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Michigan Business Tax

U50. Can nonstock nonprofit organizations be included in a unitary business group?

Yes. Under the MBT, a unitary business group is a taxpayer that consists of:

a group of United States persons, other than a foreign operating entity, 1 of which owns or controls, directly or indirectly, more than 50% of the ownership interest with voting rights or ownership interests that confer comparable rights to voting rights of the other United States persons, and that has business activities or operations which result in a flow of value between or among persons included in the unitary business group or has business activities or operations that are integrated with, are dependent upon, or contribute to each other. For purposes of this subsection, flow of value is determined by reviewing the totality of facts and circumstances of business activities and operations. [MCL 208.1117(6).]

So long as the control and relationship tests are satisfied, a tax exempt organization, including a nonstock nonprofit organization, can be part of a unitary business group. In the case of the control test and nonstock nonprofit organizations, one person controls more than 50% of the ownership interests with voting or comparable rights of the nonstock nonprofit organization if more than 50% of the directors or trustees of that organization are either representatives of or controlled by the parent organization.