Instructions For Schedule Rz Of M-1065 Partnership Renaissance Zone Deduction

CITY OF MUSKEGON

INSTRUCTIONS FOR SCHEDULE RZ OF M-1065

PARTNERSHIP RENAISSANCE ZONE DEDUCTION

GENERAL INFORMATION

LINE BY LINE INSTRUCTIONS

The Renaissance Zone designation for the City of Muskegon has been in

Fill out form M-1065 through Schedule E, before doing Schedule RZ.

effect for residents and businesses since January 1, 2000. The City of

Line 1. Enter partnership’s name as shown on the Muskegon income tax

Muskegon has four geographic areas that are designated as Renaissance

return, Form M-1065.

Zones which are the Former Mall Zone, Boilerworks/Amazon Zone,

Watermark Zone, and the Whittaker Electric Zone. These zones start to

Line 2. Enter the partnership’s Federal Employer Identification Number.

phase out in 2013. Please see phase out deduction instructions.

Line 3. Enter the street address of each location in a Muskegon

The City of Muskegon has also created two new sub-zones Highpoint

Renaissance Zone.

Flats and Heritage Square that are effect until 2023. The phase out period

Line 4 Enter the beginning date and ending date the partnership was

for these sub-zones does not begin until 2020.

qualified to claim the Muskegon Renaissance Zone Deduction for

the tax year.

WHO MAY CLAIM A RENAISSANCE ZONE DEDUCTION

A partnership that is located and conducting business activity in a

RENAISSANCE ZONE APPORTIONMENT PERCENTAGE -

Muskegon Renaissance Zone is qualified to claim the Renaissance Zone

BUSINESS INCOME

Deduction. If the partnership elects to pay the tax for the partners, the

deduction is claimed on the partnership return. Otherwise the deduction is

The Renaissance Zone apportionment percentage is used by partnerships

passed through to the partners. Partners claim the deduction by filing

located and doing business in Muskegon in a Renaissance Zone and outside

Schedule RZ of M-1040 with their individual returns.

the Renaissance Zones.

Line 5a. In column 1, enter the average net book value of all real and

HOW TO CLAIM A RENAISSANCE ZONE DEDUCTION

tangible personal property owned and located in Muskegon. In

To claim or pass through the City of Muskegon Renaissance Zone

column 2, enter the average net book value of the real and tangible

deduction, a partnership must file a Schedule RZ with their Muskegon

personal property may be determined by adding the net book

partnership income tax return.

value at the beginning of the year to the net book value at the end

RENAISSANCE ZONE DEDUCTION DISQUALIFIERS

of the year and dividing the sum by two. If the business was

located in the Renaissance Zone for less than a year, a monthly

A partnership is not eligible to claim a Renaissance Zone deduction if

average basis is to be used.

the partnership:

Line 5b. Enter in column 1, the gross annual rent multiplied by 8 for all

1. Is delinquent in filing or paying any of the following state or local taxes:

rented real property located in Muskegon. In column 2, show the

Michigan single business tax, Michigan income tax, city income tax,

gross annual rent multiplied by 8 for rented real property located in

Act 198 industrial abatement tax, commercial abatement tax,

a Muskegon Renaissance Zone.

enterprise zone tax, city utility tax or general property taxes on real or

personal property.

Line 6. Enter in column 1 compensation paid to employees for work or

services performed within Muskegon. In column 2, enter

2. Owns residential property and did not file an affidavit with the County of

compensation paid to employees for work or services performed

Muskegon Assessor's office by December 31 of the prior tax year

within a Muskegon Renaissance Zone. In column, enter the

attesting that the property is in substantial compliance with all

percentage, column 2 divided by column 1.

applicable state and local zoning, building and housing laws or codes.

Line 7. Enter the total of line 5c and line 6.

3. Is located within Muskegon outside of a Renaissance Zone and moves

to a location within a Renaissance Zone in Muskegon without approval

Line 8. Divide line 7 by 2 and enter the result.

of the City.

RENAISSANCE ZONE DEDUCTION FOR BUSINESS

4. Relocates more than 25 full-time equivalent jobs from one or more

INCOME PRIOR TO PHASE OUT

Non-Renaissance Zone local governmental units (city, village or

township) and any of the local government units from which a job was

Line 9a-9e

relocated adopts a resolution objecting to the relocation within 60 days

Column 1. Enter the allocated income from the partnership return,

of being notified of the job relocation by the business.

Form M-1065, Schedule C, column 5.

DEDUCTIBLE INCOME

Column 2. Enter the net operating loss deduction from the partnership

A partnership may deduct that portion of its net income from business

claimed on each partner’s individual Muskegon income tax

activity within a Muskegon Renaissance Zone. Business activity consists

return.

of two components, business income and nonbusiness income. Business

Column 3. Enter the retirement plan deduction claimed on each

income from activity conducted within a Muskegon Renaissance Zone is

partner’s individual Muskegon income tax return that was

determined via a two-factor Renaissance Zone apportionment formula.

based upon income from the partnership.

Nonbusiness income is allocated based upon situs of the income and

Column 4. Subtract the amount from column 2 and 3 from column 1

domicile of the partners. Income used to calculate any other deduction

and enter the result.

allowed by the income tax ordinance and income derived from illegal

Column 5. Multiply the amount from column 4 for each partner by the

activity shall not be used to calculate the Renaissance Zone deduction.

percentage on line 8 and enter the result.

RENAISSANCE ZONE PHASE OUT

DEDUCTION PHASE OUT FOR BUSINESS INCOME

The Renaissance Zone deduction is phased out during the final three year

Lines 10a-10e

of Renaissance Zone’s designation. The phase out percentages are: 25%

Column1. Enter the business income phase out percentage

for the tax year that is 2 years before the final year of designation; 50% for

computed in Schedule A, line 4 (on page 2) for each partner.

the tax 1 year immediately preceding the final year of designation; and

Column 2. Compute the Renaissance Zone deduction phase out for

75% for the final year of designation.

business income for each partner by multiplying the

Calculation of the phase out percentage must be done separately for

amount on line 9, column 5, for the partner by the business

business income and nonbusiness income. If reporting on a fiscal year, the

income phase out percentage on line 10, column 1, for the

calculations get more complicated due to the different phase out

partner.

percentages for the months in each different calendar year.

Instructions For Schedule Rz Of M-1065 Partnership Renaissance Zone Deduction - Muskegon

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