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Michigan Business Tax
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M4. The modified gross receipts tax base means the gross receipts of the taxpayer less "purchases from other firms." The definition of "purchases from other firms" includes "materials and supplies" to the extent not included in inventory and assets as defined. What, specifically, is the definition of "materials and supplies"?
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Answer:
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Under MCL 208.1113(6), "purchases from other firms" means:
- Inventory acquired during the tax year, including freight, shipping,
delivery, or engineering charges included in the original contract price for
that inventory.
- Assets, including the costs of fabrication and installation, acquired during the tax year of a type that are, or under the internal revenue code will become, eligible for depreciation, amortization, or accelerated capital cost recovery for federal income tax purposes.
- To the extent not included in inventory or depreciable property, materials and supplies, including repair parts and fuel.
As used in MCL 208.1113(6)(c), "materials and supplies" means tangible personal property acquired during the tax year to be used or consumed in - and directly connected to - the production or management of inventory under MCL 208.1113(6)(a) or the operation or maintenance of assets under MCL 208.1113(6)(b). "Materials and supplies" includes repair parts and fuel.
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