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a UBG, but the foreign operating entity is excluded from the

Line 1: Enter the Michigan sales that are directly attributable

UBG by definition. The U.S. parent filing a UBG return may

to the taxpayer.

not eliminate intercompany transactions between itself and the

Transportation services that source sales based on revenue

foreign operating entity.

miles: Enter on this line the taxpayer’s total sales multiplied

by the ratio of Michigan revenue miles over revenue miles

Additions to Business Income

everywhere as provided in the “Sourcing of Sales to Michigan”

Line 11: Enter any interest income and dividends from

chart for that type of transportation service. Revenue mile

bonds and similar obligations or securities of states other than

means the transportation for consideration of one net ton in

Michigan and their political subdivisions in the same amount

weight or one passenger the distance of one mile.

that was excluded from federal taxable income (as defined for

UBGs: Enter on this line the entire amount of Michigan sales

CIT purposes). Reduce this addition by any expenses related to

of all members in the group after eliminations. For more

the foregoing income that were disallowed on the federal return

by IRC § 265 and § 291.

information see the instructions for Data for Unitary Business

Group Members (Form 4897).

Line 12: Enter all taxes on, or measured by, net income

including city and state taxes, Foreign Income Tax, and Federal

Line 2: Enter the total sales that are directly attributable to the

Environmental Tax claimed as a deduction on the taxpayer’s

taxpayer.

federal return. This would include the tax imposed under the

Transportation services that source sales based on revenue

CIT to the extent claimed as a deduction on the taxpayer’s

miles: Enter on this line the total sales that are directly

federal return. This would also include the tax imposed under

attributable to the taxpayer.

the Business Income Tax portion of the Michigan Business Tax.

UBGs: Enter on this line the entire amount of total sales of all

Line 13: Enter any net operating loss carryback or carryover

members in the group after eliminations. For more information

that was deducted in arriving at federal taxable income (as

see the instructions for Data on Unitary Business Group

defined for CIT purposes). Enter this amount as a positive

Members (Form 4897).

number.

Line 14: Enter, to the extent deducted in arriving at federal

PArT 2: BuSINeSS INCoMe

taxable income (as defined for CIT purposes), any royalty,

Line 4: Non-C Corporations enter this line as business income.

interest, or other expense paid to a person related to the

Business income includes payments and items of income and

taxpayer by ownership or control for the use of an intangible

expense attributable to the business activity of the Non-C

asset if the person is not included in the taxpayer’s UBG.

Corporation (Partnership or S Corporation) and separately

Royalty, interest, or other expense described here is not

reported to the members.

required to be included if the taxpayer can demonstrate that

Line 6: There currently are no miscellaneous items to be entered

the transaction has a nontax business purpose other than

on this line. Leave this line blank.

avoidance of this tax, is conducted with arm’s-length pricing

and rates and terms as applied in accordance with IRC § 482

Line 9: For UBGs only: Enter the group’s total eliminations

and § 1274(d), and satisfies one of the following:

from federal taxable income.

• Is a pass through of another transaction between a third

NOTE: Elimination, where required, applies to transactions

party and the related person with comparable rates and terms.

between any members of the UBG supported by this form.

• Results in double taxation. For this purpose, double taxation

For example, if the UBG includes standard taxpayers (not

owned by and unitary with a financial institution in the

exists if the transaction is subject to tax in another jurisdiction.

UBG), an insurance company, and a financial institution with

• Is unreasonable as determined by the Treasurer, and the

nexus, transactions between a standard taxpayer member and

taxpayer agrees that the addition would be unreasonable based

an insurance or financial member are eliminated whenever

on the taxpayer’s facts and circumstances.

elimination is required, despite the fact that the insurance and

• The related person (recipient of the transaction) is organized

financial members are not reported on the combined return filed

under the laws of a foreign nation which has in force a

by standard taxpayer members. If a transaction between two

comprehensive income tax treaty with the United States.

members of a UBG is reported on the group’s current return

Line 15: There currently are no additions required that are

by one member but reported on the preceding or succeeding

recorded on this line. Leave this line blank.

group return by the other member (due to differing year ends or

accounting methods of the members), the side of that transaction

Subtractions from Business Income

that is included in the group’s current filing period must be

eliminated. The other side of the same transaction will be

Subtractions are generally available to the extent included in

eliminated on the group return for the filing period in which the

arriving at FTI (as defined for CIT purposes).

other member reports the transaction.

Line 18: Enter the distributive share of flow-through income

However, there is no elimination with an otherwise related entity

that is included in the taxpayer’s federal taxable income that

if the related entity is excluded from the UBG. For example,

is received from a flow-through entity that is not member

consider a group with a U.S. parent, a U.S. subsidiary, and a

of a UBG with the taxpayer. Flow-through entities include

foreign operating entity subsidiary that would otherwise be

Partnerships and S Corporations as well as limited liability

Form 4946 - Michigan Schedule Of Corporate Income Tax Liability For A Michigan Business Tax Filer - 2012 Page 4

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