"Purchases from other firms" are deducted from a taxpayer's gross receipts to calculate the modified gross receipts tax base. In general, purchases from other firms means:

• Inventory acquired during the tax year. Inventory - defined at MCL 208.1111 - means the stock of goods, including electricity and natural gas, held for resale in the ordinary course of a retail or wholesale business, and finished goods and good in process of a manufacturer, including raw materials purchased from another person. Inventory also includes floor plan interest for licensed new car dealers and shipping and engineering charges so long as such charges are included in the original contract price for the associated inventory. Finally, inventory includes the cost of certain securities and commodities for securities traders, brokers, and dealers as defined under the MBT.
• Depreciable assets acquired during the tax year. Deductible depreciable assets are those that are or will become eligible for depreciation, amortization, or accelerated capital cost recovery under the IRC. The cost of depreciable assets includes costs of fabrication and installation.
• Materials and supplies. 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 or the operation or maintenance of depreciable assets as described above. "Materials and supplies" includes repair parts and fuel.
• Staffing company compensation. Wages, benefits, and certain payroll taxes paid to personnel provided to the clients of staffing companies as defined under the MBT.
• Payments to subcontractors and purchases by contractors. For persons included in SIC codes 15, 16, and 17 - such as general contractors, operative builders, and trade contractors - that fail to qualify for the Small Business Alternative Credit: (i) payments to subcontractors for construction projects so long as such payments are made pursuant to a contract specific to that project, and (ii) to the extent not deducted as inventory or materials and supplies, materials deducted as purchases in determining the cost of goods sold on the taxpayer's federal return. For a more complete list of those persons within SIC codes 15, 16, and 17, see http://www.osha.gov/pls/imis/sic_manual.html.
• Select payments by theater owners. Film rental or royalty payments paid by a theater owner to a film distributor, film producer, or a film distributor and producer.
• Select payments by real estate brokers and appraisers. For persons licensed under articles 25 or 26 of the Occupational Code (real estate brokers, salespersons, and appraisers), payments to independent contractors licensed under those same articles. For a more complete list of those persons licensed under articles 25 and 26 of the Occupational Code, see MCL 339.2501 - .2518, 339.2601 - .2637.

The more specific statutory definition of "purchases from other firms" is found at MCL 208.1113(6).