value?
B48. An individual shareholder of an S corporation receives income from the S corporation that is reported on a federal 1099-MISC form. Would the income reported on the 1099-MISC constitute business income subject to MBT, or personal compensation..
B49. How is the book-tax deduction to the business income tax base affected if the various members of a unitary business group each have and report a book-tax difference on Form 4593 with the initial required MBT return and the unitary business ...
B50. An investment partnership has sales of capital asset securities consisting of both gains and losses that result in an overall gain. In determining the business income and modified gross receipts tax bases, is only the net gain included in ...
B51. In January 2008, the State of Michigan decoupled from federal bonus depreciation. Consequently, we have to add-back to business income bonus depreciation that was taken on the federal return.

Since bonus depreciation is not allowed ...
B42. What impact would a merger in 2008 have on the ability of the surviving entity to utilize SBT business loss carryforwards? How will losses incurred after December 31, 2007 be impacted by the merger?
B43. (Answer rescinded, replaced by B47) Can a taxpayer net the cost of purchased securities with the proceeds from those securities? For purposes...
B39. MCL 208.1201(2) provides a deduction for the book-to-tax difference or deferred liability resulting from the change from the
B40. At what date should the book-tax difference be calculated for the deduction provided in MCL 208.1201(2)(i)? The term "first fiscal period ending after July 12, 2007" is unclear.
B41. I am a broker/dealer in securities without any W-2 payroll. My major expense is 1099 commissions paid to sales representatives. Are these commission expenses deductible on my MBT return?
B37. Section 201(2)(i) of the MBTA allows a series of deductions beginning in 2015, based on an amount called the "book-tax difference." A taxpayer's book-tax difference must be calculated for the first fiscal period ending after
B38. May a taxpayer that has no MBT filing obligation for 2008 file Form 4593 (documenting the future section 201(2)(i) deduction regarding the book-tax difference) as a free-standing form,in order to preserve the possibility of taking
B35. A real estate limited partnership owns an apartment project in Michigan subject to mortgage debt. The partnership negotiates a reduction in the mortgage but retains ownership of the apartment project. As the result of the reduction in the mort
B36. MCL 208.1201(2)(h) provides a deduction from the business income tax base for self employment net earnings except to the extent that the net earnings represent a reasonable return on capital. What is a "reasonable return on capital"?
B31. (Answer rescinded, replaced by B46) If a C corporation owns 56% of a flow-through entity, and the two meet the MBT definition of a unitary grou
B32. Are royalties received from a foreign entity included in the tax base of the MBT?
B33. Does business income include casual transactions or isolated sales?
B34. How should inter-company transactions between members of a unitary business group be eliminated when the members have different year ends?
B29. We manufacture customized tooling systems, which we then sell to our customer. After the sale, although the customer owns the tooling, it physically remains at our plant, and we use the tooling to manufacture the customer's product...
B30. How are accounts receivable factoring companies treated for purposes of the Michigan Business Tax Act (MBTA)?
B26. Does the deduction for net earnings from self employment exempt self-employed individuals from taxation under the MBT?
B27. Under the Michigan Business Tax Act (MBTA) will a taxpayer receive a deduction for the modified gross receipts tax paid when calculating the business income tax base?
B28. Is the gain recognized on the one time sale of business assets and goodwill by an entity to another entity taxed under the Michigan Business Tax (MBT)?
B24. (Answer rescinded, replaced by B45) Is the sale of stock by a stockholder in a closely held corporation back to the corporation or another ...
B25. I am a 100% shareholder of a corporation that does business in Michigan. I am a nonresident of Michigan. The corporation is organized as a C corporation. I sell 100% of the stock of the corporation which results in a capital gain...
B19. (Answer rescinded, replaced by B54) What is the definition of intangible asset as used in computing the business income tax base?
B20. Our company adds a handling charge to all customer invoices. Is this handling charge taxable under the MBT?
B21. A real estate limited partnership owns an apartment project in Michigan. The partnership is in the process of selling the apartment project to avoid foreclosure. The apartment project is the partnership's only asset and the partnership will...
B22. How is a like-kind exchange treated under the MBT?
B23. Is an individual person who earns more than $350,000 in interest and dividends for the tax year subject to the MBT? Are the person's capital gains from sales of stock subject to the MBT?
B18. (Answer rescinded, replaced by B44) May taxpayers, including corporations and partnerships, take the IRC 199 deduction for MBT purposes?
B15. Does the sale by an individual of a direct investment in a corporation, partnership or LLC that is not traded on a public exchange constitute "personal investment activity" such that the income and proceeds from such a sale are exc
B16. Public Act 145 of 2007 amended the MBT to exclude certain personal investment activities from business income and gross receipts.
B17. (Answer rescinded, replaced by B55) Limited liability companies are included in the efinition of "person" under the MBT.  Assuming that the federal...
B12. Under the MBT, will there be a depreciation deduction, or will Michigan conform to federal depreciation rules?
B13. For purposes of applying section 201(2)(f)(ii) of the MBTA, does the phrase "subject to tax in another jurisdiction" refer only to taxation by another state, or does it also include taxation by a foreign country?
B14. Is interest and dividend income included in business income under the Michigan Business Tax (MBT)?
B7.Are system software royalties, excluded from the determination of tax liability under the Single Business Tax Act ("SBTA")(see MCL 208.9(4)(g)(viii) and (7)(c)(vii)), likewise excluded from the determination of tax liability under the Michigan
B8. Do the business income tax and modified gross receipts tax components of the MBT apply to individuals, estates, and trusts or family limited partnerships (FLIP)s that are specifically established for estate planning purposes, on income from
B9. If an individual owns 100% of an S corporation law practice with gross receipts of $500,000, net income of $100,000 after wages of $250,000, and also has the following income not related to the S corporation or any other trade or business:
B10. If a business or unitary group taxpayer has a negative business income tax base, is the 4.95% tax rate applied to the negative business income base, with the result then netted against a positive modified gross receipts tax to determine
B11. If a Michigan LLC has a nonresident corporate partner, does that partner file an MBT return and report and pay tax on it's share of LLC income at the same 4.95% [rate]?
B5. Is the deduction provided under MCL 208.1201(2)(i) altered by the MBT surcharge?
B6. Does the deduction provided under MCL 208.1201(2)(i) reduce the MBT surcharge imposed under MCL 208.1281(1)?
B4. Are capital gains that are included in the Modified Gross Receipts tax base also included in the Business Income tax base?
B2. What impact does the deduction for net earnings from self employment have on the business income tax base of professional service partnerships (for example, some consulting, law, and accounting firms)?
B3. Are S corporations treated in the same manner as partnerships and corporations in this regard? Can you clarify the treatment of S corporation distributions?
Business Income Tax
B1. Will shareholders of S corporations and partners in partnerships be liable for Michigan individual income tax on their share of flow-through income from entities subject to MBT?
C57. Under MCL 208.1403(2), a taxpayer may claim a credit against the MBT equal to a specified percentage of the taxpayer's "compensation in this state." What is the definition of "compensation in this state"?
C56. When must a brownfield or historic preservation credit assignment be in place in order for the assignee to make the election to remain under the MBT?
C55. Does the step up in basis under Internal Revenue Code (IRC) section 754 election and 743 application qualify as "purchases from other firms" when calculating the modified gross receipts tax base? Does the step up in basis qualify for ITC?
C48. How is the private equity fund credit calculated?
C49. How are the small business alternative credit disqualifiers under the MBT calculated for a part-year shareholder?
C50. A "qualified taxpayer" for purposes of the Historic Preservation Credit is the person that either owns the historic resource or has a long-term lease agreement with the owner, and has paid or incurred the qualified expenditures for the ...
C51. The Department has determined that a separately calculated Michigan depreciation amount is allowable for assets claiming IRC 168(k) bonus depreciation from which Michigan has decoupled. When the asset is sold, will the Michigan book-value..
C52. For MBT Brownfield Redevelopment credits authorized by MCL 208.1437, if the Qualified Taxpayer has a limited MBT liability and has taken the credit against his MBT liability to the fullest extent, how is he paid for the balance of the unused..
C53. Is the certification process for an education foundation similar to that of a community foundation?
C54. Do state tax liens attach to assigned MBT tax credits?
C47. Under the MBT, may unused Investment Tax Credits ("ITC") be carried forward to future tax years?
C44. Are the MEGA credits under the MBT (MCL 208.1431) the same as the MEGA credits under the SBT?
C45. Under the MBT, does land qualify for the Investment Tax Credit ("ITC")?
C46. When computing the loss adjustment for the small business alternative credit provided under MCL 208.1417,
C41. How is the Small Business Alternative Credit under MCL 208.1417 calculated by a taxpayer that is a unitary business group? How do the disqualifiers and percentage reducers work?
C42. For purposes of the Small Business Alternative Credit under MCL 208.1417, do the rules of attribution attribute the allocated business income related shareholder to determine whether the taxpayer is disqualified from the credit?
C43. Is a staffing company as defined in section 113(6)(d)(ii) eligible for the section 403 compensation credit on wages etc. paid to the personnel it supplies to its customers?
C37. What is the proper treatment for an SBT carryforward credit which has only one year of carryforward remaining under the SBT dictated lifespan? Does MCL 208.1401 extend the life of the credit, or is it limited by the original SBT term?
C38. Do dividends that represent distribution of previously taxed S corporation earnings qualify as dividends for purposes of determining an "active shareholder"?
C39. For purposes of the private equity fund credit under MCL 208.1453, if a private equity fund manager is an entity that is a member of a unitary business group, does the calculated credit percentage apply to the tax liability of the entire unita
C40. Is compensation under the MBT reported on a cash or accrual basis?
C33. How are gross receipts computed on an installment sale of a capital asset? Is the realized installment sale gain included in the two tax bases? How is the investment tax credit (ITC) affected?
C34. What kinds of expenses qualify for the MBT credit under MCL 208.1451 that applies to beverage distributors who originate deposits on beverage containers?
C35. If two shareholders of a C corporation (X Corp) are themselves C corporations (Y Corp & Z Corp) & one of Y Corp's shareholders is paid a management fee for managing the business of X Corp, does the management fee factor into the ...
C36. Can a taxpayer use data from its SBT tax periods in calculating the loss adjustment for purposes of determining eligibility for the Alternative Small Business Credit under MCL 208.1417?
C32. What expense items are included in compensation for purposes of the compensation credit provided for at MCL 208.1403(2)? What accounting method is used to determine compensation?
C31. My company intends to purchase a significant piece of business equipment in the near future. This equipment is the type of property that is or will become eligible for depreciation for federal tax purposes. Under the MBT, can my company ...
C28. (Answer rescinded, replaced by C57) Under MCL 208.1403(2), a taxpayer may claim a credit against the MBT equal to a specified percentage of the taxpayer's "compensation in this state." …
C29. How is the Small Business Alternative Credit under MCL 208.1417 calculated by a taxpayer that is a unitary business group? How do the disqualifiers and percentage reducers work?
C30. How do foreign persons with no U.S. federal taxable income calculate adjusted business income for purposes of the Small Business Alternative Credit under MCL 208.1417?
C25. Regarding the industrial personal property tax credit under the MBT, will the Department continue to look to the parcel classification assigned by the local property tax assessor for qualification for the credit, as it has done under the
C26. The MBT Act provides the following credits will be taken sequentially before any other credits: compensation and investment credits (MCL §208.1403)
C27. MCL §208.1403(3)(d)-(f) provides for investment credit recapture. The recapture language includes the limiters "to the extent used and at the rate used." Does this limiting language only apply to assets acquired during SBT tax years?
C22. Is the farmland preservation credit available under the Michigan Business Tax?
C23. How were the rates of the Compensation Credit, the Investment Tax Credit, and the Research and Development Credit impacted by the passage of PA 145, which added the surcharge to the MBT?
C21. What is the compensation credit?
C14. Under the MBTA, is the section 281 surcharge imposed before or after available credits are applied? Does the surcharge apply to both the modified gross receipts tax and the business income tax?
C15. Is the Arts and Culture credit available for donations made to science museums?
C16. What types of expenses qualify for the MBT's "research and development" credit?
C17. Is there a filing threshold phase-in for the Michigan Business Tax?
C18. Does Schedule C (sole proprietor) income of over $180,000.00 preclude the taxpayer from using the Small Business Alternative Credit?
C19. How will unused carryforward credits under the Single Business Tax Act (SBTA), the application of which is limited to tax years 2008 and 2009 under the Michigan Business Tax Act (MBTA), be treated for fiscal year taxpayers?
C20. How is stock ownership determined with respect to Small Business Alternate Credit disqualifiers? Will the attribution rules used for the SBT and found in IRC section 318 apply when computing the active shareholder rules under the MBT?
C10. Who is considered an officer for purposes of the Small Business Alternative Credit under MCL 208.1417?
C11. (Answer rescinded, replaced by C22) Is the farmland preservation credit available under the Michigan Business Tax?
C12. (Answer rescinded, replaced by C27) Will the recapture limiting language of MCL 208.1403(3)(d)-(f) apply to both the Michigan Business …
C13. Are these provisions superseded by the MBT?
C09. How are existing SBT credits, or those awarded but not yet certified, handled under the MBT?
C08. Will Single Business Tax (SBT) credit carry forwards carry over to the Michigan Business Tax (MBT)?
C06. (Answer rescinded, replaced by C21) What is the compensation credit?
C07. Do Historic Rehabilitation and Brownfield credits, approved under the Single Business Tax Act, carryover and can they be used against Michigan Business Tax liability?
C01. Does the Michigan Business Tax Act contain a Renaissance Zone Credit?
C02. How does a Professional Employer Organization, as defined by MCL 208.1113(4), determine compensation for the small business credit disqualifier in accordance with MCL 208.1417(8)?
C03. How are the adjusted business income and compensation disqualifiers of the small business credit, found in MCL 208.1417, computed for PEOs and their clients?
C04. Is a Professional Employer Organization, as defined by MCL 208.1113(4), entitled to the Compensation Credit of MCL 208.1403?
C05. (Answer rescinded, replaced by C41) How is the alternate credit under MCL 208.1417 used by a unitary business group?
Credits
E35. Is developer testing required if I am a large taxpayer that develops proprietary software to prepare and e-file my MBT return?
E34. Will there be an exception to the mandate for software that does not support Unitary Business Group (UBG) filings?
E33. Does the MBT e-file mandate include sole proprietorship returns filed by individuals?
E32. Will Treasury provide a form allowing the taxpayer to opt out?
E31. Will Treasury mail MBT instruction booklets to taxpayers for the 2010 tax year?
E30. Will Treasury still provide fillable MBT forms on the Web?
E29. Is the MBT e-file mandate on the taxpayer, the preparer or the software developer?
E28. How will Treasury ensure that all developers are complying with the MBT e-file requirements?
E27. If an MBT return and attachments exceed the file size limitations, would Michigan prefer to receive the return electronically, without attachments, or would it be better to send a paper MBT return with attachments?
E26. What if the federal return cannot be e-filed? Will an MBT State Stand Alone return be required?
E25. Will a rejection at the federal level allow an MBT return to be paper-filed?
E24. If Treasury sends a notice to the taxpayer for paper filing an MBT return, will the return be considered late if that taxpayer does not then submit the e-filed return before the filing due date?
E23. Can rejected returns that cannot be corrected and retransmitted and returns that fall under one of the Treasury-recognized exceptions be paper filed on computer-generated forms?
E22. If software is capable of computing a bottom line tax without supporting a necessary schedule, will the taxpayer be able to paper file the computer-generated MBT return and include a handwritten copy of the unsupported schedule, or will ...
E21. Will all software companies be required to support MBT e-file?
E20. Will there be a penalty for software developers if they allow a taxpayer or preparer to file a paper MBT return prepared using their software?
E19. Will there be a monetary penalty for failure to comply with the MBT e-file mandate?
E18. Will Michigan offer a free solution for MBT e-file?
E17. What legal authority is there for enforcing the mandate?
E16. What types of companies/businesses are covered by the MBT e-file mandate?
E15. Are there any waivers or exceptions to the mandate?
E14. What does Treasury expect software developers to do to help enforce the MBT e-file mandate?
E13. What should the taxpayer or preparer do when their e-filed MBT return is rejected?
E12. Where can the policy and language of the MBT e-file mandate be found?
E11. Is there a penalty for failing to comply with the MBT e-file mandate?
E10. What should I do when I owe tax and want to e-file my Michigan Business Tax return?
e-File
E01. Will I be able to send attachments with the MBT e-file return?
E2. Do I need a Customer Service Number (CSN) to e-file my MBT return?
E3. What MBT forms are eligible for e-file?
E4. I don't use software to prepare my MBT return. Am I required to e-file?
E5. Do I have to mail anything to Treasury?
E6. I have a Michigan-issued TR Number. Am I eligible for e-file?
E7. My software does not support the State Stand Alone method for e-file and I am not e-filing my federal return. What should I do?
E8. How do I know if my Michigan return was Accepted or Rejected?
E9. In previous years I have utilized the Direct portal for my SBT returns. Can I transmit my MBT return using the Direct portal?
Fi36. Would a new TV network dedicated to a single topic be eligible for the film production credit?
Fi37. What amount of finance fees and interest qualifies for film production credit, and how is it calculated?
Fi35. Are expenditures paid by an eligible production company for shipping and delivery eligible for the film production tax credit?
Fi34.(Answer rescinded, replaced by Fi 37) What amount of finance fees and interest qualifies for film production credit, and how is it calculated?
Fi32. How do the Film Office and Treasury determine whether a company is a proper applicant for the film production credit?
Fi33. What guidelines should an eligible production company follow when requesting a post-production certificate and an independent auditor follow when verifying and performing an audit of the expenditures for a film or digital media production ...
Fi31.If we have services performed or construction materials delivered, but then wait to make payment for those services or purchases until after the application is approved and an agreement has been entered into, can we later claim those service
Fi26. Can interim tax credit certificates be issued and the tax credits claimed prior to final completion of the project? If so, what happens to interim tax credits if the project is not completed?
Fi27. Please confirm that an assignment of a film infrastructure credit can be made any time prior to the return filing deadline for the year in which the Investment Expenditure Certificate is issued.
Fi28. MCL 208.1457(8) contemplates that a film and digital media infrastructure credit may be assigned to an assignee, and also contemplates that such assignee can re-assign to one or more assignees. Can the secondary assignees from the ...
Fi29. MCL 208.1457(9) calls for a credit application and redemption fee of 0.5% of a film and digital media infrastructure credit claimed. How is this fee charged? Is the fee paid in cash or via a reduction of the credit percentage of 25% to 24.5?
Fi30. Is the vintage year of an infrastructure credit the year in which the investment expenditure certificate is approved?
Fi24.When may an eligible production company claim a film infrastructure tax credit pursuant to section 457 of the Michigan Business Tax Act ("MBTA"). MCL 208.1457.
Fi25.If all or part of a film infrastructure credit is assigned, and the production facility that was the subject of the credit is later sold, triggering a recapture under the statute, which entity will be responsible for the recapture? ...
Fi22. When may an eligible production company claim a film production tax credit pursuant to section 455 of the Michigan Business Tax Act ("MBTA"). MCL 208.1455.
Fi23. Does a typical sound recording (for instance, the production of a music CD) qualify as a "qualified production" that is eligible for the Film Production Credit?
Fi20. A production company owns the rights necessary to produce a video game, but plans to license use rights to a well-known cartoon character so that the character can appear in the game. Would the fees or costs associated with licensing this...
Fi21. A company that is the lessee of a building in Michigan intends to make capital improvements to the leased property to convert it into studio space to be used by the film and/or video game production industries ...
Fi19. Under the Michigan Income Tax Act, MCL 206.367, a film production company that seeks a film production credit must either withhold Michigan income tax on the payments it makes to a PEO/PSC or, alternatively, it must insure that the PEO/PSC ha
Fi11. For purposes of the Film Production Credit,a production company or its designated payroll company has an obligation to withhold Michigan payroll taxes on wages paid to employees working on a Michigan production. Similarly,a production company
Fi12. Does a production company's interest expense associated with production financing qualify as a direct production expenditure that is eligible for the Film Production Credit? If so,does capitalized interest qualify? Does interest
Fi13. Film production companies with existing credit agreements that were approved have found that they have underestimated their Michigan budgets. What is the process to address this situation,and what procedure should be followed?
Fi14. Are per diem expenses,living allowances,and car and meal allowances eligible for the Film Production Credit?
Fi15. A "box rental" occurs when an employee of a production company charges the company a weekly fee for the use of his or her own tools. For instance,a makeup person may charge the production company a weekly fee for the use of the brushes,mirror
Fi16. Are workers' compensation insurance expenditures eligible for film production credit?
Fi17. Must a Michigan Business Tax annual return be filed to obtain a refund of a film production credit?
Fi18. When will expenditures made prior to approval of a film production credit agreement by the State qualify for credit?
Fi01. The MBT's film production credit (MCL 208.1455) provides, in part, a credit calculated as a specified percentage of "direct production expenditures". How will the criteria expressed in the definition of "direct production expenditures"

Notice to Taxpayers Regarding Qualified Vendors

Fi2. a) Is a fee paid to a business located outside Michigan for processing a film production company's payroll at a location outside Michigan a qualified expense? b) If not, does the answer change if an employee or agent is present in Michigan to
Fi3. Is the expense for production insurance paid to an out-of-state insurance company through a Michigan based broker/agent a qualified direct production expenditure?
Fi4. Does the purchase of tangible personal property through an 800 number answered outside of Michigan and delivered from a warehouse outside of Michigan qualify as a direct production expenditure if the seller collects and remits Michigan sales/u
Fi5. Is the rental of specialized motion picture equipment from a vendor located outside Michigan (and whose inventory is also located outside Michigan) a qualified direct production expenditure if the rental is handled by a Michigan based rental v
Fi6. Tax Return Filing: a) Is a taxpayer required to file an MBT tax return in order to obtain a film credit or refund?; b) If so, may the return be filed early (before the end of the return year)?
Fi7. Does a production company that fails to withhold or insure that the personal services company ("PSC") or professional employment organization ("PEO") withholds lose an otherwise available film credit?
Fi8. Do non-permanent fixtures such as honeywagons (a type of multi-room trailer used by film and television productions) and star trailers (larger trailers typically used by celebrities) qualify for the infrastructure credit?
Fi9. Are fringe benefits paid to crew members such as the employer's share of FICA, health insurance, and so forth eligible for the Film Production Credit? If so, are these expenditures considered "direct production expenditures" eligible for a 40
Fi10. MCL 208.1455 provides for an MBT Film Production Credit "equal to 42% of direct production expenditures for a state certified qualified production in a core community." What exactly does "in a core community" mean?" Where the production is

Michigan Film Credit Post Production Audit Package

Important Audit Announcement for CPAs Submitting Film Audits After January 1, 2012
Film Credits
For more Film Credit information, visit www.michiganfilmoffice.org.
F5. Financial Institutions must calculate the net capital tax base five year look-back period to find the average of net equity and certain deductions. The MBT provides guidance in the case of a merger or acquisition of a financial institution fo
F6. Financial Institutions pay tax under the MBT on net capital. Computation of this tax base requires a financial institution to average the past five years of net equity with certain deductions. How does a unitary business group of financial in
F4. The MBT franchise tax provides financial institutions with a tax base deduction for "the average daily book value of United States obligations and Michigan
F2. The surcharge of the Michigan Business Tax Act,found at MCL 208.1281,exempts "a person subject to the tax imposed
F3. How does a unitary business group ("UBG") composed of financial institutions that includes a bank authorized to exercise only trust powers,which is exempt from the MBT surcharge under MCL 208.1281(4)(b),calculate the surcharge?
F1. Do nonresident financial institutions located outside Michigan whose only activity in Michigan consists of an ownership interest in loans secured in whole or in part by real property located in Michigan have nexus under the MBT?
Financial Institutions Tax
I1. How must a foreign insurer file for purposes of the retaliatory tax when the insurer's state of incorporation requires unitary filing?
I2. Does a unitary group of insurance companies have to file a combined MBT return?
Insurance Companies Tax
Mi40. RAB 2001-2 describes provisions of the SBT related to the tax base of a foreign person for tax years beginning in or after 2000. Does RAB 2001-2 apply to the MBT?
Mi41. Is interest, dividend and capital gains investment income generated by an LLC, the members of which are trusts and which was set up solely for the purpose of pooling and investing money gifted to children's and grandchildren's trusts, ...
Mi42. Are farms exempt under the MBT? Are agricultural activities taxed under the MBT? What about a taxpayer that has both retail and farm activities?
Mi43. Will case law concerning the retaliatory tax, such as TIG Ins Co v Dep't of Treasury, and Prudential Property & Cas Ins Co v Dep't of Treasury, which were decided in SBT years, be applied equally to the MBT?
Mi44. Does the MBT follow the federal check-the-box regulations?
Mi45. Are controlled foreign corporations ("CFC's") under IRC 957 taxpayers under the MBT? Can controlled foreign corporations be members of a unitary business group? What if the controlled foreign corporation is a disregarded entity of a U.S...
Mi46. Are single member limited liability companies and qualified subchapter S subsidiaries ("QSubs") disregarded for federal tax purposes also disregarded under the MBT?
Mi38. Are regulated investment companies subject to the Michigan Business Tax? If so, does the MBT provide a deduction for dividends paid similar to Federal Form 1120-RIC, U.S. Tax Return for Regulated Investment Companies?
Mi39. MCL 208.1201(2) provides a deduction for the book-to-tax difference or deferred liability resulting from the
Mi36. If a taxpayer that is a unitary business group has a business loss carry forward under MCL 208.1201(5), what happens to the business loss carry forward if membership in the unitary business group changes?
Mi37. Are mortgage companies financial institutions under the Michigan Business Tax?
Mi35. Will public libraries receive any moneys from the Michigan Business Tax? There was a provision in the Single Business Tax Act that directly funded public libraries, will this continue under the MBT?
Mi34. What is the meaning of the acronym FIRE which appears in the presentation entitled MBT Overview-August 1, 2007 on the MBT Website?
Mi32. Can a taxpayer use data from its SBT tax periods in calculating the loss adjustment for purposes of determining eligibility for the Alternative Small Business Credit under MCL 208.1417?
Mi33. What kinds of expenses qualify for the MBT credit under MCL 208.1451 that applies to beverage distributors who originate deposits on beverage containers?
Mi29. Are condominium, homeowners, and timeshare associations taxed under IRC 528 or IRC 277 exempt from the MBT?
Mi30. Will Voluntary Disclosure continue with the Michigan Business Tax?
Mi31. Does the MBT provision which states that the MBT is imposed,
Mi25. (Answer rescinded, replaced by Mi44.) Does the MBT follow the federal check-the-box regulations?
Mi26. When is the final SBT return due for a fiscal year taxpayer? Can a fiscal year filer request an extension for the final SBT return?
Mi27. (Answer rescinded, replaced by Mi45.) Are controlled foreign corporations ("CFC's") under IRC 957 taxpayers under the MBT? Can controlled...
Mi28. (Answer rescinded, replaced by Mi46.) Are single member limited liability companies and qualified subchapter S subsidiaries ("QSubs") ...
Mi23. Can a unitary group, as defined in the MBT, enter into a voluntary disclosure agreement with the Department of Treasury under MCL 205.30c if one member of the group would be disqualified on its own?
Mi24. If a taxpayer is disqualified from voluntary disclosure, available at MCL 205.30c, under the Single Business Tax, is the taxpayer disqualified under the Michigan Business Tax? Specifically, if a taxpayer filed SBT returns, is it considered..
Mi21. Will a taxpayer whose final SBT return is for a period of less than four months need to remit SBT estimates? For example, will a taxpayer with a fiscal year end of September 30, 2008,
Mi22. For purposes of calculating the $350,000 filing threshold in section 505(1); will "gross receipts" as defined in section 111 be used, or will the filing threshold be determined by "sales" as defined in section 115? What
Mi20. Is the MBT going to accept the federal treaty benefit on the 1120F?
Mi11. Will an Employee Stock Ownership Plan ("ESOP") be liable for Michigan income tax under the Michigan Income Tax Act ("ITA"), 1967 P.A. 281, for it's share of flow-through income from a S corporation that is subject to MBT?
Mi12. Can new motor vehicle and watercraft dealers who separately itemize and collect the modified gross receipts (MGR) tax from customers, in addition to the sales price, collect amounts in excess of the amount of taxes remitted to the Department?
Mi13. Are cooperatives organized under IRC 1381(a)(2) exempt from the MBT?
Mi14. Will charitable trusts be subject to the MBT?
Mi15. If an entity is subject to the Business Income Tax, will the entity's members/shareholders be subject to Michigan personal income tax?
Mi16. Are small businesses exempt from the imposition of the surcharge?
Mi17. Under the MBTA, is the section 281 surcharge imposed before or after available credits are applied? Does the surcharge apply to both the modified gross receipts tax and the business income tax?
Mi18. (Answer rescinded, replaced by Mi28.) Are limited liability companies subject to the MBT?
Mi19. Under the Michigan Business Tax Act (MBTA) will corporations still be able to deduct the statutory exemption from the adjusted tax base before calculating tax as was available under the Single Business Tax Act (SBTA)?
Mi9. Is the deduction provided under MCL 208.1201(2)(i) altered by the MBT surcharge?
Mi10. Does the deduction provided under MCL 208.1201(2)(i) reduce the MBT surcharge imposed under MCL 208.1281(1)?
Mi7. For developers in the trade or business of selling real property, does the definition of inventory as used in "purchases from other firms" include real property?
Mi8. Will shareholders of S corporations and partners in partnerships be liable for Michigan individual income tax on their share of flow-through income from entities subject to MBT?
Mi5. (Answer rescinded, replaced by Mi28.) Are limited liability companies subject to the MBT?
Mi6. (Answer rescinded, replaced by Mi34.) What is the meaning of the acronym FIRE which appears in the presentation entitled MBT Overv
Mi2. How are Professional Employer Organizations and Staffing Companies defined for the MBT and how do the two differ?
Mi4. How is the modified gross receipts tax base calculated for professional employment organizations and staffing companies? What is the significance of these different treatments?
Mi3. Is sales tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?
Misc.
Mi1. (Answer rescinded, replaced by Mi40.) Revenue Administrative Bulletin 2001-2 describes provisions of the SBT related to the tax base …
M81. Does the step up in basis under Internal Revenue Code (IRC) section 754 election and 743 application qualify as "purchases from other firms" when calculating the modified gross receipts tax base? Does the step up in basis qualify for ITC?
M80. How is "fuel" defined for purposes of the "purchases from other firms" deduction under MCL 208.1113(6)? Does it include the cost of gas for all of a business' automobiles currently in use, including owned and leased vehicles? ....
M79. Are the qualified affordable housing deductions from business income and gross receipts under MCL 208.1201(7) and 208.1203(6) limited to qualified affordable housing projects ("QuAHPs") that purchase residential rental units after ...
M67. What are purchases from other firms?
M68. May taxpayers take the IRC 199 deduction for MBT purposes?
M69. Can a taxpayer net the cost of purchased securities with the proceeds from those securities? For purposes of taxing the gain, is the cost the actual cost of the securities or the fair market value?
M70. Is the sale of stock by a stockholder in a closely held corporation back to the corporation or another stockholder subject to MBT?
M71. Are dividends from subsidiaries and interest income from unrelated parties included in the modified gross receipts tax base in the MBT?
M72. An investment partnership has sales of capital asset securities consisting of both gains and losses that result in an overall gain. In determining the business income and modified gross receipts tax bases, is only the net gain included in the
M73. Can modified gross receipts (MGR) tax separately collected from customers by new motor vehicle dealers and new or used watercraft dealers be remitted with monthly sales, use and withholding returns?
M74. For purposes of MCL 208.1113(6)(e), how is subcontractor defined?
M75. Must a contractor enter into a written contract with subcontractors in order to reduce gross receipts by the amount of payments made to subcontractors for a construction project?
M76. To calculate the modified gross receipts tax base, may contractors deduct from gross receipts all amounts paid to subcontractors as purchases from other firms?
M77. Taxpayer is a commercial printing and mailing company. Taxpayer provides printing and mailing services to clients throughout the U.S. Postage is billed to the client. Is the postage included in the gross receipts of the taxpayer?
M78. Are commissions that real estate brokers collect and pay to their real estate agents who actually sold the property include in gross receipts? If not, may they be deducted from gross receipts as a "Purchase From Another firm"?
M65. What impact would a merger in 2008 have on the ability of the surviving entity to utilize SBT business loss carryforwards? How will losses incurred after December 31, 2007 be impacted by the merger?
M66. (Answer rescinded, replaced by M69) Can a taxpayer net the cost of purchased securities with the proceeds from those securities? For purposes of
M60. Are returns and allowances included or excluded when calculating the modified gross receipts figure?
M61. Do food items purchased by a restaurant that are ingredients in menu items for sale to customers constitute "purchases from other firms?"
M62. Are parts used by an outside repair person to repair taxpayer's fixed assets a "purchase from another firm" under MCL 208.1113(6)?
M63. When determining the modified gross receipts portion of MBT tax liability, do you include and report receipts from out-of-state companies or just Michigan-based receipts?
M64. I am a broker/dealer in securities without any W-2 payroll. My major expense is 1099 commissions paid to sales representatives. Are these commission expenses deductible on my MBT return?
M59. What qualifies as purchases from other firms for mortgage companies?
M56. Are retailers who drop ship products from suppliers to customers within and outside of Michigan entitled to deduct the cost of these items from gross receipts as purchases from other firms?
M57. Are royalties received from a foreign entity included in the tax base of the MBT?
M58. How should inter-company transactions between members of a unitary business group be eliminated when the members have different year ends?
M55. How are gross receipts computed on an installment sale of a capital asset? Is the realized installment sale gain included in the two tax bases? How is the investment tax credit (ITC) affected?
M52. We manufacture customized tooling systems, which we then sell to our customer. After the sale, although the customer owns the tooling, it physically remains at our plant, and we use the tooling to manufacture the customer's product...
M53. Are Michigan lottery dealers required to include the proceeds from retail lottery ticket sales when calculating gross receipts, or are they only required to include the amount of the commission that they receive on such sales?
M54. How are accounts receivable factoring companies treated for purposes of the Michigan Business Tax Act (MBTA)?
M49. Is the gain recognized on the one time sale of business assets and goodwill by an entity to another entity taxed under the Michigan Business Tax (MBT)?
M50. Does the deduction for net earnings from self employment exempt self-employed individuals from taxation under the MBT?
M51. Are vehicles taken as trade-ins and later sold by an auto dealer considered "purchases from other firms" under the MBT, and thus deductible from gross receipts in determining the modified gross receipts tax base?
M46. (Answer rescinded, replaced by M70) Is the sale of stock by a stockholder in a closely held corporation back to the corporation or another stock
M47. (Answer rescinded, replaced by M71) Are dividends from subsidiaries and interest income from unrelated parties included in the modified gross re
M48. I am a 100% shareholder of a corporation that does business in Michigan. I am a nonresident of Michigan. The corporation is organized as a C corporation. I sell 100% of the stock of the corporation which results in a capital gain...
M40. Our company adds a handling charge to all customer invoices. Is this handling charge taxable under the MBT?
M41. My company intends to purchase a significant piece of business equipment in the near future. This equipment is the type of property that is or will become eligible for depreciation for federal tax purposes. Under the MBT, can my company...
M42. A real estate limited partnership owns an apartment project in Michigan. The partnership is in the process of selling the apartment project to avoid foreclosure. The apartment project is the partnership's only asset and the partnership will...
M43.  How is a like-kind exchange treated under the MBT?
M44. Is an individual person who earns more than $350,000 in interest and dividends for the tax year subject to the MBT? Are the person's capital gains from sales of stock subject to the MBT?
M45. (Answer rescinded, replaced by M80) How is "fuel" defined for purposes of the "purchases from other firms" deduction under MCL 208.1113(6)?
M38. (Answer rescinded, replaced by M68) May taxpayers, including corporations and partnerships, take the IRC 199 deduction for MBT purposes?
M39. May any taxpayer separately itemize and collect the tax imposed under the Michigan Business Tax Act ("MBTA") from its customers in addition to sales price?
M30. Does the sale by an individual of a direct investment in a corporation, partnership or LLC that is not traded on a public exchange constitute "personal investment activity" such that the income and proceeds from such a sale are exclu
M31. Public Act 145 of 2007 amended the MBT to exclude certain personal investment activities from business income and gross receipts. Which taxpayers may exclude personal investment activity from business income and gross receipts? What about fa
M32. A unitary business group under the MBTA is required to file a combined return. For purposes of calculating the unitary business group's modified gross receipts tax base, does the group eliminate all inter-company transactions between members o
M33. How is the "purchases from other firms" subtraction determined? The statute uses the term "purchased" and "acquired"; neither of which are defined in the law. What method of accounting will be used
M34. Is an SBT business loss related to a final short period SBT return that will be applied to the MBT based on a full twelve-month year or on the short period year? If the taxpayer uses the proration method to calculate its final
M35. Is a fiscal year taxpayer required to apply its final year SBT business loss against its first short period MBT return?
M36. The definition of "modified gross receipts tax base" makes no provision for a negative modified gross receipts tax base. Will Treasury administratively allow a carryforward of a negative modified gross receipts tax base?
M37. To qualify as "materials and supplies" or "purchases from other firms" deductible from gross receipts under MCL 208.1113(6), must assets be directly related to inventory or vice versa?
M26. Does the Modified Gross Receipts Tax component of the Michigan Business Tax Act tax capital gains of investors, including trusts, Family Limited Partnerships and individuals?
M27. Under the MBT, will there be a depreciation deduction, or will Michigan conform to federal depreciation rules?
M28. Do wholesale gasoline purchases and applicable excise taxes paid by a gasoline retailer qualify as "purchases from other firms" under Section 113(6) of the Michigan Business Tax Act ("MBTA")?
M29. Does partnership income constitute gross receipts of the partner for purposes of the modified gross receipts tax portion of the MBT?
M11. Are system software royalties, excluded from the determination of tax liability under the Single Business Tax Act ("SBTA") (see MCL 208.9(4)(g)(viii) and (7)(c)(vii)), likewise excluded from the determination of tax liability under the
M12. Do the business income tax and modified gross receipts tax components of the MBT apply to individuals, estates, and trusts or family limited partnerships (FLIP)s that are specifically established for estate planning purposes, on income from
M13. If an individual owns 100% of an S corporation law practice with gross receipts of $500,000, net income of $100,000 after wages of $250,000, and also has the following income not related to the S corporation or any other trade or business:
M14. (Answer rescinded, replaced by M67) What are purchases from other firms?
M15. If a business or unitary group taxpayer has a negative business income tax base, is the 4.95% tax rate applied to the negative business income base, with the result then netted against a positive modified gross receipts tax to determine
M16. Should a taxpayer use the cash or accrual method when determining gross receipts under the MBT?
M17. Does the "materials and supplies" provision in the definition of “purchases from other firms" at MCL 208.1113(6)(c) apply to service providers?
M18. Must a company that receives dividend and interest income from a partnership include those amounts in gross receipts?
M19. Is use tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?
M20. Do construction subcontractors have to be licensed in order for payments made to such subcontractors to be considered "purchases from other firms" under section 113(6)(e) of the Michigan Business Tax Act ("MBTA")?
M21. Can credit card processing fees be deducted from gross receipts when determining the modified gross receipts tax base under the Michigan Business Tax Act ("MBTA")?
M22. To calculate the modified gross receipts tax base, may contractors deduct from gross receipts all amounts paid to subcontractors as purchases from other firms?
M23. For purposes of MCL 208.1113(6)(e), how is subcontractor defined?
M24. Must a contractor enter into a written contract with subcontractors in order to reduce gross receipts by the amount of payments made to subcontractors for a construction project?
M25. Can modified gross receipts (MGR) tax separately collected from customers by new motor vehicle dealers and new or used watercraft dealers be remitted with monthly sales, use and withholding returns?
M7. Is labor deductible from gross receipts as a "purchase from other firms?"
M8. Do shipping and delivery charges not included in the contract price for inventory constitute "purchases from other firms?"
M9. Are amounts paid by a taxpayer to a staffing company deductible from gross receipts as "purchases from other firms?"
M10. Are capital gains that are included in the Modified Gross Receipts tax base also included in the Business Income tax base?
M6. Is sales tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?
M4. What, specifically, is the definition of "materials and supplies"?
M5. Will a Single Business Tax (SBT) business loss carry forward carry over to the Michigan Business Tax (MBT)? Is the deduction before or after apportionment?
M2. How are gross receipts, rents etc. received from real property apportioned?
M3. Is rental income included in gross receipts?
M1. (Answer rescinded, replaced by M26) Does the Modified Gross Receipts Tax component of the Michigan Business Tax Act tax capital gains of ...
Modified Gross Receipts Tax
N13. Does an out-of-state trucking company that drives into Michigan for pick up or delivery of product, but has no other physical presence (e.g. employees or real or personal property ) in Michigan, create nexus with Michigan subjecting ...
N12. Under the MBT nexus standards for the modified gross receipts tax, is owning a partnership interest considered physical presence in Michigan? The partnership owns rental real property in Michigan.
N11. Does a mail order company that does not have physical presence in Michigan and was not previously subject to the SBT, but mails catalogs to persons within Michigan and has $350,000 or more in Michigan sales have nexus for purposes of the...
N9. Non-U.S. corporations qualify as taxpayers under the MBT. For purposes of the business income tax component of the MBT, will the Department recognize the protection of PL 86-272 for non-U.S. corporations?
N10. Does the protection of Public Law 86-272 apply to financial institutions?
N8. An out-of-state company has a remote employee located in Michigan. The out-of-state company has no sales or business activities in Michigan. Does the out-of-state company have nexus with Michigan under the MBT?
N5. For purposes of apportionment, in determining whether a Michigan-based taxpayer has nexus with a state other than Michigan pursuant to section 301(3), must gross receipts in any "one" state or in all states equal or exceed $350,000 in
N6. Regarding the MBT nexus standard found in section 200(1), which is based upon the taxpayer actively soliciting sales in Michigan and having "gross receipts of $350,000.00 or more sourced to this state," will the $350,000.00 be calcula
N7. Please provide examples of when and how an internet web site can be determined to be "purposeful" or "active solicitation".
N3. If a flow through entity establishes nexus for either or both the business income tax or modified gross receipts tax under the MBTA, do the individual partners or shareholders automatically acquire nexus for individual income tax purposes
N4. For purposes of apportionment under the MBT, what jurisdictional standard will be applied to determine whether a taxpayer is subject to tax in another state?
N2. What are the nexus standards under the MBT?
Nexus
N1. How does a unitary business group apportion its tax bases when some members of the group do not have nexus with Michigan?
U63. Can a UBG with one or more fiscal year members make the election between the actual and annual method for calculating its final MBT return?
U62. A dental practice organized as a sole proprietorship became a professional limited liability company ("PLLC") effective January 1, 2008. For federal income tax purposes, the PLLC is a disregarded entity and the member reports his income as...
U61. Are foreign entities includable in unitary business group? What if the foreign entity is the single member of a domestic single member limited liability company disregarded for federal tax purposes?
U59. If you are an entity within the unitary group that does not have nexus without application of the unitary principal, are your shareholders liable for Michigan personal income tax?
U60. Is an individual a member of a unitary business group with the entities in which the individual has a controlling interest?
U58. Are controlled foreign corporations ("CFC's") under IRC 957 taxpayers under the MBT? Can controlled foreign corporations be members of a unitary business group? What if the controlled foreign corporation is a disregarded entity of a U.S...
U57. How must a unitary business group file its final MBT annual return in order to properly report the final MBT year of all its members?
U55. How is the book-tax deduction to the business income tax base affected if the various members of a unitary business group each have and report a book-tax difference on Form 4593 with the initial required MBT return and the unitary business...
U56. If the parties in a corporate acquisition are members of the same unitary business group, is the gain and expense eliminated as an intercompany transaction?
U53. In applying the agricultural exemption contained in the Michigan Business Tax Act (MBTA) at MCL 208.1207(1)(d) to a unitary business group (UBG), is the primary activity test to qualify for the exemption performed at the member entity level
U54. Financial Institutions pay tax under the MBT on net capital. Computation of this tax base requires a financial institution to average the past five years of net equity with certain deductions. How does a unitary business group of financial i
U51. Would a group of companies who have a flow of value between them but are owned by two unrelated persons, each owning 50%, be considered a unitary business group?
U52. If five or fewer persons who are unrelated individuals, estates or trusts own a controlling interesting in a brother-sister group of entities, will that satisfy the control test for purposes of qualifying as a unitary business group?
U50. Can nonstock nonprofit organizations be included in a unitary business group?
U48. How does a unitary business group register under the MBT?
U49. Three entities, an operating farm, a trucking company, and a rental company, meet the "more than 50% ownership" test for a unitary business group.
U45. How does a unitary business group ("UBG") composed of financial institutions that includes a bank authorized to exercise only trust powers,which is exempt from the MBT surcharge under MCL 208.1281(4)(b),calculate the surcharge?
U46. Does a unitary business group calculate its gross receipts for purposes of the gross receipts filing threshold and the filing threshold credit before or after the elimination of gross receipts arising from inter-company transactions?
U47. Can a unitary business group with one or more fiscal year members use the annual method for calculating its first MBT return? If so,must all fiscal year members in the group make the same election between annual and actual methods? What if a f
U41. With respect to a unitary business group, what is the liability of the individual entities that make up the group for payment of the tax? If payment is not made, which member will be charged with penalties and interest?
U42. If a taxpayer that is a unitary business group has a business loss carry forward under MCL 208.1201(5), what happens to the business loss carry forward if membership in the unitary business group changes?
U43. At what point in time must two entities meet the test for being members of a unitary business group?
U44. An individual owns a controlling interest in multiple limited liability companies that hold rental property
U37. Is it possible to have a unitary group of financial institutions under the MBT? How will such groups file a combined return?
U38. For purposes of the private equity fund credit under MCL 208.1453, if a private equity fund manager is an entity that is a member of a unitary business group, does the calculated credit percentage apply to the tax liability of the entire uni
U39. Are partners deemed to own each others' holdings by attribution under section 318 of the Internal Revenue Code?
U40. (Answer rescinded, replaced by U62.) A dental practice organized as a sole proprietorship became a professional limited liability company...
U36. (Answer rescinded, replaced by U61.) Are foreign entities includable in unitary business group? What if the foreign entity is the single member
U34. For purposes of determining a unitary business group, how is the control test interpreted and applied?
U35. Do the $350,000 threshold amount for taxpayer nexus under MCL 208.1200, the $350,000 threshold amount for filing of returns and payment of MBT under MCL 208.1505, and the range of gross receipts between $350,000 and $700,000 concerning the...
U30. (Answer rescinded, replaced by U36.) Are foreign entities includable in unitary business group? What if the foreign entity is the single membe
U31. (Answer rescinded, replaced by U58.) Are controlled foreign corporations ("CFC's") under IRC 957 taxpayers under the MBT? Can controlled...
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 ...
U33. What is a unitary business group?
U26. Can a unitary group, as defined in the MBT, enter into a voluntary disclosure agreement with the Department of Treasury under MCL 205.30c if one member of the group would be disqualified on its own?
U27. How are the Business Income and Modified Gross Receipts tax bases calculated for a unitary business group?
U28. How will MCL 208.1503, which gives taxpayers the choice of two filing methods for the first MBT return, apply to a unitary group where members of the group have different tax years?
U29. How must a unitary business group file its combined return when members of the group have different tax years?
U23. (Answer rescinded, replaced by U48) How does a unitary business group register under the MBT?
U24. (Answer rescinded, replaced by U52) If five or fewer persons who are unrelated individuals, estates or trusts own a controlling interesting ...
U25. Can brother-sister corporations wholly owned by a single person be members of a unitary business group? If so, how are the tax bases calculated?
U20. A unitary business group under the MBTA is required to file a combined return. For purposes of calculating the nitary business group's modified gross receipts tax base, does the group eliminate all inter-company transactions between members of
U21. When members of a unitary business group have different accounting methods (for example, cash and accrual) is uniformity required or do they report using each member's accounting method?
U22. Can a pre-2008 Brownfield credit or Historic Preservation credit of a unitary business group member be used in 2008 and thereafter against the tax liability of the entire unitary business group?
U19. (Answer rescinded, replaced by U60.) Is an individual a member of a unitary business group with the entities in which the individual has a con
U12. How does a unitary business group file under the MBT when one or more of the members of the unitary business group do not have nexus with Michigan?
U13. How must a foreign insurer file for purposes of the retaliatory tax when the insurer's state of incorporation requires unitary filing?
U14. Section 511 of the MBTA states that "Each United States person included in a unitary business group or included in a combined return shall be treated as a single person..." Does this mean that all phase-ins, thresholds, credit limits & other..
U15. Does a unitary group of insurance companies have to file a combined MBT return?
U16. (Answer rescinded, replaced by U59.) If you are an entity within the unitary group that does not have nexus without application of the ...
U17. How is the business income of a unitary business group determined when one member uses cash basis accounting and the other member uses the accrual method and their tax year ends are different?
U18. How does the MBT filing threshold apply to a unitary business group comprised of several members if one or more of the members has apportioned gross receipts of less than $350,000?
U8. (Answer rescinded, replaced by U33.) What is a unitary business group?
U9. Can brother-sister corporations wholly owned by a single individual be members of a unitary business group? What if the corporations conduct no interrelated business activities?
U10. If a husband and wife are 100% owners in different businesses; do they form a unitary group?
U11. How does the MBT filing threshold apply to a unitary business group comprised of several members if one or more of the members has apportioned gross receipts of less than $350,000?
U4. Are special purpose entities taxpayers under the MBT?
U5. How are the business income and modified gross receipts tax bases apportioned for a unitary business group that includes both transportation companies and companies other than transportation companies?
U6. (Answer rescinded, replaced by U51.) Would a group of companies who have a flow of value…
U7. Are unitary business groups under the MBT the same as controlled groups under the SBT?
U3. How does a unitary business group apportion its tax bases under the MBT? Is the apportioned tax base of a unitary group allocated back to the members of the unitary business group?
U2. Under the MBT, can the subsidiary continue to file separately or will the REIT and subsidiary be required to file a consolidated return?
U1. How does a unitary business group apportion its tax bases when some members of the group do not have nexus with Michigan?
Unitary
December 18, 2013
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