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Why was my Small Business Alternative Credit (SBAC) adjusted?

Why was my Small Business Alternative Credit (SBAC) adjusted?

  • If the SBAC was adjusted on your Michigan Business Tax (MBT) return, please check if the following information was included with your return:
     
    • The following forms are required to be filed to claim the SBAC: Form 4567; Form 4568; Form 4571; and Form 4577 (Corporations Only), Form 4578 (Partnerships Only), or Form 4580 [Unitary Business Group (UBG) Only]. (NOTE: Individuals and fiduciaries filing as individuals need not file Forms 4577 or 4578.) If any of these forms are missing, the credit will be denied. A complete amended return, including all forms, schedules and attachments, must be filed in order to correct the original return.
       
    • If the credit is claimed by a UBG, Form 4577 or Form 4578 is required to be filed for each member of the group.
  • If the credit is claimed by a UBG, aggregate business income before eliminations should be reported on the “Business Income” line of Form 4571. Business income before eliminations can be found on Form 4580, Part 2B, under Column A for each member.
     
  • In order to qualify for the SBAC, no individual, shareholder or officer can have allocated income after loss adjustment of more than $180,000. No partner can have distributive share of income after loss adjustment of more than $180,000.
     
  • If any individual, shareholder or officer has allocated income or any partner has distributive income of more than $160,000, but less than $180,000, the SBAC must be reduced, as shown on Form 4571.
     
  • If filing Form 4577 for a short-period return or a part-year shareholder, compensation, director fees, and dividends of each individual should be reported as actual amounts on the form. However, for purposes of determining credit disqualifiers, the same amounts must be annualized.
     
  • If filing Form 4578 for a short-period return, partners’ shares of distributive income should be reported as actual amounts on the form. However, for purposes of determining credit disqualifiers, the same amounts must be annualized.