Form 4571 - Michigan Business Tax Common Credits For Small Businesses

Annualizing

UBGs: Complete one form for the group. Enter the Designated

Member (DM) name in the Name field and the DM account

Multiply each applicable amount, total gross receipts, adjusted

number in the Federal Employer Identification Number (FEIN)

business income, and shareholder, officer, and partner income by

or TR Number field.

12 and divide the result by the number of months the business

operated. Generally, a business is considered in business for one

PART 1: SMALL BUSINESS ALTERNATIVE CREDIT

month if the business operated for more than half the days of the

Skip to Part 2 of this form if not claiming a Small Business

month. If the tax year is less than one month, consider the tax

Alternative Credit.

year to be one month for the purposes of the calculation.

Business income is adjusted by federal net operating loss

Loss Adjustment

carryover or carryback from Form 4567, line 32. It is

If taxpayers are not eligible for the full Small Business

also adjusted by compensation and director fees of active

shareholders and officers from Form 4577 and by capital losses.

Alternative Credit due to an adjusted business income or

allocated income disqualifier, they may benefit from the MBT

Loss Adjustment for the Small Business Alternative Credit

Adjusted Business Income

(Form 4575). If the adjusted business income was less than

Line 2: Enter business income from Form 4567, line 28. If not

zero in any of the five years immediately preceding the tax year

subject to Business Income Tax, enter business income from

the Business Income Worksheet (Worksheet 4746) in Form

for which a taxpayer is claiming a credit and an MBT Small

Business Alternative Credit was received for that same year,

4600. Attach this worksheet to the return.

the taxpayer may be able to reduce the current year’s adjusted

UBGs: Enter the business income before eliminations from

business income or allocated income amounts by the loss. See

Form 4580, Part 2B, line 30A.

Form 4575 for more details.

Line 3: Enter all capital losses that were used federally to offset

capital gain. This is not the net figure found on the Schedule D

A loss adjustment will not prevent a reduction to the Small

lines identified below. It is the amount of capital losses that were

Business Alternative Credit based on gross receipts that

used in reaching the net figure on the federal return lines. If

exceed $19,000,000. It will also not change the amount of

filing a U.S. Form 1040 or 1041, include the capital loss amount

compensation on Form 4577, column L, for a C Corporation.

that the Individual or Fiduciary was able to use against the

Special Instructions for UBGs

capital gain and the capital loss amount that the Individual or

Fiduciary was permitted to deduct from ordinary income ($3,000

UBGs calculate the gross receipts and adjusted business income

disqualifiers at the UBG level without eliminating intercompany

or less). Use both long-term and short-term capital losses here.

transactions. For a UBG to claim a small business alternative

Include the capital losses used in calculating the net figure

credit, each member of the UBG that is a corporation (including

using “Net short-term capital gain or (loss)” and “Net long-

an entity taxed federally as such) must file Form 4577. Each

term capital gain or (loss)” from Schedule D of federal Forms

member of the UBG that is a partnership (including an entity

1040, 1041, 1065, 1120 and 1120S as applicable.

taxed federally as such) must file Form 4578. The disqualifier

UBGs: Combine all capital losses for all members and enter on

that is based on allocated or distributive share of income is

line 3.

applied on a separate entity basis using a pro forma calculation

for business income and is not a combined amount received from

Line 6 and line 7: Fiscal Year Filers: See “Supplemental

all members of a UBG. See the “Supplemental Instructions for

Instructions for Standard Fiscal MBT Filers” in Form 4600.

Standard Members in UBGs” section in Form 4600.

Small Business Alternative Credit Calculation

A disqualifier applies to a UBG if such disqualifier applies to

Line 11: The Small Business Alternative Credit is reduced

any member of that UBG. For example, a UBG is disqualified

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

from taking the Small Business Alternative Credit if that UBG

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

includes a member that is a Partnership and any one partner of

income (or distributive share of income, for a partner) after

that Partnership receives more than $180,000 as a distributive

loss adjustment of more than $160,000. This reduction is based

share of the adjusted business income minus loss adjustment of

on the individual/partner/officer/shareholder with the largest

the Partnership.

allocated or distributive share of income. Enter the allocated

income of the shareholder or officer with the highest allocated

Similarly, the reduction percentages apply to a taxpayer that

is a UBG if such reduction percentages apply to any member

income after loss adjustment or the highest distributive share of

income assigned to a partner or individual, even if that figure is

of that UBG. For example, the Small Business Alternative

Credit of a taxpayer is reduced by 20 percent if the taxpayer is

$160,000 or less.

a UBG that includes a member that is a C Corporation, and the

If loss adjustment is successfully applied to fully or partially

compensation and director fees of an officer of that member C

cure an owner’s allocated or distributive income disqualifier,

Corporation exceed $160,000, but are less than $165,000.

enter on line 11 the number from Form 4575, line 5.

Line 12: For a taxpayer whose owners or officers all have

Line-by-Line Instructions

allocated or distributive share of income after loss adjustment

Lines not listed are explained on the form.

of $160,000 or less, enter 100 percent. All other taxpayers, see

the table at the bottom of page 2 of this form to determine what

Name and Account Number: Enter name and account number

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

percent to enter on this line.

Form 4571 - Michigan Business Tax Common Credits For Small Businesses - 2014 Page 4

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