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Credits 10. How is stock ownership determined with respect to Small Business Alternative Credit disqualifiers? Will the attribution rules used for the MBT and found in IRC section 318 apply when computing the active shareholder rules und

Under MCL 206.671, an entity is disqualified from taking the small business alternative credit if shareholder compensation and share of adjusted business income (minus the loss adjustment) exceed $180,000. The term "shareholder" is defined as a person who owns outstanding stock in a corporation or a person that is a member of a business entity which files as a corporation at the federal level. The credit provides that an active shareholder's share of business income shall not be attributed to another active shareholder. MCL 206.671(2).

An "active shareholder" is a shareholder who receives, in any combination, at least $10,000 in compensation, directors' fees, or dividends from the business, and who owns at least 5% of the outstanding stock or other ownership interest. MCL 206.671(10)(a). An individual is considered as the owner of the stock owned, directly or indirectly, by or for family members as defined by section 318(a)(1) of the Internal Revenue Code. MCL 206.609(5).

The CIT definitions of "shareholder" and "active shareholder" are identical to the definitions under the MBT. Therefore, the attribution rules for stock ownership and for determining "active shareholders" will be applied to the Small Business Alternative Credit in a similar manner as they were under the MBT.