Form 4891 - Michigan Corporate Income Tax Annual Return

Instructions for Form 4891

Corporate Income Tax (CIT) Annual Return

information should be filled with the name and FEIN of the

Purpose

DM.

To calculate the Corporate Income Tax for standard taxpayers.

NOTE: A taxpayer that is a UBG must file a combined

Insurance companies should file the Insurance Company

return using the tax year of the DM. The combined return of

Annual Return for Michigan Corporate Income and Retaliatory

the UBG must include each tax year of each member whose

Taxes (Form 4905) and Financial Institutions should file the

tax year ends with or within the tax year of the DM. For

CIT Annual Return for Financial Institutions (Form 4908).

example, Taxpayer ABC is a UBG comprised of three standard

A standard taxpayer is an entity that is a C Corporation, an

members: Member A, the DM with a calendar tax year, and

Members B and C with fiscal years ending March 31 and

entity that has elected to be taxed federally as a C Corporation

for the tax year included on this return, and a Unitary Business

September 30, respectively. Taxpayer ABC’s tax year is that of

Group that includes members that are C Corporations

its DM. For this group in 2013, that annual return will included

or entities that have elected to be taxed federally as a C

Member A’s calendar year ending December 31, 2013, the tax

Corporation for the tax year included on this return.

year of Member B ending March 31, 2013, and the tax year of

Member C ending September 30, 2013.

Special Instructions for Unitary Business Groups

The gross receipts of a UBG is the sum of the gross receipts

Under the CIT, corporation means an entity that is a C

of each member included in the UBG, other than a foreign

Corporation or has elected to file federally as a C Corporation

operating entity or a person subject to the tax as an insurance

for the tax year included on this return. A taxpayer is a

company or financial institution, less any gross receipts arising

corporation, an insurance company, a financial institution, or a

from transactions between members included in the UBG.

Unitary Business Group (UBG) that is liable for tax, interest,

Gross receipts of each member should reflect the accounting

or penalty.

method that member used to compute its federal taxable

A UBG is a group of United States persons that are

income.

corporations, insurance companies, or financial institutions,

The business income of a UBG is the sum of the business

other than a foreign operating entity, that satisfies the following

income of each member included in the UBG, other than a

criteria:

foreign operating entity or a person subject to the tax as an

insurance company or financial institution, less any items

• One of the persons owns or controls, directly or indirectly,

of income and related deductions arising from transactions

more than 50 percent of the ownership interest with voting

(including dividends) between members included in the UBG.

rights (or rights comparable to voting rights) of the other

Business income of each member should reflect the accounting

members; AND

method that member used to compute its federal taxable income.

• The UBG has operations which result in a flow of value

between the members in the UBG or has operations that are

In general, components used to determine tax liability relate to

integrated with, are dependent upon, or contribute to each

the group as a single taxpayer, not to the individual members

other. Flow of value is determined by reviewing the totality of

that comprise the group. Exceptions to this general rule are

facts and circumstances of business activities and operations.

noted in instructions to the applicable forms. The group of

members on the combined return is treated as the taxpayer (a

A foreign operating entity means a United States corporation

distinct entity) for purposes of the CIT Act.

that would otherwise be a part of a UBG that is taxable in

Michigan; has substantial operations outside the United States,

For more information on UBGs, see the instructions

for CIT Tax Data for Unitary Business Group Members

the District of Columbia, any territory or possession of the

(Form 4897) and the Department of Treasury Web site at

United States except for the commonwealth of Puerto Rico, or

a political subdivision of the foregoing; and at least 80 percent

of its income is active foreign business income as defined in

Taxpayer Certification

Internal Revenue Code (IRC) § 861(c)(1)(B).

A return filed by a UBG must be signed by an individual

In Michigan, a UBG with members that are corporations

authorized to sign on behalf of the DM. Provide a telephone

must file Form 4891. A Designated Member (DM) must file

number for that individual at the DM’s office. Treasury will

the return on behalf of the standard members of the group. In

only discuss the return with the authorized signer.

a brother-sister controlled group, any member that has nexus

with Michigan may be designated to serve as DM. In a parent-

Public Act 266 of 2013: The Affiliated Group

subsidiary controlled group or a combined controlled group

Election

(an interlocking combination of a parent-subsidiary group

Public Act 266 of 2013 creates the affiliated group election,

and a brother-sister group), the controlling member must

which allows a group of persons that satisfy the definition

serve as DM if it has nexus with Michigan. If it does not have

of “affiliated group,” (see below) to elect to be treated

nexus with Michigan, the controlling member may appoint

any member with nexus to serve as DM. When filling out the

as a UBG under the CIT even if those persons do not

forms supporting this return, fields that require “taxpayer”

satisfy the relationship test of MCL 208.611(6). For more

Form 4891 - Michigan Corporate Income Tax Annual Return - 2014 Page 3

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