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maximize the claimed SBAC. If a negative number is reached

Line 11: Enter (as a positive number) the negative ABI from

on line 7, a greater disqualifier amount is needed from the

Form 4571, line 8, for tax years where an SBAC was received.

disqualifier chart here on line 5.

UBGs: When completing a member’s form, this line is

calculated using member specific (pro forma) data. Note,

Tax Year Less Than 12 Months: Business income and

shareholder disqualifiers must be calculated on an annualized

however, the member cannot enter an ABI amount for a tax

year that it was part of the UBG and the UBG did not receive

basis. Enter annualized numbers on lines 1, 4, and 6. Part-year

shareholders also must annualize compensation and report that

the SBAC. The member may, however, enter an ABI amount

figure on line 6.

for a tax year that it was not a member of the UBG and it

received the SBAC, regardless of whether the UBG received

Annualizing

the credit in that same year.

To annualize, multiply each applicable amount, ABI, or

When completing the Group Copy for ABI, enter the sum of the

shareholder compensation, by 12 and divide the result by the

following: 1) UBG’s negative ABI for tax years it received the

number of months the business operated. Generally, a business

SBAC, plus, 2) a member’s negative ABI for a tax year when it

is considered in business for one month if the business operated

received the SBAC and was not part of the UBG. These member

for more than half the days of the month.

amounts are calculated initially at the member level but used and

NOTE: If the business was in operation for less than a month it

maintained for use in future years on the Group Copy for ABI.

is considered to have been in business for 1 month.

Line 12: Enter the amount of loss entered on line 11 that was

UBGs: For UBG members reporting a period of less than 12

used as an adjustment in a prior period.

months with the group return, annualization is done using the

UBGs: When completing the Group Copy for ABI, if a

member’s number of months in the group’s tax year. Sum the

member’s negative ABI was included on Line 11 (the member

annualized member figures (when applicable) to get the group’s

received a credit and was not part of the UBG in the tax year

total annualized figure.

the credit was received), include any loss adjustment used by

Line 4: UBGs: When calculating the amount of loss

that member in a prior period to offset an ABI disqualifier.

adjustment needed to reduce a member’s shareholder income

Also enter any groupwide loss used against the UBG’s ABI

disqualifier, the member should calculate a pro forma of the

disqualifier in a prior period.

MBT Common Credits for Small Businesses (Form 4571) for

Line 13: Subtract line 12 from line 11 to arrive at loss available

the purpose of completing this line.

on the current return. If less than zero, enter zero; no loss is

Line 5: Form 4575 should always be calculated initially using

available.

$160,000. This calculation will establish taxpayer eligibility

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

UBGs: On the Group Copy for ABI, if the group’s membership

has not changed, that is, no member has joined or left the

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

group since the filing of the prior year’s return, the amounts

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

calculated on line 13 should equal the amounts on line 16 of

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

the prior year’s corresponding columns. If membership for this

year is different, these amounts may not be the same. See the

Line 5

Eligible % of Credit

“Supplemental Instructions for Standard Members in UBGs”

$ 160,000

100% - no reduction

section in Form 4600 for details.

$164,999

80%

$169,999

Line 14: Enter the amount from line 3 or line 9, whichever

60%

is larger, in the first column where a loss is available on line

$174,999

40%

13. In subsequent columns, enter amount from line 15 of the

$180,000

20%

previous applicable column.

Line 7: If a negative number is reached, some reduction of

UBGs: When completing a member’s form for the purpose of

credit is necessary. Return to line 5 and enter the higher

reducing the shareholder income disqualifier, enter the amount

disqualifier amount from the chart. Continue this process

from line 9.

until line 7 is greater than or equal to zero. This calculation

When completing the Group Copy for ABI, enter the amount

establishes the maximum allowable SBAC.

from line 3.

Part 2: Available Loss

Line 15: If line 14 is larger than line 13, subtract line 13 from

Use Part 2 to determine the loss available from the five preceding

line 14. Enter here and on line 14 of the next column where a

periods. Do not enter a negative sign in front of the loss amount.

loss is available on line 13.

Complete lines 10 through 16 one column at a time. For lines

Line 16: If line 13 is larger than line 14, subtract line 14 from

11 through 16, complete only columns for periods that reported

line 13. This amount is available to use in subsequent periods.

a loss and received an SBAC.

NOTE: To benefit from a loss adjustment, the total loss

Line 10: Enter each tax year end date for periods where loss

available for the current year, line 13, must equal or exceed the

occurred. Begin with the earliest year in the left column.

loss adjustment required on line 14.

Form 4575 - Michigan Business Tax Loss Adjustment For The Small Business Alternative Credit - 2014 Page 5

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