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group Form 4575. The groupwide Form 4575 will calculate loss

Name and Account Number: Enter name and account number

available from the UBG’s prior tax years as well as organize

as reported on page 1 of the MBT Annual Return (Form 4567).

the members’ available loss that may be used against this

UBGs: Complete one form for each member for whom this

disqualifier. These member amounts are calculated initially

schedule applies. Enter the DM’s name in the Taxpayer Name

at the member level but used and maintained for use in future

field and the member to whom the schedule applies on the

years on the Group Copy for ABI.

line below. For the form that determines the UBG’s ABI

In the Taxpayer Name field at the top of the page, enter the

loss adjustment, enter the DM’s name and FEIN in the first

identification line, and “GROUP COPY FOR ABI” and no

Designated Member’s (DM’s) name followed by the DM’s

Federal Employer Identification Number (FEIN) or Michigan

FEIN in the second identification line.

Department of Treasury (TR) assigned number. In the Unitary

Part 1: Current Year Amounts

Business Groups Only field, enter “GROUP COPY FOR ABI,”

and leave FEIN or TR Number field blank. On this group copy

Use Part 1 to determine the amount of loss adjustment

of Form 4575, enter groupwide data for lines 1 through 3.

necessary to qualify for the SBAC.

Leave lines 4 through 9 blank. Complete lines 10 through 16

If the taxpayer is not eligible for the credit because the ABI

following line-specific instructions.

exceeds $1,426,100 ($180,000 for individuals), complete lines 1

To reduce the UBG’s ABI disqualifier, the group will use its

through 3.

available loss from a prior tax period when the UBG received

If the taxpayer is not eligible because a shareholder’s

the SBAC, as well as a member’s available loss from a tax

allocated income exceeds $180,000, or a partner’s distributive

year when it received the SBAC and was not part of the UBG

income exceeds $180,000, complete lines 4 through 9 for the

(member’s separate year). However, the group may not use

shareholder(s) or partner(s) creating the disqualifier. The loss

a member’s separately calculated available loss for a tax year

adjustment required is the largest amount needed to eliminate

when the member was part of the UBG to reduce the group’s

all allocated income disqualifiers.

ABI disqualifier.

Partnerships: Form 4575 is formatted for Corporations. To use

To reduce the UBG’s ABI disqualifier, available loss is used

on a first-in, first-out basis until those losses are extinguished.

it for a Partnership, make these changes:

For the purposes of completing Part 2, if a member’s separate

Enter on line 6 any guaranteed payments made to the partner

creating a $180,000 disqualifier.

year does not share a common year end with the UBG, use a

separate column for that member. If some members’ separate

On line 8, divide by the percentage of ownership from column

years share a common year end, total the amount of those

C of the MBT Schedule of Partners (Form 4578).

members’ available loss in a single column. Arrange all of

the columns in chronological order. If additional columns are

NOTE: A member of a Limited Liability Company (LLC) is

needed to accommodate the five preceding periods, create and

characterized for MBT purposes as a partner, shareholder,

attach a table comparable to that found in lines 10 through 16.

or owner, based on the federal characterization of the LLC.

Apply to that custom table the calculations described in the

An LLC taxed as a Partnership for federal purposes must file

form text and instructions for lines 10 through 16.

as a Partnership for MBT. Similarly, an LLC taxed as a C

Corporation or S Corporation for federal purposes must file

Lines 14 through 16 on the Group Copy for ABI will reflect

the usage of loss adjustment to resolve the ABI disqualifier

under that same status for MBT.

and the maintenance of loss adjustment available for future

NOTE: In general, a federally disregarded entity is required to

years (within the five year statutory period). Loss adjustment

file as if it were a sole proprietorship if owned by an individual,

used for the ABI disqualifier is not recorded on the member

or a branch or division if owned by another business entity.

copy of Form 4575. However, loss adjustment used for the ABI

disqualifier from a member’s separately filed years should be

Reduced SBAC: A reduction of the SBAC is required if

an Individual, a partner in a Partnership, a shareholder of

tracked in the taxpayer’s records. Any ABI loss adjustment

a Corporation, or an officer of a C Corporation has allocated

remaining from a member’s separately filed years will be

income after loss adjustment of more than $160,000. This

available to that member in the event the member leaves the

reduction is based on the Individual/partner/officer/shareholder

UBG prior to complete usage of the loss adjustment available

with the largest allocated income.

by the UBG. See the “Supplemental Instructions for Standard

Members in UBGs” section in the MBT Forms and Instructions

Complete lines 4 through 9 for the shareholder or partner

for Standard Taxpayers (Form 4600) for details.

creating the need to reduce the SBAC.

NOTE: If the UBG still has a disqualification on this basis

Form 4575 should always be calculated initially using $160,000

(greater than $1,426,100) after completing the group’s Form

on line 5. This calculation will establish taxpayer eligibility

4575 as described above, the UBG is disqualified from the

without the need to reduce the SBAC. However, if the total

SBAC. Do not proceed with these instructions.

loss available for the current year on line 13 does not equal or

exceed the loss adjustment required on line 9, the taxpayer may

Line-by-Line Instructions

still calculate a lesser loss adjustment to claim a reduced credit.

Lines not listed are explained on the form.

Try the calculation more than once. Substitute the numbers

Dates must be entered in MM-DD-YYYY format.

shown on the chart in the instructions for line 5, in order to

Form 4575 - Michigan Business Tax Loss Adjustment For The Small Business Alternative Credit - 2014 Page 4

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