Michigan Tax Amnesty And Tax Returns Guide And Instructons (Page 18 of 41) in pdf

INSTRUCTIONS FOR LOSS ADJUSTMENT WORKSHEET

Purpose: To adjust your adjusted business income to

you may still calculate a lesser loss adjustment to enable

qualify for the small business credit or minimize the

you to claim a reduced credit.

reduction percentage required.

You may have to try the calculation more than once.

If your adjusted business income was less than zero in

Substitute the numbers shown on the chart below on line

any of the five years immediately preceding the tax year

5 in order to maximize your claimed small business

for which you are claiming a credit, and you received a

credit:

small business credit for that same year, you may adjust

Line 5

Eligible % of credit

for the loss before you figure your eligibility for the

100% - no reduction

$ 95,000

small business credit. A loss adjustment will not affect a

80%

$ 99,999

reduction to the small business credit based on gross

60%

$104,999

receipts that exceed 9 million. It will also not change the

40%

$109,999

amount of allocated income on C-8000KC, Column K for

$115,000

20%

a C-corporation.

Part 1: Current Year Amounts

The SBT loss adjustment worksheet is structured for

Use this part to determine the amount of loss adjustment

corporations. To use it for a partnership or member of a

controlled group, make these changes.

necessary to qualify for the small business credit.

Partnerships. Enter on line 6 any guaranteed payments

If you are not eligible for the credit because your

made to the partner creating a $115,000 disqualfier. On

adjusted business income exceeds $475,000, complete

line 8, divide by the percentage of ownership from the

lines 1 through 3.

C-8000KP, col. D.

Controlled Groups. A member of a controlled group may

If you are not eligibile because you have a shareholder

use this form for the shareholder compensation disqualifier

whose allocated income exceeds $115,000 or a partner

(lines 4 through 9). The adjustment must come from the

with distributive income that exceeds $115,000, complete

same company. The business income disqualifier must be

lines 4 through 9 for the shareholder or partner creating

calculated on a consolidated basis. Substitute consolidated

the disqualifier.

figures for lines 1- 3 and lines 10 - 15.

Note: For the purpose of computing the small business

Part 2: Available Loss

credit, a member of an LLC is treated as a partner if the

LLC is taxed as a partnership.

Use this section to determine the loss available from the

five preceding years.

You may have to calculate both if you have more than

one disqualifier. Complete lines 4 through 9 for each

Line 10. Enter ‘Y’ under each year that a small business

shareholder or partner who creates a disqualifier. The

credit was received.

loss adjustment required is the largest amount needed to

Line 11. Enter the adjusted business income from

eliminate all disqualifiers.

C-8000C, line 9 for each tax year that reported a loss.

Reduced small business credit. A reduction of the

Report the loss in brackets.

small business credit is required if an individual, a

Lines 12 - 15. Continue to fill out each year’s column

partner in a partnership or shareholder or officer of a

only if you entered a Y on line 10 and the adjusted

corporation has allocated income after loss adjustment of

business income reported on line 11 was a loss.

more than $95,000. This reduction is based on the

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

individual/partner/officer/shareholder with the largest

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

allocated income.

exceed the loss adjustment required on line 14.

Complete lines 4 through 9 for the shareholder or partner

creating the need to reduce the small business credit.

The loss adjustment worksheet should always be

calculated initally using $95,000 on line 5. This

calculation will establish your eligibility without the need

to reduce the small business credit. However, if the total

loss available for the current year on line 13 does not

equal or exceed the loss adjustment required on line 9,

Michigan Tax Amnesty And Tax Returns Guide And Instructons Page 18

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