What are the Terms/Definitions for the Composite Individual Income Tax Return?
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.
Intermediate member FTE – A member of a flow-through entity that is also a flow-through entity.
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.
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, including portfolio income.