Form 4594 - Michigan Farmland Preservation Tax Credit

4594, Page 3

Instructions for Form 4594

Michigan Farmland Preservation Tax Credit

• Partnerships.

Purpose

• Joint owners.

The Farmland Preservation Tax Credit gives a share of the

• S

Corporation

shareholders,

except

shareholders

property tax paid on farmland back to farmland owners.

S Corporations who had an FDRA before January 1, 1989, and

Farmland owners qualify for credit by agreeing to keep the

in 1991 elected to file under the SBT Act on Form C-8022.

land as farmland and not develop it for another use.

• Grantor Trusts (if treated as an owner under Internal

NOTE: This form must be filed with the Michigan Business

Revenue Code § 671 to 679).

Tax Annual Return (Form 4567). Unlike some earlier years,

• Trusts created by the death of a spouse if the Trust requires

Form 4594 cannot be filed as a stand-alone document.

100 percent of the income from the Trust to be distributed each

NOTE: Beginning January 1, 2012, only those taxpayers with

year to the surviving spouse.

a certificated credit, which is awarded but not yet fully claimed

Form MI-1040CR-5 is available on the Department of Treasury

or utilized, may elect to be MBT taxpayers. If a taxpayer files

an MBT return and claims a certificated credit, the taxpayer

(Treasury) Web site at

makes the election to file and pay under the MBT until the

Claiming the Credit

certificated credit and any carryforward of that credit are

exhausted. This credit must be claimed beginning with the

Income from taxpayers whose primary activity results from

taxpayer’s first tax year ending after December 31, 2011, in

the agricultural production may be subject to MBT. Michigan

order for the taxpayer to remain taxable under the MBT and

Farmland Preservation Tax Credit (Form 4594) may not be

filed alone. It must now be accompanied by Michigan Business

claim the credit.

Tax Annual Return (Form 4567), MBT Refundable Credits

Requirements

(Form 4574), Schedule of Corporate Income Tax Liability for

a Michigan Business Tax Filer (Form 4946), and Schedule of

To qualify, the following requirements must be met:

Certificated Credits (Form 4947), at minimum.

• Taxpayer must own farmland, and

Attach a copy of U.S. Form 1120 or 1041, page 1, and copies of

• Taxpayer must have entered into a Farmland Development

Rights Agreement (FDRA) with the Michigan Department of

all the federal schedules completed for the federal tax return.

Agriculture (MDA).

The following must also be attached:

• A copy of the taxpayer’s 2013 property tax statement(s) with

If agreements were entered into on or after January 1, 1978, the

gross receipts qualifications in Part 1 must be met.

corresponding agreement numbers listed on each.

• A copy of the receipt(s) showing that 2012 and 2013 property

Farmland Development Rights Agreement

taxes were paid. If property taxes have not been paid or receipt(s)

Through an FDRA, a taxpayer may receive property tax relief in

is not attached, Treasury will mail a check made jointly payable

to the Corporation, Estate, or Trust, AnD the county treasurer

return for a pledge not to change the use of the taxpayer’s lands.

for the county where the property is located. (A new check

NOTE: The FDRA restricts development of land. Before

payable only to the Corporation, Estate or Trust will not be

making any changes to property covered under this agreement

issued if it is later proved that the taxes had been paid.)

or to its ownership, consult the MDA. Some changes may make

• If the property tax statement includes property that is not

property ineligible for credit.

covered under an FDRA, the taxpayer must show what portion

Filing the Correct Form

of total acreage and property tax is for land enrolled in the

FDRA. A local equalization officer or local assessor must

The following should file using Form 4594:

give this information on official letterhead if it is not listed

• Estates, include property taxes from the date of death and

separately on property tax bills.

farm income required to be reported on the entity’s U.S. Form

1041.

When to Claim a New Agreement

• Corporations other than S Corporations.

A taxpayer must have made the election to remain taxable

• S Corporations that had an FDRA before January 1, 1989,

under the MBT beginning with the taxpayer’s first tax year

and in 1991 elected to file under the Single Business Tax (SBT)

ending after December 31, 2011, in order for the taxpayer

Act on the Farmland Preservation Tax Credit (Form C-8022).

to remain taxable under the MBT and claim certificated

• Trusts, except as noted below.

credits. If a taxpayer properly made this election with either

a certificated farmland preservation agreement or another

The following should file using the MI-1040CR-5:

certificated credit, the taxpayer may be able to claim a new

• Individuals who own a farm independently.

farmland preservation agreement as well. New agreements

• Representatives

must be approved by the local government by November 1,

deceased

individuals

who

were

2014, to claim a 2014 credit. However, the FDRA is not final

unmarried at time of death. Include property taxes and income

until a copy that has been recorded at the Register of Deeds is

from January 1 to the date of death.

Form 4594 - Michigan Farmland Preservation Tax Credit - 2014 Page 3

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