Terms and Definitions


For purposes of the Flow-Through Withholding requirements, the following terms and definitions apply:

Flow-through entity(FTE) – an entity that, for that tax year, is an S corporation, a general partnership, a limited partnership, a limited liability partnership, or a limited liability company that is not taxed as a C corporation for federal income tax purposes for that tax year. FTE does not include a disregarded entity for federal income tax purposes.  MCL 206.701(d).

“Member” of a flow-through entity – a shareholder of an S corporation; a partner in a general partnership, limited partnership, or limited liability partnership; or a member of a limited liability company.

Corporation – any entity that is required to or has elected to file as a C corporation for federal income tax purposes for that tax year.  MCL 206.605(1).

Nonresident individual – means an individual who is not a resident of or domiciled in this state.  MCL 206.701(f).

Distributive Share – A member’s share of business income reported to the member on a federal K-1 form.

Business Income – For an FTE, business income includes payments and items of income and expense that are attributable to business activity of the FTE and separately reported to the members.

Tiered Structure – A structure where an FTE (source FTE) has one or more members that are also FTEs (intermediate FTE member).