Form 4594 - Michigan Farmland Preservation Tax Credit

4594, Page 4

the taxpayer may be able to claim a new farmland preservation

from January 1 to the date of death.

agreement as well. New agreements must be approved by the

• Partnerships.

local government by November 1, 2016, to claim a 2016 credit.

• Joint owners.

However, the FDRA is not final until a copy that has been

• S

Corporation

shareholders,

except

shareholders

recorded at the Register of Deeds is received from the MDARD.

S Corporations who had an FDRA before January 1, 1989, and

If the taxpayer doesn’t receive a copy of the recorded agreement

in 1991 elected to file under the SBT Act on Form C-8022.

before April 30, file the MBT return without that agreement.

When the FDRA is received, the taxpayer must file an amended

• Grantor Trusts (if treated as an owner under Internal

MBT return to include the agreement.

Revenue Code § 671 to 679).

NOTE: A taxpayer may not amend to revoke the election to

• Trusts created by the death of a spouse if the Trust requires

remain taxable under the MBT. Once the taxpayer makes a

100 percent of the income from the Trust to be distributed each

valid election to claim a certificated credit, the taxpayer must

year to the surviving spouse.

remain in the MBT until the credit and any carryforward of

Form MI-1040CR-5 is available on the Department of Treasury

that credit are exhausted.

(Treasury) Web site at

Jointly Payable Checks

Claiming the Credit

The taxpayer should take the check, check stub, and a copy

Income from taxpayers whose primary activity results from

of the FDRA(s) to the county treasurer(s) who will have the

the agricultural production may be subject to MBT. Michigan

taxpayer endorse the check and then use the refund to pay any

Farmland Preservation Tax Credit (Form 4594) may not be

delinquent taxes. Any remaining amount will be returned to

filed alone. It must now be accompanied by Michigan Business

the taxpayer.

Tax Annual Return (Form 4567), MBT Refundable Credits

(Form 4574), Schedule of Corporate Income Tax Liability for

Property Taxes That Can Be Claimed for Credit

a Michigan Business Tax Filer (Form 4946), and Schedule of

The property taxes levied in 2016 on enrolled land are eligible

Certificated Credits (Form 4947), at minimum.

for the 2016 credit, regardless of when they are paid.

Attach a copy of U.S. Form 1120 or 1041, page 1, and copies of

Ad valorem property taxes that were levied in 2016, including

all the federal schedules completed for the federal tax return.

collection fees up to 1 percent of the taxes, can be claimed for

The following must also be attached:

credit. Special assessments (those not based on taxable value),

• A copy of the taxpayer’s 2016 property tax statement(s) with

penalties, and interest cannot be claimed.

corresponding agreement numbers listed on each.

Taxes on land not eligible for either the principal residence

• A copy of the receipt(s) showing that 2015 or 2016 property

or qualified agricultural property exemptions most likely are

taxes were paid. If property taxes have not been paid or receipt(s)

not eligible for the Farmland Preservation Tax Credit. The

is not attached, Treasury will mail a check made jointly payable

exception is rental property where the tenant spends at least

to the Corporation, Estate, or Trust, AND the county treasurer

1,040 hours per year participating in the farming operation. To

for the county where the property is located. (A new check

compute the taxes that can be claimed for credit, exclude the

payable only to the Corporation, Estate or Trust will not be

school operating tax and multiply the balance by the percentage

issued if it is later proved that the taxes had been paid.)

of exemption allowed by the local taxing authority.

• If the property tax statement includes property that is not

ExamplE:

covered under an FDRA, the taxpayer must show what portion

of total acreage and property tax is for land enrolled in the

Taxes levied

$2,000

FDRA. A local equalization officer or local assessor must

School operating tax

$350

give this information on official letterhead if it is not listed

Principal residence exemption

60%

separately on property tax bills.

• If the property tax statement includes land on more than

$2,000

$1,650

one agreement, the property taxes must be allocated according

350

60%

to the land in each agreement. The local assessor will be

$990 can be claimed for credit

$1,650

able to determine what the breakdown is based on the legal

descriptions of the land enrolled under each agreement.

If the taxpayer has entered into more than one FDRA with the

MDARD, the sum of the taxes under each agreement is used

When to Claim a New Agreement

to compute the credit. The amount of credit the taxpayer will

receive is based on adjusted business income.

A taxpayer must have made the election to remain taxable under

the MBT beginning with the taxpayer’s first tax year ending

Claiming a Credit for Farms Purchased in 2016

after December 31, 2011, in order for the taxpayer to remain

That Were Already Enrolled in the Program

taxable under the MBT and claim certificated credits. If a

A taxpayer must have made the election to remain taxable

taxpayer properly made this election with either a certificated

under the MBT beginning with the taxpayer’s first tax year

farmland preservation agreement or another certificated credit,

Form 4594 - Michigan Farmland Preservation Tax Credit - 2016 Page 4

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