Tax News

CCH (cch.taxgroup.com) reports:

  The definition of "gross receipts" under the Michigan business tax is modified so that more items are excluded. The amount deducted as a bad debt under federal income tax law that corresponds to items included in the modified gross receipts tax base may be subtracted from gross receipts according to phased-in percentage amounts. Among other things, other items that may be excluded from gross receipts include:

  -- proceeds from the sale less any gain to the extent the gain is included in federal taxable income if the property is (1) a capital asset under IRC §1221(a), (2) land used in a trade or business under IRC §1231(b), (3) a hedging transaction, or (4) an investment or trading assets managed as part of a treasury function;

  -- interest and dividends received from federal or Michigan bonds;

  -- dividends and royalties received or deemed received from a foreign operating entity, according to phase-in percentage amounts;

  -- certain specific taxes and fees, such as sales or use taxes collected from a consumer, excise taxes paid on tobacco, and motor fuel taxes, according to phased-in percentage amounts;

  -- amounts attributable to an ownership interest in a pass-through entity, regulated investment company, or a real estate investment trust; and

  -- for a regulated investment company, receipts derived from investment activity by that regulated investment company.

In addition, other technical changes were made to the gross receipts definition.

Act 433 (S.B. 1038), Laws 2009, effective January 9, 2009, applicable retroactively and effective for taxes levied on and after January 1, 2008