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Nexus & Apportionment 11. If an out-of-state corporation owns a partnership interest in a partnership in Michigan, does that create nexus for the corporation?

Yes. There are three separate, alternative nexus standards under the CIT. A taxpayer has nexus with Michigan under the CIT if any of the following exists: (1) the taxpayer has a physical presence in Michigan for a period of more than 1 day during the tax year, (2) the taxpayer actively solicits sales in Michigan and has Michigan sourced gross receipts of $350,000 or more, or (3) if the taxpayer has an ownership interest or a beneficial interest in a flow-through entity, directly, or indirectly through 1 or more other flow-through entities, that has nexus in Michigan. MCL 206.621(1). A partnership is considered a flow-through entity under the CIT. MCL 206.607(2). Thus, if the partnership has nexus with Michigan, the ownership interest in that partnership will create nexus in Michigan for the corporation.