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eliminated on the group return for the filing period in which the

Transportation services that source sales based on revenue

miles: Enter on this line the taxpayer’s total sales multiplied

other member reports the transaction.

by the ratio of Michigan revenue miles over revenue miles

However, there is no elimination with an otherwise related entity

everywhere as provided in the “Sourcing of Sales to Michigan”

if the related entity is excluded from the UBG. For example,

chart for that type of transportation service. Revenue mile

consider a group with a U.S. parent, a U.S. subsidiary, and a

means the transportation for consideration of one net ton in

foreign operating entity subsidiary that would otherwise be

weight or one passenger the distance of one mile.

a UBG, but the foreign operating entity is excluded from the

NOTE: Only transportation services are sourced using revenue

UBG by definition. The U.S. parent filing a UBG return may

not eliminate intercompany transactions between itself and the

miles. To the extent the taxpayer has business activities or

revenue streams not from transportation services, those

foreign operating entity.

receipts should be sourced accordingly.

Additions to Business Income

UBGs: Enter on this line the entire amount of Michigan sales

Line 11: Enter any interest income and dividends from

of all members in the group after eliminations. For more

bonds and similar obligations or securities of states other than

information see the instructions for CIT Data for Unitary

Michigan and their political subdivisions in the same amount

Business Group Members (Form 4897).

that was excluded from federal taxable income (as defined for

Line 2: Enter the total sales that are directly attributable to the

CIT purposes). Reduce this addition by any expenses related to

taxpayer.

the foregoing income that were disallowed on the federal return

by IRC § 265 and § 291.

Transportation services that source sales based on revenue

Line 12: Enter all taxes on, or measured by, net income

miles: Enter on this line the total sales that are directly

including city and state taxes, Foreign Income Tax, and Federal

attributable to the taxpayer.

Environmental Tax claimed as a deduction on the taxpayer’s

UBGs: Enter on this line the entire amount of total sales of all

federal return. This would include the tax imposed under the

members in the group after eliminations. For more information

CIT to the extent claimed as a deduction on the taxpayer’s

see the instructions for CIT Data on Unitary Business Group

federal return. This would also include the tax imposed under

Members (Form 4897).

the Business Income Tax portion of the Michigan Business Tax.

Line 13: Enter any net operating loss carryback or carryover

PART 2: BUSINESS INCOME

that was deducted in arriving at federal taxable income (as

Line 4: Non-C Corporations enter this line as business income.

defined for CIT purposes). Enter this amount as a positive

Business income includes payments and items of income and

number.

expense attributable to the business activity of the Non-C

Line 14: Enter, to the extent deducted in arriving at federal

Corporation (Partnership or S Corporation) and separately

taxable income (as defined for CIT purposes), any royalty,

reported to the members.

interest, or other expense paid to a person related to the

Line 6: Include income from the production of agricultural

taxpayer by ownership or control for the use of an intangible

activities if not included on line 4. Farms are not exempt under

asset if the person is not included in the taxpayer’s UBG.

the CIT. Furthermore, the tax base attributable to the production

Royalty, interest, or other expense described here is not

of agricultural goods by a person whose primary activity is the

required to be included if the taxpayer can demonstrate that

production of agricultural goods is similarly not exempt.

the transaction has a nontax business purpose other than

Line 9: For UBGs only: Enter the group’s total eliminations

avoidance of this tax, is conducted with arm’s-length pricing

and rates and terms as applied in accordance with IRC § 482

from federal taxable income.

and § 1274(d), and satisfies one of the following:

NOTE: Elimination, where required, applies to transactions

• Is a pass through of another transaction between a third

between any members of the UBG supported by this form.

party and the related person with comparable rates and

For example, if the UBG includes standard taxpayers (not

owned by and unitary with a financial institution in the

terms.

UBG), an insurance company, and a financial institution with

• Results in double taxation. For this purpose, double

nexus, transactions between a standard taxpayer member and

taxation exists if the transaction is subject to tax in another

an insurance or financial member are eliminated whenever

jurisdiction.

elimination is required, despite the fact that the insurance and

• Is unreasonable as determined by the Treasurer, and the

financial members are not reported on the combined return filed

taxpayer agrees that the addition would be unreasonable

by standard taxpayer members. If a transaction between two

based on the taxpayer’s facts and circumstances.

members of a UBG is reported on the group’s current return

• The related person (recipient of the transaction) is organized

by one member but reported on the preceding or succeeding

under the laws of a foreign nation which has in force a

group return by the other member (due to differing year ends or

comprehensive income tax treaty with the United States.

accounting methods of the members), the side of that transaction

that is included in the group’s current filing period must be

Line 15: Enter on this line the expenses that resulted from the

eliminated. The other side of the same transaction will be

production of oil and gas if that production of oil and gas is

Form 4946 - Schedule Of Corporate Income Tax Liability For A Michigan Business Tax Filer Page 4

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