Form 4891 - Michigan Corporate Income Tax Annual Return

between a standard taxpayer member and an insurance or financial

Royalty, interest, or other expense described here is not

member are eliminated whenever elimination is required, despite

required to be included if the taxpayer can demonstrate that the

the fact that the insurance and financial members are not reported

transaction has a nontax business purpose other than avoidance

on the combined return filed by standard taxpayer members.

of this tax, is conducted with arm’s-length pricing and rates and

terms as applied in accordance with IRC § 482 and § 1274(d),

However, there is no elimination with an otherwise related

and satisfies one of the following:

entity if the related entity is excluded from the UBG. For

• Is a pass through of another transaction between a third

example, consider a group with a U.S. parent, a U.S. subsidiary,

and a foreign operating entity subsidiary that would otherwise

party and the related person with comparable rates and terms.

be a UBG, but the foreign operating entity is excluded from the

• Results in double taxation. For this purpose, double taxation

UBG by definition. The U.S. parent filing a UBG return may

exists if the transaction is subject to tax in another jurisdiction.

not eliminate intercompany transactions between itself and the

• Is unreasonable as determined by the Treasurer, and the

foreign operating entity.

taxpayer agrees that the addition would be unreasonable based

If a transaction between two members of a UBG is reported on

on the taxpayer’s facts and circumstances.

the group’s current return by one member but reported on the

• The related person (recipient of the transaction) is organized

preceding or succeeding group return by the other member (due

under the laws of a foreign nation which has in force a

to differing year ends or accounting methods of the members), the

comprehensive income tax treaty with the United States.

side of that transaction that is included in the group’s current filing

UBGs: add Form 4897, line 30 of all members and enter sum

period must be eliminated. The other side of the same transaction

will be eliminated on the group return for the filing period in

here.

which the other member reports the transaction.

Line 23: Enter on this line the expenses included on line

Additions to Business Income

12 that resulted from the production of oil and gas if that

production of oil and gas is subject to the Severance Tax on Oil

Line 19: Enter any interest income and dividends from

or Gas, 1929 PA 48. Also enter expenses related to the income

bonds and similar obligations or securities of states other than

derived from a mineral to the extent that income is included

Michigan and their political subdivisions in the same amount

that was excluded from federal taxable income (as defined for

on line 30 and that expense was deducted in arriving at federal

taxable income.

CIT purposes). Reduce this addition by any expenses related to

the foregoing income that were disallowed on the federal return

UBGs: add the amount on Form 4897, line 31 off all members

by IRC § 265 and § 291.

and enter the sum here.

UBGs: add Form 4897, line 27 of all members and enter sum

Line 24: There are currently no miscellaneous items to be

here.

entered on this line. Leave this line blank.

Line 20: Enter all taxes on, or measured by, net income

Subtractions from Business Income

including city and state taxes, Foreign Income Tax, and Federal

Subtractions are generally available to the extent included in

Environmental Tax claimed as a deduction on the taxpayer’s

arriving at federal taxable income (as defined for CIT purposes).

federal return. This includes the tax imposed under the CIT

to the extent claimed as a deduction on the taxpayer’s federal

Line 27: Enter on this line the sum of all entries in Column

C of Non-Unitary Relationships with Flow-Through Entities

return that includes the tax period on this return. Enter all taxes

on, or measured by, net income including city and state taxes,

(Form 4898). FTEs include partnerships and S corporations

Foreign Income Tax, and Federal Environmental Tax claimed

as well as limited liability companies that are not taxed as a C

as a deduction on the taxpayer’s federal return. This would

corporation. If an amount is entered on this line, Form 4898

include the tax imposed under the CIT to the extent claimed as

must be completed and included with the filing of this form.

a deduction on the taxpayer’s federal return that includes the

UBGs: The amount entered on line 27 must equal the sum of

tax period on this return. This would also include, to the extent

all entries in Column C of all Forms 4898 that were filed by

deducted in arriving at federal taxable income (as defined for

the UBG. The amount also will equal the sum of all group

CIT purposes), the Business Income Tax portion of the MBT..

members’ Form 4897, line 32

UBGs: add Form 4897, line 28 of all members and enter sum

Line 28: Enter, to the extent included in federal taxable income

here.

(as defined for CIT purposes), any dividends and royalties

Line 21: Enter any net operating loss carryback or carryover that

received from persons other than United States persons and

was deducted in arriving at federal taxable income (as defined for

foreign operating entities, including, but not limited to, amounts

CIT purposes). Enter this amount as a positive number.

determined under IRC § 78 or IRC § § 951 to 964.

UBGs: add Form 4897, line 29 of all members and enter sum

UBGs: Enter here the sum of Form 4897, line 33 of all members.

here.

Line 29: To the extent included in federal taxable income (as

defined for CIT purposes), deduct interest income derived from

Line 22: Enter, to the extent deducted in arriving at federal

taxable income (as defined for CIT purposes), any royalty,

United States obligations.

interest, or other expense paid to a person related to the

UBGs: Enter here the sum of Form 4897, line 34 of all

taxpayer by ownership or control for the use of an intangible

members.

asset if the person is not included in the taxpayer’s UBG.

Form 4891 - Michigan Corporate Income Tax Annual Return - 2014 Page 9

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