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Instructions for Form 4898

Corporate Income Tax: Non-Unitary Relationships with Flow-Through Entities

persons that are C corporations, insurance companies, or

Purpose

financial institutions, other than a foreign operating entity,

that satisfies the control test and one of two relationship tests.

The purpose of this form is to gather information on the

distributive share of flow-through income received throughout

If an Affiliated Group Election is made (see instructions

the tax year by taxpayers or members of a Unitary Business

for Form 4891), the UBG also includes all members of the

Group (UBG) from directly or indirectly owned flow-through

affiliated group, as defined in IRC 1504 except that the group

entities (FTEs) that are not unitary with the taxpayer, where the

includes only US persons (no foreign persons or foreign

flow-through income received is included in the taxpayers’ or

operating entities) that are corporations, financial institutions

UBG member’s federal taxable income figure.

or insurance companies that satisfy the control test and have

made the election to file as a UBG. Once the election is made,

General Information

the Affiliated Group is treated as a UBG for all purposes. See

the General Instructions in the CIT Forms and Instructions

This form is intended to only be used for a Corporate Income

for Standard Taxpayers (Form 4890) for more information on

Tax (CIT) taxpayer (or member of a UBG) to report the

UBGs.

distributive income it received from its interests in FTEs that

are not unitary with that taxpayer or UBG. This form must

NOTE: An FTE owned directly or indirectly by a taxpayer or

be filed by any taxpayer that has received a distributive share

a member of a UBG may or may not be unitary with a taxpayer

of income from an FTE that the taxpayer is not unitary with.

or UBG member. This form asks for information only on the

flow-through entities that are NOT unitary with the taxpayer or

If the taxpayer is a UBG, then each member of the UBG that

has received a distributive share of income from an FTE that

UBG member. For those flow-through entities that are unitary

the UBG is not unitary with must file this form. If more space

with the taxpayer, use the CIT Unitary Relationships with FTEs

is needed, include additional copies of Form 4898 as needed.

(Form 4900).

Repeat the taxpayer’s and UBG member’s name and Federal

Employer Identification Number (FEIN) (if applicable) at the

Line-by-Line Instructions

top of every copy of Form 4898.

Lines not listed are explained on the form.

Flow-through entity means an entity that for the applicable

Name and Account Number: Enter name and account number

tax year is treated as a subchapter S corporation under section

as reported on page 1 of the CIT Annual Return (Form 4891).

1362(a) of the internal revenue code, a general partnership, a

trust, a limited partnership, a limited liability partnership, or a

Unitary Business Groups (UBGs): Complete one form for

limited liability company, that for the tax year is not taxed as a

each member that is a C Corporation (including an entity taxed

C corporation for federal income tax purposes.

federally as such). Enter the Designated Member’s (DM’s)

name and FEIN in the Taxpayer Name and FEIN fields and the

An FTE is unitary with a taxpayer when that taxpayer owns

name and FEIN of the member to whom the schedule applies

or controls, directly or indirectly, more than 50 percent of the

on the line below.

ownership interests with voting rights or ownership interests

that confer comparable rights to voting rights of the FTE, and

Column A and B: Identify each FTE by name and FEIN.

that has business activities or operations which result in a

Column C: Enter the total amount of distributive income

flow of value between the taxpayer and the FTE, or between

received from the non-unitary FTE that is included in the

the FTE and another FTE unitary with the taxpayer, or has

taxpayer’s or UBG member’s federal taxable income. If the

business activities or operations that are integrated with, are

taxpayer or UBG member received a distributive loss from the

dependent upon, or contribute to each other.

non-unitary FTE that is included in its federal taxable income,

The determination of whether a taxpayer is unitary with an

enter that loss in this column as a negative. UBG members

FTE is made at the taxpayer level. If the taxpayer at issue is

will enter the amount of distributive income that the member

a UBG, the ownership requirement will be made at the UBG

received from each non-unitary FTE. For each UBG member,

the sum of all distributive share of flow-through income

level. So, if the combined ownership of the FTE by the UBG is

greater than 50 percent, then the ownership requirement will be

received and entered on column C shall equal the amount

satisfied.

entered on line 32 of the CIT Data on Unitary Business Group

Members (Form 4897).

NOTE: PA 266 of 2013 authorizes an affiliated group

election that applies an alternate test for finding a unitary

RECENT STATUTORY CHANGE: Under PA 233 of 2013,

relationship between corporations. This act DID NOT create

if a FTE listed here has made a valid election to remain in

a corresponding “affiliated group” test for finding a unitary

the Michigan Business Tax for this filing period, and files a

relationship between a corporation and an FTE. The existence

Michigan Business Tax (MBT) return for its tax year that ends

of a unitary relationship between a corporation and an FTE is

with or within the tax year of the CIT taxpayer, distributive

income allocated by that FTE to the corporate owner filing

still based exclusively on the traditional two-part test described

above.

this return shall not be reported here or elsewhere on this CIT

return.

Unitary Business Group means a group of United States

Form 4898 - Michigan Corporate Income Tax: Non-Unitary Relationships With Flow-Through Entities - 2014 Page 3

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