Instructions For Form 4567 - Michigan Business Tax Annual Return (Page 7 of 11) in pdf

with Michigan and exceeds the protections of PL 86-272, all

licenses,

divisions,

other

infrequently

occurring

members of the UBG — including members protected under

dispositions, transfers, or transactions involving tangible,

PL 86-272 — must be included when calculating the UBG’s

intangible, or real property if the property is or was used in

Business Income Tax base and apportionment formula. PL 86-

the person’s trade or business operation.

272 will only remove business income from the apportionable

• Income derived from the sale of an interest in a business that

Business Income Tax base when all members of the UBG are

constitutes an integral part of the person;’s regular trade or

protected under PL 86-272.

business.

Line 28: Business income means that part of federal taxable

• Income derived from the lease or rental of real property

income derived from business activity. For MBT purposes,

NOTE: Personal investment income, gains from the sale of

federal taxable income means taxable income as defined by IRC

property held for personal use and enjoyment, or other assets not

§ 63, except that federal taxable income shall be calculated as if

used in a trade or business, and any other income not specifically

IRC § 168(k) [as applied to qualified property placed in service

derived from a trade or business that is earned, received, or

after December 31, 2007] and IRC § 199 were not in effect. For

otherwise acquired by an Individual, an Estate, or a Trust or

a Partnership or S Corporation (or LLC federally taxed as such),

Partnership organized or established for estate or gift planning

business income includes payments and items of income and

purposes, a person organized exclusively to conduct investment

expense that are attributable to business activity of the

activity solely for a third party individual or a person related

Partnership or S Corporation and separately reported to the

to that individual, or a common trust established under the

partners or shareholders.

Collective Investment Funds Act of 2941, is not included in the

Use the Business Income Worksheet (Worksheet 4746), in

Business Income Tax base. This exclusion only applies to the

Form 4600, to calculate business income. Attach the worksheet

specific types of taxpayers identified above. Investment income

to the return. The worksheet will calculate business income

and any other types of income earned or received by all other

as defined by law in most instances. Taxpayers and tax

types of persons or taxpayers not specifically referenced must be

professionals are expected to be familiar with uncommon

included in the business income of the taxpayer.

situations within their experience, which produce business

Additions to Income

income not identified by specific lines on the worksheet, and

report that amount on the most appropriate line. Treasury may

Additions are generally required to the extent deducted in

adjust the figure resulting from Worksheet 4746 to account

arriving at federal taxable income. (Business income, line 28.)

properly for such uncommon situations.

Line 29: Enter any interest income and dividends from

For an organization that is a mutual or cooperative electric

bonds and similar obligations or securities of states other than

company exempt under IRC § 501(c)(12), business income

Michigan and their political subdivisions in the same amount

equals the organization’s excess or deficiency of revenues

that was excluded from federal taxable income (as defined for

over expenses as reported to the federal government by those

MBT purposes). Reduce this addition by any expenses related

organizations exempt from the federal income tax under the

to the foregoing income that were disallowed on the federal

IRC, less capital credits paid to members of that organization,

return by IRC § 265 or 291.

less income attributed to equity in another organization’s net

Line 30: Enter all taxes on, or measured by, net income

income, and less income resulting from a charge approved

including city and state taxes, Foreign Income Tax, and Federal

by a state or federal regulatory agency that is restricted for

Environmental Tax claimed as a deduction on the federal return.

a specified purpose and refundable if it is not used for the

Line 31: Enter the Michigan Business Tax, including

specified purpose.

surcharge, claimed as a deduction on the federal return.

For a tax-exempt person, business income means only that

part of federal taxable income (as defined for MBT purposes)

Line 32: Enter any net operating loss carryback or carryover

derived from unrelated business activity.

that was deducted in arriving at federal taxable income (as

defined for MBT purposes) reported on line 28. Enter this

For an Individual or an Estate, or for a Partnership or Trust

amount as a positive number.

organized for estate or gift planning purposes, business income

is that part of federal taxable income (as defined for MBT

Line 33: Enter any losses included in federal taxable income

purposes) derived from transactions, activities, and sources in

(as defined for MBT purposes) that are attributable to other

the regular course of the person’s trade or business, including

entities that have made a valid election to file under the MBT

the following:

and have filed under the MBT. If there is only one such entity

to report, enter its FEIN or TR number in the field on this

• All income from tangible and intangible property if the

form. If there is more than one such entity to report, enter

acquisition, rental, lease, management, or disposition of the

on the form the FEIN or TR number of one of the entities

property constitutes integral parts of the person’s regular

and attach a list of the account numbers of all. On the list

trade or business operations.

include a breakdown of the amount of this loss add-back that

• Gains or losses incurred in the taxpayer’s trade or business

is attributable to each entity. In any case, the amount on line

from stock and securities of any foreign or domestic

33 should be the total of all losses, not just the loss of the one

corporation and dividend and interest income.

entity identified on the form.

• Income derived from isolated sales, leases, assignments,

UBGs: It is not necessary to attach a list of entities in

Instructions For Form 4567 - Michigan Business Tax Annual Return Page 7

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