Michigan Business Tax

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?

Generally, no. Although the MBT filing threshold is $350,000 in apportioned or allocated gross receipts, MCL 208.1505(1), the definitions of "business income" and "gross receipts" as used in the MBT Act were amended on December 1, 2007 by PA 145. Under the new definitions, MCL 208.1105(2) and 208.1111(1)(v), personal investment income, gains from the sale of personal assets, and other income received by an individual that are not specifically derived from a trade or business are not included in the MBT business income and gross receipts tax bases, and are not included in calculating gross receipts for the purposes of applying the MBT filing threshold or the gross receipts filing threshold credit. MCL 208.1505(1); 208.1411. The interest, dividend, and capital gain income of the individual in the example, even if such income totaled more than $350,000 for a single tax year, would not be subject to the MBT, unless the trade or business of that individual includes making investments and engaging in investment activity.