Form Mi-1040h - Michigan Schedule Of Apportionment - 2013 Page 2
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22013 MI-1040H, Page 2
Instructions for Form MI-1040H, Schedule of Apportionment
Business income from business activity that is taxable both
Sales of tangible personal property are in Michigan if:
within and outside Michigan is apportioned to Michigan using
1.
The property is shipped or delivered to a purchaser (other
this form. If you have more than one MI-1040H Schedule of
than the United States government) within Michigan
Apportionment, total losses attributable to other states should
regardless of the free on board (F.O.B.) point or other
be reported on line 4 of the Michigan Schedule 1. Total income
conditions of the sale, or
attributable to other states should be reported on line 13 of the
2. The property is shipped from an office, store, warehouse,
Michigan Schedule 1. The Michigan income tax statute uses
factory or other place of storage in Michigan and the
the standards prescribed by federal Public Law (P.L.) 86-272
purchaser is the United States government or the taxpayer
to determine if a taxpayer’s income is taxable in another state.
is not taxable in the state of the purchaser.
A taxpayer’s income is taxable in another state if:
Sales (other than of tangible personal property) are in Michigan
1. In that state the taxpayer is subject to a net income tax, a
if:
franchise tax measured by net income, a franchise tax for
1. The business activity is performed in Michigan, or
the privilege of doing business, a corporate stock tax, or
2. The business activity is performed both in Michigan and
2. That state has jurisdiction to subject the taxpayer to a net
in another state(s), but based on cost of performance, a
income tax regardless of whether the state does or does not.
greater proportion of the business activity is performed in
Sales Factor
Michigan.
There are special formulas for transportation companies and
Divide the total sales in Michigan during the tax year by the
other authorized taxpayers. Those formulas are identified in
total sales everywhere during the tax year.
Chapter 3 of the Michigan’s Income Tax Act.
“Sales” includes gross receipts from sales of tangible property,
rental of property and providing of services that constitute
business activity. Exclude all receipts of nonbusiness income.
Note: Throwback sales for individual income tax follow
federal P.L. 86-272 standards. The business must have physical
presence in the other state or activity beyond solicitation of
sales in order to exclude sales into another state or country
from the numerator. The Michigan income tax act definition of
“state” includes a foreign country. Therefore, foreign sales are
considered Michigan sales unless the business entity is taxable
in the foreign country.
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