Instructions For Form 4567 - Michigan Business Tax Annual Return (Page 8 of 11) in pdf

Line 41: To the extent included in federal taxable income (as

connection with this line item because all entities for which

a loss add-back is being reported have been identified on the

defined for MBT purposes), deduct any earnings that are net

corresponding line of Form 4580, or a similar list required as

earnings from self-employment as defined under IRC § 1402

an attachment to Form 4580.

of the taxpayer, or a partner or LLC member of the taxpayer.

The amount deducted shall be the amount properly reported

Line 34: Enter any royalty, interest, or other expense paid to

on a schedule K-1-form 1065 as self-employment earnings for

a person related to the taxpayer by ownership or control for

federal income tax purposes for the tax year.

the use of an intangible asset if the person is not included

in the taxpayer’s UBG. Royalty, interest, or other expense

Line 42: There are two items that qualify for entry on this

described here is not required to be included if the taxpayer

line. If both types apply, enter the combined total as a single

can demonstrate that the transaction has a nontax business

amount.

purpose other than avoidance of this tax, is conducted with

A) For tax years that begin after December 31, 2009, to

arm’s-length pricing and rates and terms as applied in

the extent included in federal taxable income, deduct

accordance with IRC § 482 and 1274(d), and satisfies one of

the amount of a charitable contribution made to the

the following:

Advance Tuition Payment fund created under section 9

• Is a pass-through of another transaction between a third

of the Michigan Education Trust Act, PA 316 of 1986,

party and the related person with comparable rates and

MCL 390.1429. This is deductible only to the extent that

terms.

contribution was NOT federally deductible.

• Results in double taxation. For this purpose, double

B) Enter the Book-Tax deduction to the extent available.

taxation exists if the transaction is subject to tax in another

The deduction is only available to a taxpayer that reported

jurisdiction.

a Book-Tax amount on Form 4593 with an original 2008

• Is unreasonable as determined by Treasury, and the taxpayer

MBT annual return.

agrees that the addition would be unreasonable based on the

taxpayer’s facts and circumstances.

The Book-Tax deduction is calculated as follows:

• The related person (recipient of the transaction) is organized

1) Total of amount reported on Column C of Form 4593

under the laws of a foreign nation which has in force a

with the original 2008 MBT annual return. (For UBGs,

comprehensive income tax treaty with the United States.

compute the sum of the amounts reported by all current

members of the group who filed Form 4593.)

Line 35: There currently are no additions required that are

recorded on this line. Leave this line blank.

2) Calculate the amount needed to offset the net deferred

tax liability of the taxpayer which results from the

Subtractions from Income

imposition of the business income tax, at a rate of 4.95%,

and the modified gross receipts tax, at a rate of 0.8%,

Subtractions are generally available to the extent included in

calculated for the first fiscal period ending after July 12,

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

2007.

Line 38: Enter any dividends and royalties received from

persons other than United States persons and foreign operating

3) Take the lesser of the result of (1) or (2).

entities, including, but not limited to, amounts determined

4) Report on this line 4% of the result of step (3). The

under IRC § 78 or IRC § 951 to 964.

remaining 96% (for fiscal filers, 92%) of the amount from

Line 39: Enter any income included in federal taxable income (as

step (3) will be deductible in future years.

defined for MBT purposes) that are attributable to other entities

A taxpayer claiming the Book-Tax deduction must maintain

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

records and work papers necessary to support the calculation

filed under the MBT. If there is only one such entity to report,

and journal entry identified for the same length of time that the

enter its FEIN or TR number in the field on this form. If there is

deduction is available, and to support a potential audit of the

more than one such entity to report, enter on the form the FEIN or

taxpayer’s business by the Michigan Department of Treasury.

TR number of one of the entities and attach a list of the account

numbers of all. On the list include a breakdown of the amount of

Line 45: If line 45 is negative, enter as a negative number. A

this income subtraction that is attributable to each entity. In any

loss on line 45 will create (or increase) the MBT business loss

case, the amount on line 39 should be the total of all income, not

carryforward for the next year.

just the income of the one entity identified on the form.

Line 46: Deduct any available MBT business loss incurred

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

after December 31, 2007. Enter as a positive number.

connection with this line item because all entities for which an

Business loss means a negative business income tax base, after

income subtraction is being reported have been identified on

apportionment, if applicable.

the corresponding line of Form 4580, or a similar list required

as an attachment to Form 4580.

Only an MBT business loss may be used and only from prior

consecutive years when the taxpayer was an MBT taxpayer.

Line 40: To the extent included in federal taxable income (as

defined for MBT purposes), deduct interest income derived

NOTE: MBT business loss carryforward is not the same as

from United States obligations.

the federal net operating loss carryforward or carryback.

Instructions For Form 4567 - Michigan Business Tax Annual Return Page 8

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