Tax News

CCH (cch.taxgroup.com) reports:

The Michigan Department of Treasury has issued single business tax guidance regarding the calculation of the small business credit for an entity that has more than one taxable year (including a short tax year) in a controlled group year. If a short-year entity has two taxable years in a controlled group year, the two taxable years of the short-year entity that end within the same calendar year are not combined on the same Form C-8009. Instead, two Forms C-8009 must be filed; the business activities of the affiliates are reported the same.
A small business credit will be denied a controlled group if (1) combined gross receipts exceed $10 million; (2) combined adjusted business income exceeds $475,000; or (3) allocated income exceeds $115,000. If one of these conditions exists for any of the affiliates on either Form C-8009, then all affiliates and the short-year entity cannot claim the credit on either form. However, if one of the conditions exists only for the short-year entity on only one of the forms, the short-year entity may claim the credit on the other form, provided that annualized adjusted business income, gross receipts, and allocated income do not disqualify the short-year entity.
Furthermore, if the short-year entity is allocated any of the SBT statutory exemption, then the exemption is made identically to each tax year. The exemption should be prorated for the short-period return. Sample calculations are included.
Internal Policy Directive 2008-01 , Michigan Department of Treasury, April 21, 2008, ¶401-362
Other References:
Explanations at ¶11-550
Explanations at ¶12-125