Instructions For Form Mi-1040cr-5 - Michigan Farmland Preservation Tax Credit - 2011 Page 5
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16Land Owned With
Claiming a Credit on a Farm
Someone Other Than a Spouse
Purchased in 2011 That Was
Already Enrolled in the Farmland Program
Taxes on land owned jointly are allocated to each owner.
If co-owners divide each item of revenue and expenses and
Your farmland credit will be processed only if there is a
choose to allocate the property taxes that same way, they
farmland agreement on file with the MDA in the same
may do so only if they attach a copy of a statement signed
name as your deed. You must prorate the 2011 taxes for
by each owner. The statement must show each owner’s
the period you owned the land and claim your credit based
share of the revenues and expenses. This requirement can
only on those taxes.
be met by completing Part 2 of MI-1040CR-5. If a signed
Filed for Bankruptcy
income distribution statement is not attached, the taxes
must be allocated equally among the owners, with two
If you are enrolled in the Farmland and Open Space
exceptions:
Preservation Act program and have petitioned for
bankruptcy (under U.S. Bankruptcy Code, chapters 7, 11,
• A husband and wife are considered one owner.
12, or 13), claim your credit on MI-1040CR-5 and attach it
• An owner eligible to be claimed as a dependent by
to your Michigan income tax return.
another owner cannot receive a share of the taxes and
You must prorate your credit for the part of the year ending
cannot claim a credit for that farmland.
when the petition in bankruptcy was filed. The trustee in
Land Owned by a Limited Liability Company
bankruptcy or the landowner as Debtor in Possession may
file a claim for the portion of the year following the date
Property taxes on land owned by a limited liability
of petition. Bankruptcy estates are also required to file a
company are allocated to each member in a percentage
Fiduciary Income Tax Return (MI-1041).
equal to the member’s share of ownership or distributive
share of ordinary income as reported by the limited
Transferring an Agreement
liability company to the Internal Revenue Service (IRS).
To transfer an agreement, you must show that all of the
Land Owned by an S Corporation or Trust
land described under the agreement has been conveyed.
The MDA will need a copy of the legal document
Beginning with credits for 1988, taxes on land owned by
(e.g., deed, land contract) used for conveyance and the new
an S corporation are allocated to each shareholder based
owner’s name, address, Social Security number, and a fee
on the shareholder’s share of the corporation’s stock.
of $25 per transfer.
This percentage is on U.S. Form 1120S, Schedule K-1.
Exception: If the S corporation had an FDRA before
For more information on the Farmland Preservation
1989, and in 1991 elected to file under the SBT Act on
Agreement contact:
C-8022, the S corporation must continue to file under the
Farmland and Open Space Preservation Unit
Michigan Business Tax (MBT). If the FDRA was not in
Environmental Stewardship Division
the S corporation’s name before January 1, 1989, the taxes
Michigan Department of Agriculture
on land covered by this agreement must be claimed on the
P.O. Box 30449
shareholders’ Michigan income tax using MI-1040CR-5.
Lansing, Michigan 48909
These taxes must be claimed by the shareholders even
if the S corporation elected to file C-8022 for other
agreements that the S corporation entered into before
January 1, 1989.
For farmland owned by a grantor trust, if you are treated
as the owner of that trust under IRC sections 671 through
679, you must include a copy of that portion of the trust
agreement that shows you are the owner of a grantor trust
holding title to the farmland.
If the trust was created by the death of a spouse and
requires 100 percent of the income to be distributed to the
surviving spouse, you must attach a copy of U.S. Form
1041 and Schedule K-1, if required.
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