Skip Navigation
Michigan, Official Portal for the State of Michigan Home
close print view
  Corporate Income Tax
Credits 20. How is the Small Business Alternative Credit under MCL 206.671 calculated by a taxpayer that is a unitary business group? How do the disqualifiers and percentage reducers work?
The Small Business Alternative Credit is available to any taxpayer (other than insurance companies under Chapter 12 and financial institutions under Chapter 13) with gross receipts that do not exceed $20,000,000.00 and with adjusted business income minus the loss adjustment that does not exceed $1,300,000.00 as adjusted annually for inflation using the Detroit consumer price index and subject to certain additional disqualifiers. MCL 206.671(1). The taxpayer will also be disqualified if an officer or shareholder receives more than $180,000.00 in compensation or compensation plus share of business income exceeds that amount (allocated income disqualifier). MCL 206.671(1)(a).

"Taxpayer" is defined to include a unitary business group. MCL 206.611(5). The gross receipts and adjusted business income thresholds are those of the unitary business group (UBG) and are calculated at the group level. The allocated income disqualifier is calculated for an officer or shareholder using all amounts paid or allocable to the officer or shareholder by all entity members of the unitary business group. MCL 206.671(2)(B). The reduction percentages of the credit, which may reduce but not completely disqualify a taxpayer from the credit, are calculated in the same manner.

A disqualifier or reduction percentage applies to the entire UBG if such applies to any one member of the group. MCL 206.671(9). This credit is calculated without regard to intercompany eliminations.

Example X, a taxpayer that is a unitary business group is disqualified from taking the credit if that unitary business group includes a member that is an LLC taxed as a corporation and any one shareholder or any one member of the LLC receives more than $180,000.00 in shareholder compensation. The shareholder's compensation is calculated by combining all compensation paid to the shareholder by all members of the UBG.

Example Y, the credit is reduced by 20% if the taxpayer is a unitary business group that includes a member that is a corporation and the compensation and director's fees of an officer of that member corporation exceed $160,000.00 but are less than $165,000.00, calculated with compensation and director's fees paid by all members of the group.

Michigan Business One Stop
Link to Department and Agencies Web Site Index
Link to Statewide Online Services Index
Link to Statewide Web-based Surveys
Link to RSS feeds available on this site
FAQ Categories
 •  Index of Tax FAQ's
 •  Individual Income Tax
 •  Business Taxes
 •  1099-MISC Filing Requirements
 •  Collections/Delinquent Accounts
 •  Tax Increment Financing
 •  Service Fee/PILOT Housing
 •  State Real Estate Transfer Tax
 •  Native American
 •  Michigan Business Tax
 •  Status of Individual Refund
 •  Health Insurance Claims Assessment (HICA) Act
 •  Energy Home Improvement Credit
 •  Corporate Income Tax
QR code Home
PoliciesMichigan Survey

Copyright © 2014 State of Michigan