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6. Who may participate in a composite return?

A participant in a Michigan Composite Individual Income Tax Return (Form 807) must be a nonresident member of a flow-through entity (FTE). A nonresident member is an individual who is not domiciled in this state; a nonresident estate or trust; or intermediate FTE** with a nonresident ultimate owner. An ultimate owner that participates in a composite return may not have a federal excess business loss limitation.

For each participating intermediate FTE include a Tiered Structure Schedule from the source FTE to the ultimate owner, with the following:

  • Details for each tier of the tiered structure:
    • FTE name, FEIN and ownership percentage for each tier
  • Details for each participating ultimate owner:
    • Name, address, account number, distributive share of Michigan income, tax and ownership percentage

** Limitations may apply on an intermediate FTE’s ability to participate in another FTE’s composite return if the intermediate FTE elected to pay Michigan flow-through entity tax. See Flow-Through Entity (FTE) Tax Credit FAQs.