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Michigan Business Tax
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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 investments, such as capital gains, interest, dividends, or other sources of personal income?
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Answer:
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No. The definitions of "business income" and "gross receipts" as used in the MBT act were amended on December 1, 2007 by P.A. 145 to specifically exclude this type of income received by these types of entities from the MBT tax bases and threshold amounts.
As a result, personal investment income, gains from the sale of personal assets or other assets not used in a trade or business, and any other income not specifically derived from a trade or business that is earned, received, or otherwise acquired by an individual, an estate, or a trust or partnership organized or established exclusively for estate or gift planning purposes, are not included in gross receipts for purposes of determining the filing thresholds under sections 200, 411, or 505 (MCL 208.1200, 208.1411, or 208.1505), and are not included in the business income tax base or modified gross receipts tax base under sections 201 and 203, respectively, (MCL 208.1201 and 1203).
This exclusion only applies to the specific types of entities identified above. Investment income and any other types of income earned or received by all other types of persons or entities not specifically referenced in these revised definitions must be included in the gross receipts and business income of the taxpayer.
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