Form 4918 - Michigan Annual Flow-Through Withholding Reconciliation Return - 2014 Page 8
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11Line 7 and the worksheet should account for total tentative
COluMN A
distributive income, including, where applicable, distributive
Business income means federal taxable income. For CIT purposes, federal
share income of a source entity that distributed withholding
taxable income means taxable income as defined in IRC § 63, except that federal
directly to the filer instead of the filer’s members on an
taxable income shall be calculated as if section 168(k) (bonus depreciation for
qualified property) and section 199 (qualified production activities deduction)
Annual Flow-Through Withholding Reconciliation Return
were not in effect. For a tax-exempt taxpayer, business income means only
(Form 4918).
that part of federal taxable income (as defined for CIT purposes) derived from
unrelated business activity.
NOTE: For a flow-through entity that had $200,000 or less in
COluMN B
annual business income after allocation or apportionment to
* Guaranteed payment as defined under the Internal Revenue Code of 1986
Michigan but withheld on members that are C corporations or
Section 707(c) is determined to be compensation for services rendered or
other flow-through entities, skip line 5 and Column A, lines 7
for the use of capital and is not considered to be a distributive share of the
partnership’s profits. The payment, to the extent included in federal adjusted
through 17 and enter the amount withheld on line 18. Complete
gross income, is characterized as compensation or interest on the individual’s
Form 4918 from this point. Also complete line 6 and Column B
return. A nonresident partner is taxed on a guaranteed payment to the extent the
where applicable.
payment is includable in federal adjusted gross income and is for compensation
received for personal services performed in this State. A guaranteed payment for
the use of capital is allocated to the nonresident partner’s state of domicile. For
Distributive Income Worksheet
nonresident individual members, no adjustments for “bonus depreciation” or the
Column A is the list of amounts that are added together to total tentative
domestic production activities deduction are required.
distributive income for C Corporation members that is reported on line 7A of
Form 4918. Column B is the list of amounts that are added together to total
Taxpayers and tax professionals are expected to be familiar
tentative distributive income for individual members that is reported on line
7B of Form 4918. If the flow-through entity is a partnership or an entity that
with uncommon situations within their experience, which
files federally as a partnership, this information can be found on U.S. Form
produce income not identified by specific lines on the
1065, Schedule K. If the flow-through entity is an S Corporation or an entity that
preceding worksheet, and report that amount on line 7A or 7B,
files federally as an S Corporation, these amounts can be found on U.S. Form
as applicable. Treasury may adjust the figure resulting from the
1120S, Schedule K. Enter in column A only the amounts that are attributable
to members that are intermediate flow-through entities that have been withheld
worksheet to account properly for such uncommon situations.
on or C Corporations (including C Corporations that have opted out of FTW)
Line 7A: Enter on this line the flow-through entity’s total
as reported on the Schedule K-1 that has been issued to each member. Do not
report amounts in column A if the flow-through entity had $200,000 or less in
tentative distributive income that is attributable to members
that are flow-through entities or C Corporations; including C
annual business income after allocation or apportionment to Michigan and did
not withhold on members that are C corporations or other flow-through entities.
Corporations that have opted out of FTW. Also include, where
Enter in Column B only the amounts that are attributable to members that are
applicable, distributive share income of a source entity that
individuals — this includes resident and nonresident individuals — as reported
distributed withholding directly to the filer instead of the filer’s
on the Schedule K-1 that has been issued to each member.
members.
A
B
Line 7B: Enter on this line the flow-through entity’s tentative
Tentative
Tentative
Distributive
Distributive
distributive income that is attributable to members that
Income for C
Income for
are individuals, including individuals that are residents of
Distributive Income Categories
Corporations
Individuals
Michigan. Also include, where applicable, distributive share
Ordinary income (loss) from trade or
business activity
income of a source entity that distributed withholding directly
Net income (loss) from rental real estate
to the filer.
activity
Net income (loss) from other rental
Line 8A: Enter as a positive number the sum of the following
activity
amounts:
Portfolio income (loss):
• Income received by the flow-through entity filing this
Interest income
form (intermediate) as a distributive share from another
flow-through entity (source) that is not unitary with the
Dividend income
intermediate and another C corporation member. In a
tiered structure, if the flow-through entity filing this form
Royalty income
(intermediate) earns income as a distributive share from
Net short-term capital gain (loss)
another flow-through entity (source) that is not unitary
Net long-term capital gain (loss)
with the intermediate and a C corporation member, that
XXXXXXXX
income will be apportioned according to the source entity’s
*
Guaranteed payments
sales factor. Thus, income received as a distributive share
from a source flow-through entity is subtracted prior to
Net gain (loss) under section 1231
apportionment of the filer’s own tentative distributive
Other income (loss)
income and added back to the total after the filer’s
TOTAl DISTRIBuTIvE INCOME
apportionment. This subtraction preserves the source
Add all amounts in Column A and carry
entity’s sales apportionment as applied to the distributive
to Form 4918, line 7A. Add all amounts
share income received by the filer from the source entity.
in Column B and carry to Form 4918,
line 7B.
Note that this subtraction applies only if the intermediate
flow-through entity is not unitary with the source and the C
corporation taxpayer, plus,
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