15. What information must a flow-through entity report to participants in a composite return?
The following information must be reported to each participant listed on the Michigan Composite Individual Income Tax Return (Form 807):
- FEIN of the FTE
- Tax year of the FTE
- The participant’s distributive share of income allocated or apportioned to Michigan from Schedule A, Schedule of Participants, Column 2
- The participant’s share of tax liability on the composite return filed by the FTE form Schedule A, Schedule of Participants, Column 3
- The FTE’s Michigan sales and the FTE’s total sales everywhere
- The participant’s prorated exemption allowance as computed on line 47 of the composite return.
- Additional reporting requirements exist if the FTE elected to pay flow-through entity tax. See Flow-Through Entity Tax FAQ.
The FTE may use any method to report the necessary information to the participants so long as it conveys the information listed above. Treasury recommends that the FTE provides the information to the participants as a supplemental attachment to their federal Schedule K-1, which provides the participant with the information necessary to file a Michigan Individual Income Tax Return (Form MI-1040) if the ultimate owner has other Michigan-sourced income.