1. 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 publicly traded partnership or a disregarded entity for federal income tax purposes. MCL 206.12(1)

Intermediate FTE - an FTE in a tiered structure, that has an interest in another FTE.

Member of an FTE - an individual; estate; trust; or intermediate FTE.

Nonresident member - An individual who is not domiciled in this state; nonresident estate or trust; or intermediate FTE with a nonresident ultimate owner. MCL 206.12(5)

Participant - A nonresident member who has elected to participate in a composite return.

Ultimate owner - An individual, estate, or trust that has an interest in an FTE or intermediate FTE.

Tiered entities - An FTE is part of a tiered structure if it has one or more members that are also FTE’s. A tiered structure consists of a source FTE and one or more intermediate FTEs.  The intermediate FTE receives income from the source FTE and the income is passed through to the ultimate owner(s).

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 206.6(3)

Distributive Share - A member’s share of business income reported to the member on a federal Schedule 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. MCL 206.4