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Michigan Business Tax

	NOTICE: The MBT was amended by 145 PA 2007 on December 1, 2007. Act 145 imposes an annual surcharge to taxpayers' MBT liability, as well as makes other changes. Due to PA 145, some of the FAQs have been rescinded and revised answers have been issued. See below for a list of the rescinded answers.

	View FAQs in Chronological Order View FAQs in a Printer Friendly Version. View Rescinded FAQs

	Important Note: These responses are for informational purposes only and are not to be interpreted as official statements of the Michigan Department of Treasury. These responses are not to be construed as promulgated rules, bulletins or rulings of the Department and are subject to revision pursuant to the effect of legislation, court decisions, regulations and official statements of the Department. Additional questions are currently being reviewed by staff and will be posted to this page, as they are finalized. Please check back often. To submit your general question to Treasury for review, please email us at treasMBT@michigan.gov.


Administrative

	A1. (Answer rescinded, replaced by A22) Will taxpayers need to calculate the business income and modified gross receipts separately and pay 85% of each to meet the estimated tax payment safe harbor provision to avoid penalty and interest?

	A2. When does the MBT take effect?

	A3. Who must file MBT quarterly estimates?

	A4. When are MBT quarterly estimates due?

	A5. (Answer rescinded, replaced by A23) How are quarterly estimates calculated?

	A6. When are MBT Annual Returns due?

	A7. How can I get an extension of time to file an MBT Annual Return?

	A8. How is the tax computed if my first taxable year is less than 12 months?

	A9. If I'm registered for the SBT what do I need to do to register for the MBT?

	A10. When will forms be available for the Michigan Business Tax?

	A11. How does a Fiscal Year taxpayer file returns for their tax year ending in 2008?

	A12. Will there be E services with MBT?

	A13. (Answer rescinded, replaced by A24) Will a safe harbor be allowed for 2008 estimates based on the 2007 SBT return?

	A14. Will the business income tax and modified gross receipts tax be filed on a single return or on separate returns?

	A15. May a taxpayer make estimated MBT payments on Form 160, the Combined Return for Michigan Taxes, and if so, how will the different due dates be reconciled?

	A16. Will SBT overpayments be applied to MBT?

	A17. Will an estimated return be due for a taxpayer with a short taxable year of less than four months under the MBT?

	A18. What is the filing threshold under the Michigan Business Tax Act (MBTA)?

	A19. When are the first and second estimated MBT payments due for a fiscal year filer with an April 30, 2008 year end?

	A20. Can a fiscal year filer request an extension for the first MBT return?

	A21. (Answer rescinded, replaced by A25) How does a taxpayer with a fiscal year end calculate tax under the MBT for estimate purposes?

	A22. Will taxpayers need to calculate the business income, modified gross receipts, and surcharge separately and pay 85% of each to meet the estimated tax payment safe harbor provision in order to avoid interest?

	A23. How are quarterly estimates calculated?

	A24. Will a safe harbor be allowed for 2008 estimates based on the 2007 SBT return?

	A25. How does a taxpayer with a fiscal year end calculate tax under the MBT for estimate purposes?

	A26. (Answer rescinded, replaced by A30) Will a taxpayer be required to make a payment with an extension request or is the listing of estimated payments made going to be accepted as it is in the Single Business Tax?

	A27. Does the $350,000 filing threshold apply to just the gross receipts tax or to both the gross receipts and business income taxes?

	A28. The SBT has a Notice of No Return, Form C-8030 to be filed by taxpayers who were not required to file. Will there be a similar MBT form?

	A29. How must a fiscal year taxpayer calculate quarterly estimated payments if one quarter straddles the period in which the SBT ends and the MBT begins? Must a fiscal year taxpayer pay its final SBT quarterly estimated payment or can the taxpayer pay all remaining liability on its final SBT return?

	A30. Will a taxpayer be required to make a payment with an extension request or is the listing of estimated payments made going to be accepted as it is in the Single Business Tax?

	A31. When is the final short period Single Business Tax (SBT) return due for a fiscal year taxpayer? If the taxpayer chooses the annual method for calculating the final SBT liability, how does it file timely for the fiscal year that is required to close on December 31, 2007 for SBT reporting purposes?

	A32. Will Voluntary Disclosure continue with the Michigan Business Tax?


Apportionment

	Ap1. Under Chapter 3 of the MBT, if the business activities of a taxpayer are subject to tax within and without the state, each tax base must be apportioned based on the formula of sales in Michigan over sales everywhere. For purposes of apportionment, "sale" is defined in part as: [t]he transfer of title to, or possession of, property that is stock in trade or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the tax period or property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business. [MCL 208.1115(1).] Is the occasional sale of assets by a taxpayer a "sale" for apportionment purposes?

	Ap2. How are gross receipts, rents etc. received from real property apportioned?

	Ap3. Does the Michigan Business Tax Act (MBTA) provide for "throw back sales"?

	Ap4. What is the location of investment partnerships? Is it based on the residence of the general partner, the location of the brokerage firm, the residences of the majority of partners, or where the partnership was formed?

	Ap5. Under MCL 208.1115, "sales" means "[f]or taxpayers not engaged in any other business activities, sales include interest, dividends, and other income from investment assets and activities and from trading assets and activities." Does this definition include the investment income of individuals?


Business Income Tax

	B1. Will shareholders of S corporations and partners in partnerships be liable for Michigan individual income tax on their share of flow-through income from entities subject to MBT? Does it matter whether the shareholders or partners are residents or nonresidents?

	B2. Under MCL 208.1201, the business income tax base means the business income of the taxpayer subject to certain adjustments, including a deduction for net earnings from self-employment. Specifically, the section instructs "[t]o the extent included in federal taxable income, deduct any earnings that are net earnings from self-employment as defined under section 1402 of the [IRC] of the taxpayer or a partner or limited liability company member of the taxpayer except to the extent that those net earnings represent a reasonable return on capital." MCL 208.1201(2)(h). What impact does this deduction have on the business income tax base of professional service partnerships (for example, some consulting, law, and accounting firms)?

	B3. Corporations, Limited Liability Companies (LLCs), and Partnerships will be able to fully deduct amounts paid out as compensation to employees, as well as a 100% deduction for distributions that are subject to self employment income tax. Are S corporations treated in the same manner as partnerships and corporations in this regard? Can you clarify the treatment of S corporation distributions?

	B4. Are capital gains that are included in the Modified Gross Receipts tax base also included in the Business Income tax base?

	B5. Is the deduction provided under MCL 208.1201(2)(i) altered by the MBT surcharge?

	B6. Does the deduction provided under MCL 208.1201(2)(i) reduce the MBT surcharge imposed under MCL 208.1281(1)?

	B7. Are system software royalties, excluded from the determination of tax liability under the Single Business Tax Act ("SBTA") (see MCL 208.9(4)(g)(viii) and (7)(c)(vii)), likewise excluded from the determination of tax liability under the Michigan Business Tax Act (?MBTA")?

	B8. Do the business income tax and modified gross receipts tax components of the MBT apply to individuals, estates, and trusts or family limited partnerships (FLIP)s that are specifically established for estate planning purposes, on income from investments, such as capital gains, interest, dividends, or other sources of personal income?

	B9. If an individual owns 100% of an S corporation law practice with gross receipts of $500,000, net income of $100,000 after wages of $250,000, and also has the following income not related to the S corporation or any other trade or business: dividends - $100,000, interest $250,000, capital gain $750,000, and pension of $100,000. Is he liable for the MBT taxes on a combined basis as an individual and owner of a S corporation?

	B10. If a business or unitary group taxpayer has a negative business income tax base, is the 4.95% tax rate applied to the negative business income base, with the result then netted against a positive modified gross receipts tax to determine Michigan Business Tax (?MBT") liability?

	B11. If a Michigan LLC has a nonresident corporate partner, does that partner file an MBT return and report and pay tax on it's share of LLC income at the same 4.95% [rate]?

	B12. Under the MBT, will there be a depreciation deduction, or will Michigan conform to federal depreciation rules?

	B13. For purposes of applying section 201(2)(f)(ii) of the MBTA, does the phrase "subject to tax in another jurisdiction" refer only to taxation by another state, or does it also include taxation by a foreign country?

	B14. Is interest and dividend income included in business income under the Michigan Business Tax (MBT)?

	B15. Does the sale by an individual of a direct investment in a corporation, partnership or LLC that is not traded on a public exchange constitute "personal investment activity" such that the income and proceeds from such a sale are excluded from business income and gross receipts? Similarly, is the distributive share of a partnership to a partner that is an individual business income or gross receipts to that individual?

	B16. Public Act 145 of 2007 amended the MBT to exclude certain personal investment activities from business income and gross receipts. Which taxpayers may exclude personal investment activity from business income and gross receipts? What about family limited partnerships that demonstrate a business purpose for federal purposes yet are intended to generate valuation discounts for gift and estate tax purposes? What about an investment club organized as a partnership?

	B17. Limited liability companies are included in the definition of "person" under the MBT. Assuming that the federal "check the box" rules are followed, does the business income adjustment set forth at section 201(2)(e), which requires a taxpayer to add the loss or subtract the income attributable to "another entity," apply to the income or loss of a disregarded limited liability company?

	B18. May taxpayers, including corporations and partnerships, take the IRC 199 deduction for MBT purposes?

	B19. What is the definition of intangible asset as used in computing the business income tax base?

	B20. Our company adds a handling charge to all customer invoices. Is this handling charge taxable under the MBT?

	B21. A real estate limited partnership owns an apartment project in Michigan. The partnership is in the process of selling the apartment project to avoid foreclosure. The apartment project is the partnership's only asset and the partnership will be dissolved shortly after the sale. As a result of the sale, the partnership will have a capital gain of approximately $6.3 million, and, in addition, will have debt forgiven of approximately $2.6 million. The debt being forgiven is a seller note and accrued interest that was executed in favor of the previous owner of the project. The potential buyer has agreed to pay a portion of the seller note and interest, and the former owner has agreed to forgive the balance of the debt. For federal tax purposes, their cancellation of debt ("COD") income is a pass through item and the ultimate taxability is determined at the partner level instead of the partnership level. The partnership will be liable for both the modified gross receipts (MGR) and business income tax portions of the MBT on the rental income of the partnership. Will the partnership COD income and capital gain that are passed through to the partners be subject to MBT?

	B22. How is a like-kind exchange treated under the MBT?

	B23. Is an individual person who earns more than $350,000 in interest and dividends for the tax year subject to the MBT? Are the person's capital gains from sales of stock subject to the MBT?

	B24. Is the sale of stock by a stockholder in a closely held corporation back to the corporation or another stockholder subject to MBT?

	B25. I am a 100% shareholder of a corporation that does business in Michigan. I am a nonresident of Michigan. The corporation is organized as a C corporation. I sell 100% of the stock of the corporation which results in a capital gain. Is the capital gain from the sale of the stock subject to the new MBT?

	B26. Does the deduction for net earnings from self employment exempt self-employed individuals from taxation under the MBT?

	B27. Under the Michigan Business Tax Act (MBTA) will a taxpayer receive a deduction for the modified gross receipts tax paid when calculating the business income tax base?

	B28. Is the gain recognized on the one time sale of business assets and goodwill by an entity to another entity taxed under the Michigan Business Tax (MBT)?

	B29. We manufacture customized tooling systems, which we then sell to our customer. After the sale, although the customer owns the tooling, it physically remains at our plant, and we use the tooling to manufacture the customer's product. Are these sales of tooling taxable under the Michigan Business Tax Act (MBTA)?

	B30. How are accounts receivable factoring companies treated for purposes of the Michigan Business Tax Act (MBTA)?


Credits

	C1. Does the Michigan Business Tax Act contain a Renaissance Zone Credit?

	C2. How does a Professional Employer Organization, as defined by MCL 208.1113(4), determine compensation for the small business credit disqualifier in accordance with MCL 208.1417(8)?

	C3. How are the adjusted business income and compensation disqualifiers of the small business credit, found in MCL 208.1417, computed for PEOs and their clients?

	C4. Is a Professional Employer Organization, as defined by MCL 208.1113(4), entitled to the Compensation Credit of MCL 208.1403?

	C5. How is the alternate credit under MCL 208.1417 used by a unitary business group? How do the disqualifiers and percentage reducers work?

	C6. (Answer rescinded, replaced by C21) What is the compensation credit?

	C7. Do Historic Rehabilitation and Brownfield credits, approved under the Single Business Tax Act, carryover and can they be used against Michigan Business Tax liability?

	C8. Will Single Business Tax (SBT) credit carry forwards carry over to the Michigan Business Tax (MBT)?

	C9. How are existing SBT credits, or those awarded but not yet certified, handled under the MBT?

	C10. Who is considered an officer for purposes of the Small Business Alternative Credit under MCL 208.1417?

	C11. (Answer rescinded, replaced by C22) Is the farmland preservation credit available under the Michigan Business Tax?

	C12. (Answer rescinded, replaced by C27) Will the recapture limiting language of MCL 208.1403(3)(d)-(f) apply to both the Michigan Business Tax Investment Tax Credit (ITC) and ITC taken under the former Single Business Tax?

	C13. MCL 208.38g(34) and 208.39c(16) of the SBT permit taxpayers with pre-approval letters issued - or rehabilitation plans certified - prior to 2007 for projects completed after the taxpayer's last tax year under the SBT but prior to 2010 to claim a certain portion of the credit amount that would have been available in 2008 and 2009 had the SBT not been repealed on the taxpayer's amended 2007 SBT return. Are these provisions superseded by the MBT?

	C14. Under the MBTA, is the section 281 surcharge imposed before or after available credits are applied? Does the surcharge apply to both the modified gross receipts tax and the business income tax? Can the alternative small business credit eliminate liability for the surcharge?

	C15. Is the Arts and Culture credit available for donations made to science museums?

	C16. What types of expenses qualify for the MBT's "research and development" credit?

	C17. Is there a filing threshold phase-in for the Michigan Business Tax?

	C18. Does Schedule C (sole proprietor) income of over $180,000.00 preclude the taxpayer from using the Small Business Alternative Credit?

	C19. How will unused carryforward credits under the Single Business Tax Act (SBTA), the application of which is limited to tax years 2008 and 2009 under the Michigan Business Tax Act (MBTA), be treated for fiscal year taxpayers?

	C20. How is stock ownership determined with respect to Small Business Alternate Credit disqualifiers? Will the attribution rules used for the SBT and found in IRC section 318 apply when computing the active shareholder rules under the MBT?

	C21. What is the compensation credit?

	C22. Is the farmland preservation credit available under the Michigan Business Tax?

	C23. How were the rates of the Compensation Credit, the Investment Tax Credit, and the Research and Development Credit impacted by the passage of PA 145, which added the surcharge to the MBT?

	C24. Can a pre-2008 Brownfield credit or Historic Preservation credit of a unitary business group member be used in 2008 and thereafter against the tax liability of the entire unitary business group?

	C25. Regarding the industrial personal property tax credit under the MBT, will the Department continue to look to the parcel classification assigned by the local property tax assessor for qualification for the credit, as it has done under the SBT?

	C26. The MBT Act provides the following credits will be taken sequentially before any other credits: compensation and investment credits (MCL §208.1403), research and development credit (MCL §208.1405), alternate/small business credit (MCL §208.1417), tax phase-in credit (MCL §208.1411). In what order are the other MBT credits claimed?

	C27. MCL §208.1403(3)(d)-(f) provides for investment credit recapture. The recapture language includes the limiters "to the extent used and at the rate used." Does this limiting language only apply to assets acquired during SBT tax years? Also, does the Department deem the investment credit for assets acquired in the same year to be claimed on a FIFO, pro-rata, or other method?

	C28. Under MCL 208.1403(2), a taxpayer may claim a credit against the MBT equal to a specified percentage of the taxpayer's "compensation in this state." What is the definition of "compensation in this state"?

	C29. How is the Small Business Alternative Credit under MCL 208.1417 calculated by a taxpayer that is a unitary business group? How do the disqualifiers and percentage reducers work?

	C30. How do foreign persons with no U.S. federal taxable income calculate adjusted business income for purposes of the Small Business Alternative Credit under MCL 208.1417?

	C31. My company intends to purchase a significant piece of business equipment in the near future. This equipment is the type of property that is or will become eligible for depreciation for federal tax purposes. Under the MBT, can my company deduct the cost of this equipment in the year of purchase when calculating its modified gross receipts tax base, and also qualify for the investment tax credit, which is applied against final MBT liability?

	C32. What expense items are included in compensation for purposes of the compensation credit provided for at MCL 208.1403(2)? What accounting method is used to determine compensation?

	C33. How are gross receipts computed on an installment sale of a capital asset? Is the realized installment sale gain included in the two tax bases? How is the investment tax credit (ITC) affected?

	C34. What kinds of expenses qualify for the MBT credit under MCL 208.1451 that applies to beverage distributors who originate deposits on beverage containers?

	C35. If two shareholders of a C corporation ("X Corp") are themselves C corporations (Y Corp and Z Corp) and one of Y Corp's shareholders is paid a management fee for managing the business of X Corp, does the management fee factor into the disqualifiers for the Small Business Alternative Credit under MCL 208.1417?

	C36. Can a taxpayer use data from its SBT tax periods in calculating the loss adjustment for purposes of determining eligibility for the Alternative Small Business Credit under MCL 208.1417?


Financial Institutions Tax

	F1. Do nonresident financial institutions located outside Michigan whose only activity in Michigan consists of an ownership interest in loans secured in whole or in part by real property located in Michigan have nexus under the MBT?


Insurance Companies Tax

	I1. How must a foreign insurer file for purposes of the retaliatory tax when the insurer's state of incorporation requires unitary filing?

	I2. Does a unitary group of insurance companies have to file a combined MBT return?


Misc.

	Mi1. Revenue Administrative Bulletin 2001-2 describes provisions of the SBT related to the tax base of a foreign person for tax years beginning in or after 2000. Does RAB 2001-2 apply to the MBT?

	Mi2. How are Professional Employer Organizations and Staffing Companies defined for the MBT and how do the two differ?

	Mi3. Is sales tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?

	Mi4. How is the modified gross receipts tax base calculated for professional employment organizations and staffing companies? What is the significance of these different treatments?

	Mi5. (Answer rescinded, replaced by Mi28.) Are limited liability companies subject to the MBT?

	Mi6. What is the meaning of the acronym FIRE which appears in the presentation entitled MBT Overview - August 1, 2007 on the Michigan Business Tax Website?

	Mi7. For developers in the trade or business of selling real property, does the definition of inventory as used in "purchases from other firms" include real property?

	Mi8. Will shareholders of S corporations and partners in partnerships be liable for Michigan individual income tax on their share of flow-through income from entities subject to MBT? Does it matter whether the shareholders or partners are residents or nonresidents?

	Mi9. Is the deduction provided under MCL 208.1201(2)(i) altered by the MBT surcharge?

	Mi10. Does the deduction provided under MCL 208.1201(2)(i) reduce the MBT surcharge imposed under MCL 208.1281(1)?

	Mi11. Will an Employee Stock Ownership Plan ("ESOP"), a tax exempt trust under federal laws, be liable for Michigan income tax under the Michigan Income Tax Act ("ITA"), 1967 P.A. 281, for it's share of flow-through income from a S corporation that is subject to MBT?

	Mi12. Can new motor vehicle and watercraft dealers who separately itemize and collect the modified gross receipts (MGR) tax from customers, in addition to the sales price, collect amounts in excess of the amount of taxes remitted to the Department?

	Mi13. Are cooperatives organized under IRC 1381(a)(2) exempt from the MBT?

	Mi14. Will charitable trusts be subject to the MBT?

	Mi15. If an entity is subject to the Business Income Tax, will the entity's members/shareholders be subject to Michigan personal income tax?

	Mi16. Are small businesses exempt from the imposition of the surcharge?

	Mi17. Under the MBTA, is the section 281 surcharge imposed before or after available credits are applied? Does the surcharge apply to both the modified gross receipts tax and the business income tax? Can the alternative small business credit eliminate liability for the surcharge?

	Mi18. (Answer rescinded, replaced by Mi28.) Are limited liability companies subject to the MBT?

	Mi19. Under the Michigan Business Tax Act (MBTA) will corporations still be able to deduct the statutory exemption from the adjusted tax base before calculating tax as was available under the Single Business Tax Act (SBTA)?

	Mi20. Is the MBT going to accept the federal treaty benefit on the 1120F?

	Mi21. Will a taxpayer whose final SBT return is for a period of less than four months need to remit SBT estimates? For example, will a taxpayer with a fiscal year end of September 30, 2008, whose final SBT return is for the period October 1, 2007 through December 31, 2007, be required to file an SBT estimate?

	Mi22. For purposes of calculating the $350,000 filing threshold in section 505(1); will "gross receipts" as defined in section 111 be used, or will the filing threshold be determined by "sales" as defined in section 115? What meaning is given to the term "apportioned or allocated gross receipts"?

	Mi23. Can a unitary group, as defined in the MBT, enter into a voluntary disclosure agreement with the Department of Treasury under MCL 205.30c if one member of the group would be disqualified on its own?

	Mi24. If a taxpayer is disqualified from voluntary disclosure, available at MCL 205.30c, under the Single Business Tax, is the taxpayer disqualified under the Michigan Business Tax? Specifically, if a taxpayer filed SBT returns, is it considered a filer for voluntary disclosure purposes under the MBT?

	Mi25. Does the MBT follow the federal check-the-box regulations?

	Mi26. When is the final SBT return due for a fiscal year taxpayer? Can a fiscal year filer request an extension for the final SBT return?

	Mi27. Are controlled foreign corporations ("CFC's") under IRC 957 taxpayers under the MBT? Can controlled foreign corporations be members of a unitary business group? What if the controlled foreign corporation is a disregarded entity of a U.S. parent?

	Mi28. Are single member limited liability companies and qualified subchapter S subsidiaries ("QSubs") disregarded for federal tax purposes also disregarded under the MBT?

	Mi29. Are condominium, homeowners, and timeshare associations taxed under IRC 528 or IRC 277 exempt from the MBT?

	Mi30. Will Voluntary Disclosure continue with the Michigan Business Tax?

	Mi32. Can a taxpayer use data from its SBT tax periods in calculating the loss adjustment for purposes of determining eligibility for the Alternative Small Business Credit under MCL 208.1417?

	Mi33. What kinds of expenses qualify for the MBT credit under MCL 208.1451 that applies to beverage distributors who originate deposits on beverage containers?


Modified Gross Receipts Tax

	M1. (Answer rescinded, replaced by M26) Does the Modified Gross Receipts Tax component of the Michigan Business Tax Act tax capital gains of investors, including trusts, Family Limited Partnerships and individuals?

	M2. How are gross receipts, rents etc. received from real property apportioned?

	M3. Is rental income included in gross receipts?

	M4. The modified gross receipts tax base means the gross receipts of the taxpayer less "purchases from other firms." The definition of "purchases from other firms" includes "materials and supplies" to the extent not included in inventory and assets as defined. What, specifically, is the definition of "materials and supplies"?

	M5. Will a Single Business Tax (SBT) business loss carry forward carry over to the Michigan Business Tax (MBT)? Is the deduction before or after apportionment?

	M6. Is sales tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?

	M7. Is labor deductible from gross receipts as a "purchase from other firms?"

	M8. Do shipping and delivery charges not included in the contract price for inventory constitute "purchases from other firms?" For example, are shipping charges paid to a third party to deliver inventory purchased from a vendor deductible from gross receipts?

	M9. Are amounts paid by a taxpayer to a staffing company deductible from gross receipts as "purchases from other firms?"

	M10. Are capital gains that are included in the Modified Gross Receipts tax base also included in the Business Income tax base?

	M11. Are system software royalties, excluded from the determination of tax liability under the Single Business Tax Act ("SBTA") (see MCL 208.9(4)(g)(viii) and (7)(c)(vii)), likewise excluded from the determination of tax liability under the Michigan Business Tax Act (?MBTA")?

	M12. Do the business income tax and modified gross receipts tax components of the MBT apply to individuals, estates, and trusts or family limited partnerships (FLIP)s that are specifically established for estate planning purposes, on income from investments, such as capital gains, interest, dividends, or other sources of personal income?

	M13. If an individual owns 100% of an S corporation law practice with gross receipts of $500,000, net income of $100,000 after wages of $250,000, and also has the following income not related to the S corporation or any other trade or business: dividends - $100,000, interest $250,000, capital gain $750,000, and pension of $100,000. Is he liable for the MBT taxes on a combined basis as an individual and owner of a S corporation?

	M14. What are purchases from other firms?

	M15. If a business or unitary group taxpayer has a negative business income tax base, is the 4.95% tax rate applied to the negative business income base, with the result then netted against a positive modified gross receipts tax to determine Michigan Business Tax (?MBT") liability?

	M16. Should a taxpayer use the cash or accrual method when determining gross receipts under the MBT?

	M17. Does the "materials and supplies" provision in the definition of ?purchases from other firms" at MCL 208.1113(6)(c) apply to service providers?

	M18. Must a company that receives dividend and interest income from a partnership include those amounts in gross receipts?

	M19. Is use tax collected by a retail business considered part of its modified gross receipts under the Michigan Business Tax?

	M20. Do construction subcontractors have to be licensed in order for payments made to such subcontractors to be considered "purchases from other firms" under section 113(6)(e) of the Michigan Business Tax Act ("MBTA")?

	M21. Can credit card processing fees be deducted from gross receipts when determining the modified gross receipts tax base under the Michigan Business Tax Act ("MBTA")?

	M22. To calculate the modified gross receipts tax base, may contractors deduct from gross receipts all amounts paid to subcontractors as purchases from other firms?

	M23. For purposes of MCL 208.1113(6)(e), how is subcontractor defined?

	M24. Must a contractor enter into a written contract with subcontractors in order to reduce gross receipts by the amount of payments made to subcontractors for a construction project?

	M25. Can modified gross receipts (MGR) tax separately collected from customers by new motor vehicle dealers and new or used watercraft dealers be remitted with monthly sales, use and withholding returns?

	M26. Does the Modified Gross Receipts Tax component of the Michigan Business Tax Act tax capital gains of investors, including trusts, Family Limited Partnerships and individuals?

	M27. Under the MBT, will there be a depreciation deduction, or will Michigan conform to federal depreciation rules?

	M28. Do wholesale gasoline purchases and applicable excise taxes paid by a gasoline retailer qualify as "purchases from other firms" under Section 113(6) of the Michigan Business Tax Act ("MBTA")?

	M29. Does partnership income constitute gross receipts of the partner for purposes of the modified gross receipts tax portion of the MBT?

	M30. Does the sale by an individual of a direct investment in a corporation, partnership or LLC that is not traded on a public exchange constitute "personal investment activity" such that the income and proceeds from such a sale are excluded from business income and gross receipts? Similarly, is the distributive share of a partnership to a partner that is an individual business income or gross receipts to that individual?

	M31. Public Act 145 of 2007 amended the MBT to exclude certain personal investment activities from business income and gross receipts. Which taxpayers may exclude personal investment activity from business income and gross receipts? What about family limited partnerships that demonstrate a business purpose for federal purposes yet are intended to generate valuation discounts for gift and estate tax purposes? What about an investment club organized as a partnership?

	M32. A unitary business group under the MBTA is required to file a combined return. For purposes of calculating the unitary business group's modified gross receipts tax base, does the group eliminate all inter-company transactions between members of the group, including "purchases from other firms"?

	M33. How is the "purchases from other firms" subtraction determined? The statute uses the term "purchased" and "acquired"; neither of which are defined in the law. What method of accounting will be used for "purchases from other firms"?

	M34. Is an SBT business loss related to a final short period SBT return that will be applied to the MBT based on a full twelve-month year or on the short period year? If the taxpayer uses the proration method to calculate its final SBT tax liability and first year MBT tax liability, is the SBT business loss also prorated?

	M35. Is a fiscal year taxpayer required to apply its final year SBT business loss against its first short period MBT return?

	M36. The definition of "modified gross receipts tax base" makes no provision for a negative modified gross receipts tax base. Will Treasury administratively allow a carryforward of a negative modified gross receipts tax base?

	M37. To qualify as "materials and supplies" or "purchases from other firms" deductible from gross receipts under MCL 208.1113(6), must assets be directly related to inventory or vice versa?

	M38. May taxpayers, including corporations and partnerships, take the IRC 199 deduction for MBT purposes?

	M39. May any taxpayer separately itemize and collect the tax imposed under the Michigan Business Tax Act ("MBTA") from its customers in addition to sales price?

	M40. Our company adds a handling charge to all customer invoices. Is this handling charge taxable under the MBT?

	M41. My company intends to purchase a significant piece of business equipment in the near future. This equipment is the type of property that is or will become eligible for depreciation for federal tax purposes. Under the MBT, can my company deduct the cost of this equipment in the year of purchase when calculating its modified gross receipts tax base, and also qualify for the investment tax credit, which is applied against final MBT liability?