Looking for a Michigan Tax Forms And Templates? Download it for free!

Instructions for Form 4575, Michigan Business Tax (MBT) Loss Adjustment

for the Small Business Alternative Credit

further in these instructions.

Purpose

NOTE: The usage of loss adjustment for one disqualifier does

To reduce the adjusted business income (ABI) or shareholder

not affect the available loss adjustment for the other disqualifier.

allocated income to qualify for the Small Business Alternative

This form will accommodate the separate maintenance of loss

Credit (SBAC) or minimize the reduction percentage required.

adjustment available for the UBG for both the ABI (Group

If the ABI was less than zero in any of the five years

Copy for ABI) and allocated income (separate member copy)

disqualifiers. For years in which a member was not part of the

immediately preceding the tax year for which a credit is being

UBG, the UBG will use that member’s available loss from those

claimed, and the taxpayer received a Small Business Credit

separate years on a first-in, first-out basis until those losses are

(SBC) under the Single Business Tax (SBT) or SBAC under

MBT for that same year, the taxpayer may adjust for the loss

consumed or extinguished.

before figuring eligibility for the SBAC. Business income

If one or more members exceed the shareholder income

for credit purposes is adjusted by using available loss from

disqualifier, only those members with shareholder income

prior years on a first-in, first-out basis until those losses are

disqualifiers must file a Form 4575, using member-only (pro

extinguished. A loss adjustment will not affect a reduction to

forma) figures in lines 4 through 16 on each member form.

the SBAC based on gross receipts that exceed $19,000,000.

If the UBG’s ABI exceeds the threshold, one Form 4575 must be

Also, it will not change the amount of compensation in column

filed to determine the UBG’s business income loss adjustment,

L for a C Corporation on the MBT Schedule of Shareholders

and Officers (Form 4577).

which will be calculated on a group basis (the Group Copy for

ABI, detailed below). For years in which a member was not part

NOTE: Use Part 2 to determine the loss available from the

of the UBG, the UBG will use that member’s available loss from

five preceding periods. Calendar year taxpayers will use

those separate years on a first-in, first-out basis until those losses

the five years prior to the tax year: 2011, 2010, 2009, 2008, and

are extinguished. These amounts are calculated initially at the

one year of SBT, 2007. Fiscal year taxpayers will calculate

member level but used and maintained for use in future years on

using the short-period ending December 31, 2011, the fiscal year

the Group Copy for ABI. Supporting 4575 forms must be filed

ending in 2011, and the fiscal years ending in 2010, 2009 and

by each member who has a loss available from the separate years

2008.

that is used against the UBG’s ABI disqualifier (member forms).

Fiscal Year Filers: See “Supplemental Instructions for

For members who do not exceed the credit’s shareholder income

threshold, only Part 2, lines 10 through 13, of Form 4575 need

Standard Fiscal MBT Filers” in the MBT Forms and

Instructions for Standard Taxpayers (Form 4600) for additional

to be completed on the member form. For members who also

information.

exceed the credit’s shareholder income threshold, lines 4 through

16 of the member form must be completed. Member forms must

NOTE: Although this form is formatted for Corporations, it

be completed using member-only figures.

can be used by other types of entities with minor adjustments.

Shareholder Income Disqualifier

See instructions for further details.

Any member whose shareholder income creates a partial

Special Instructions for Unitary Business

or complete disqualification, and that has loss available to

Groups (UBGs)

resolve that disqualification in whole or in part, must file Form

4575. Leave lines 1 through 3 blank. Complete line 4 (using

The ABI disqualifier must be calculated by the UBG by

a pro forma figure) and lines 5 through 16, all with data for the

combining the ABIs of its members. Likewise, to reduce

reporting member only. For years that the member was part of

an ABI disqualifier of the UBG, loss adjustment must be

the UBG, pro forma figures will be entered in lines 11 through

calculated on a group level and used against the group’s ABI.

13; however, the member cannot complete these lines for a tax

Loss used at the group level is independent of the loss available

year that it was part of the UBG and the UBG did not receive

at the member level.

the SBAC. The member may complete these lines for a tax year

Disqualifiers based on shareholder or partner allocated income

that it was not a member of the UBG and it received the SBC

or SBAC, regardless of whether the UBG received the credit in

must be determined on a member by member basis. If any

shareholder or partner has allocated income in excess of

that same year. Lines 14 through 16 on the member’s Form 4575

$180,000, the loss adjustment must be calculated on a member

will reflect the usage of loss adjustment to resolve the allocated

income disqualifier only. The use of loss adjustment to resolve the

by member basis for any and all members for which it may

ABI disqualifier will be maintained on the Group Copy for ABI.

apply. Loss used at a member level does not reduce the group’s

available loss.

NOTE: If any member still has a total disqualification on this

basis (greater than $180,000) after completing its own Form

NOTE: Members with available loss adjustment must complete

4575 as described above, the UBG is disqualified from the

a copy of Form 4575 using member data, referred to here as a

member copy or member form. The combined UBG member

SBAC. Do not proceed with these instructions. However, if each

data is displayed on a separate Form 4575 identified as “Group

member’s shareholder income disqualification is fully resolved

Copy for ABI.” Details regarding the forms are addressed

or reduced to a partial disqualification by this method, continue

Form 4575 - Michigan Business Tax Loss Adjustment For The Small Business Alternative Credit - 2012 Page 3

Related Articles

Related forms

Related Categories