14. How is the sales factor computed using combined apportionment for unitary entities?

The sales factor is computed using Part 1 of the Michigan Schedule of Apportionment (Form MI-1040H).  Generally, for the numerator, all the Michigan sales of every company in the unitary group are combined to arrive at Michigan sales.  For the denominator, the total sales of every company in the unitary group are combined to arrive at total sales.   When calculating the Michigan sales and the total sales of each company, intercompany sales are eliminated.  In addition, each company's Michigan sales and total sales are multiplied by the individual taxpayer's ownership interest percentage in the corresponding company.  The taxpayer must have common control over the entities included in the combined apportionment filing.  The business income (loss) from all the companies in the group, net of intercompany eliminations, is combined to arrive at business income subject to apportionment in Part 2 of the MI-1040H.

A worksheet identifying the members in the combined apportionment group showing the combining calculations must be included with the MI-1040H filed with the MI-1040 return. The worksheet may be a statement identifying the members in the combined apportionment group showing the combining calculations and a description detailing the unitary relationship between the entities included in the combined apportionment filing must be included with the MI-1040H filed with the MI-1040 return. The statement may be attached as a PDF file to an e-filed return using the file name "UnitaryCalculation.PDF." View the Combined Apportionment Example on Form MI-1040H.