Instructions For Form 4567 - Michigan Business Tax Annual Return (Page 9 of 11) in pdf

It also is not the same as the Single Business Tax business

8825) to determine its taxable income attributable to residential

loss carryforward, which was partially allowed against the

rental units in Michigan. To the extent that the Qualified

Modified Gross Receipts tax base only for tax years ending

Affordable Housing Project is taxed as something other than

in 2008. It is also not the same as a Corporate Income Tax

a Partnership or S Corporation, the Qualified Affordable

business loss carryforward. Neither an SBT business loss

Housing Project may use the Supplemental Income and Loss

carryforward nor a CIT business loss carryforward may be

(U.S. Form 1040, Schedule E) or the relevant portions of the

entered on this line or applied against the MBT tax base. A

U.S. Corporation Income Tax Return (U.S. Form 1120), as

taxpayer that acquires the assets of another corporation in a

appropriate. If the Qualified Affordable Housing Project is a

transaction described under section 381(a)(1) or (2) of the IRC

Corporation, the expenses permitted should be limited to those

may deduct any MBT business loss carryforward attributable

also listed on the Low-Income Housing Credit Agencies Report

to that distributor or transfer or corporation.

of Noncompliance or Building Disposition (U.S. Form 8823)

and U.S. Form 1040, Schedule E. Rental receipts and expenses

Line 47: Subtract line 46 from line 45. Any negative amount

must be calculated without regard to any gain or loss resulting

on line 47 is an MBT business loss which may be carried

from the disposition of rental property. Also, since Partnerships

forward to the next filing period, except to the extent that all or

are subject to tax as a person under MBT, flow-through

some portion of this business loss has exceeded its usable life

amounts from other Partnerships are not considered.

of ten tax years.

Improvements that increase the value of the property or extend

NOTE: Any business loss created on this return may only be

its life, such as replacing a roof or renovating a kitchen, are

applied against a subsequent MBT business income tax base.

not deductible rental expenses. Any passive activity loss

This business loss may not be applied against a subsequent

limitations applicable to the Qualified Affordable Housing

Corporate Income Tax tax base.

Project’s federal return also apply for purposes of MCL

208.1201(7).

Line 48: If line 47 is positive, enter the Qualified Affordable

Housing Deduction, if applicable.

The Qualified Affordable Housing Project’s deduction

is reduced by the amount of limited dividends or other

NOTE: If claiming both the seller’s and the QAHP deductions,

distributions made to the owners of the project. Income

complete the QAHP deduction calculation on lines 48a through

received by the management, construction, or development

48h, and add to the total at line 48i the amount from Form

company for completion and operation of the project and

4579, line 5.

rental units does not constitute taxable income attributable to

PA 168 of 2008 provides for a deduction from the apportioned

residential rental units.

Business Income Tax base to a Qualified Affordable Housing

UBGs: Leave lines 48a through 48h blank and carry the

Project and a seller of residential rental units to a Qualified

amount from Form 4580, Part 2B, line 45i, column C, to line

Affordable Housing Project. Qualified Affordable Housing

48i.

Project is defined under instructions for line 19.

When the seller claims a deduction for the year of sale, the

The seller may take a deduction from its apportioned Business

State will place a lien on the property equal to the amount of

Income Tax base equal to the gain from the sale of the

the seller’s deduction. If the buyer fails to qualify as a Qualified

residential rental units to the Qualified Affordable Housing

Affordable Housing Project or fails to operate any of the

Project, as calculated on the MBT Qualified Affordable

residential rental units as rent restricted units in accordance

Housing Seller’s Deduction (Form 4579). Enter the amount

with the operation agreement within 15 years after the date

from Form 4579, line 5. (All MBT forms, including Form 4579,

of purchase, the lien placed on the property for the amount

are available online at )

of the seller’s deduction becomes payable to the State. The

The Qualified Affordable Housing Project may deduct from

lien is payable through a “recapture” to be added to the tax

its apportioned Business Income Tax base an amount equal

liability of the buyer in the year the recapture event occurs.

to the product of the taxable income attributable to residential

The recapture is calculated on MBT Schedule of Recapture of

rental units in Michigan it owns multiplied by a fraction,

Certain Business Tax Credits and Deductions (Form 4587),

the numerator of which is the number of rent restricted units

and is reduced proportionally for the number of years the buyer

in Michigan owned by that Qualified Affordable Housing

qualified for the deduction.

Project and the denominator of which is the number of all

residential rental units in Michigan owned by the project. MCL

PART 3: TOTAL MICHIGAN BUSINESS TAX

208.1201(8) governs the termination of this deduction.

Line 52: In addition to the taxes imposed and levied under

MBT, an annual surcharge is imposed and levied on each

In general, taxable income attributable to residential rental

standard taxpayer equal to 21.99 percent of the taxpayer’s tax

units is gross rental receipts attributable to residential rental

liability.

units in Michigan (purchased pursuant to an operation

agreement) less rental expenses attributable to residential

The amount of the surcharge imposed and levied on any

rental units in Michigan, including, but not limited to, repairs,

taxpayer may not exceed $6,000,000 for any single tax year.

interest, insurance, maintenance, utilities, and depreciation.

Fiscal Filers: Effective January 1, 2017, the surcharge is no

Specifically, Partnerships may use a Rental Real Estate Income

longer imposed. Enter on line 52 the lesser of:

and Expenses of a Partnership or an S Corporation (U.S. Form

1) $6,000,000; or

Instructions For Form 4567 - Michigan Business Tax Annual Return Page 9

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