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below to compute the groupwide ABI loss adjustment required.

Line-by-Line Instructions

Lines not listed are explained on the form.

Adjusted Business Income Disqualifier

Dates must be entered in MM-DD-YYYY format.

This disqualifier is calculated at the group level. If the UBG

has ABI in excess of $1,344,200, the UBG must complete one

Name and Account Number: Enter name and account number

group Form 4575. The groupwide Form 4575 will calculate loss

as reported on page 1 of the MBT Annual Return (Form 4567).

available from the UBG’s prior tax years as well as organize

UBGs: Complete one form for each member for whom this

the members’ available loss that may be used against this

schedule applies. Enter the DM’s name in the Taxpayer Name

disqualifier. These member amounts are calculated initially

field and the member to whom the schedule applies on the

at the member level but used and maintained for use in future

line below. For the form that determines the UBG’s ABI

years on the Group Copy for ABI.

loss adjustment, enter the DM’s name and FEIN in the first

In the Taxpayer Name field at the top of the page, enter the

identification line, and “GROUP COPY FOR ABI” and no

Designated Member’s (DM’s) name followed by the DM’s

FEIN in the second identification line.

Federal Employer Identification Number (FEIN) or Michigan

Department of Treasury (TR) assigned number. In the Unitary

Part 1: Current Year Amounts

Business Groups Only field, enter “GROUP COPY FOR ABI,”

Use Part 1 to determine the amount of loss adjustment

and leave FEIN or TR Number field blank. On this group copy

necessary to qualify for the SBAC.

of Form 4575, enter groupwide data for lines 1 through 3.

If the taxpayer is not eligible for the credit because the ABI

Leave lines 4 through 9 blank. Complete lines 10 through 16

exceeds $1,344,200 ($180,000 for individuals), complete lines 1

following line-specific instructions.

through 3.

To reduce the UBG’s ABI disqualifier, the group will use its

available loss from a prior tax period when the UBG received

If the taxpayer is not eligible because a shareholder’s

allocated income exceeds $180,000, or a partner’s distributive

the SBAC, as well as a member’s available loss from a tax

income exceeds $180,000, complete lines 4 through 9 for the

year when it received the SBC or SBAC and was not part of

shareholder(s) or partner(s) creating the disqualifier. The loss

the UBG (member’s separate year). However, the group may

adjustment required is the largest amount needed to eliminate

not use a member’s separately calculated available loss for a

all allocated income disqualifiers.

tax year when the member was part of the UBG to reduce the

group’s ABI disqualifier.

Partnerships: Form 4575 is formatted for Corporations. To use

it for a Partnership, make these changes:

To reduce the UBG’s ABI disqualifier, available loss is used

on a first-in, first-out basis until those losses are extinguished.

Enter on line 6 any guaranteed payments made to the partner

For the purposes of completing Part 2, if a member’s separate

creating a $180,000 disqualifier.

year does not share a common year end with the UBG, use a

On line 8, divide by the percentage of ownership from column

separate column for that member. If some members’ separate

C of the MBT Schedule of Partners (Form 4578).

years share a common year end, total the amount of those

members’ available loss in a single column. Arrange all of

NOTE: A member of a Limited Liability Company (LLC) is

the columns in chronological order. If additional columns are

characterized for MBT purposes as a partner, shareholder,

needed to accommodate the five preceding periods, create and

or owner, based on the federal characterization of the LLC.

An LLC taxed as a Partnership for federal purposes must file

attach a table comparable to that found in lines 10 through 16.

Apply to that custom table the calculations described in the

as a Partnership for MBT. Similarly, an LLC taxed as a C

Corporation or S Corporation for federal purposes must file

form text and instructions for lines 10 through 16.

Lines 14 through 16 on the Group Copy for ABI will reflect

under that same status for MBT.

the usage of loss adjustment to resolve the ABI disqualifier

NOTE: In general, a federally disregarded entity is required to

file as if it were a sole proprietorship if owned by an individual,

and the maintenance of loss adjustment available for future

years (within the five year statutory period). Loss adjustment

or a branch or division if owned by another business entity.

used for the ABI disqualifier is not recorded on the member

Reduced SBAC: A reduction of the SBAC is required if

copy of Form 4575. However, loss adjustment used for the ABI

an Individual, a partner in a Partnership, a shareholder of

disqualifier from a member’s separately filed years should be

a Corporation, or an officer of a C Corporation has allocated

tracked in the taxpayer’s records. Any ABI loss adjustment

income after loss adjustment of more than $160,000. This

remaining from a member’s separately filed years will be

reduction is based on the Individual/partner/officer/shareholder

available to that member in the event the member leaves the

UBG prior to complete usage of the loss adjustment available

with the largest allocated income.

by the UBG. See the “Supplemental Instructions for Standard

Complete lines 4 through 9 for the shareholder or partner

Members in UBGs” section in Form 4600 for details.

creating the need to reduce the SBAC.

NOTE: If the UBG still has a disqualification on this basis

Form 4575 should always be calculated initially using $160,000

(greater than $1,344,200) after completing the group’s Form

on line 5. This calculation will establish taxpayer eligibility

4575 as described above, the UBG is disqualified from the

without the need to reduce the SBAC. However, if the total

SBAC. Do not proceed with these instructions.

loss available for the current year on line 13 does not equal or

Form 4575 - Michigan Business Tax Loss Adjustment For The Small Business Alternative Credit - 2012 Page 4

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