Michigan Department of Treasury Attachment 06 4571 (Rev. 04-22), Page 1 of 2 2022 MICHIGAN Business Tax Common Credits for Small Businesses Issued under authority of Public Act 36 of 2007. Taxpayer Name Federal Employer Identification Number (FEIN) or TR Number The Small Business Alternative Credit is NOT available if any The Small Business Alternative Credit must be reduced of the following conditions exist: if any of the following conditions exist: • Gross receipts exceed $20,000,000. • Any individual, shareholder or officer has allocated • Adjusted business income after loss adjustment exceeds income after loss adjustment of over $160,000 but not $1,609,400. over $180,000, or any partner has distributive share of • Any individual, shareholder or officer has allocated income income after loss adjustment of over $160,000 but not over after loss adjustment of over $180,000, or any partner has $180,000, as determined on Forms 4577 or 4578. distributive share of income after loss adjustment of over • Gross receipts exceed $19,000,000 but are not more $180,000, as determined on Form 4577 or 4578. than $20,000,000. • Compensation and director fees of a shareholder or officer of a C Corporation exceed $180,000. Taxpayers claiming the small business alternative credit, other than individuals and fiduciaries filing as individuals MUST complete and include Form 4577 or 4578, as applicable. 1. Tax liability prior to this credit from Form 4568, line 6 ........................................................................................... 1. 00 PART 1: SMALL BUSINESS ALTERNATIVE CREDIT If not claiming a Small Business Alternative Credit, skip to Part 2. Adjusted Business Income 2. Business Income from Form 4567, line 28 (see instructions)................................................................................ 2. 00 3. Gross capital loss utilized on federal return (see instructions) .............................................................................. 3. 00 4. Federal net operating loss carryover or carryback from Form 4567, line 32 ......................................................... 4. 00 5. Add lines 2, 3, and 4 ............................................................................................................................................. 5. 00 6. Compensation and director fees of active shareholders from Form 4577, line 3 ................................................. 6. 00 7. Compensation and director fees of officers from Form 4577, line 4 ..................................................................... 7. 00 8. Adjusted Business Income. Add lines 5, 6 and 7................................................................................................... 8. 00 Small Business Alternative Credit Calculation 9. Small Business Alternative Tax. Multiply line 8 by 1.8% (0.018). If less than zero, enter zero ............................ 9. 00 10. Small Business Alternative Credit. Subtract line 9 from line 1. If less than zero, enter zero ......................... 10. 00 11. Allocated income/distributive share of income used for reduction (see instructions) .. 11. 00 12. Reduction percentage from Reduced Credit Table on page 2 (based on amount from line 11) .......................... 12. % 13. Reduced Credit. Multiply line 12 by line 10. If gross receipts from Form 4567, line 12, are less than or equal to $19,000,000, carry amount to Form 4568, line 7 (see instructions) .................................................................. 13. 00 14. Tax After Small Business Alternative Credit. Subtract line 13 from line 1 ............................................................. 14. 00 Reduction Based on Gross Receipts Complete this section if gross receipts are more than $19,000,000 but not more than $20,000,000. 15. Gross receipts from Form 4567, line 12 (see instructions) .................................................................................... 15. 00 16. Excess gross receipts. Subtract $19,000,000 from line 15 .................................................................................. 16. 00 17. Excess percentage. Divide line 16 by $1,000,000, and enter as a percentage .................................................... 17. % 18. Allowable percentage. Subtract line 17 from 100% ............................................................................................... 18. % 19. Small Business Alternative Credit. Multiply percentage on line 18 by the credit on line 13. Carry amount to Form 4568, line 7 ........................................................................................................................ 19. 00 20. Tax After Small Business Alternative Credit. Subtract line 19 from line 1 ............................................................. 20. 00 Continue on Page 2 + 0000 2022 27 01 27 8 |
2022 Form 4571, Page 2 of 2 FEIN or TR Number PART 2: GROSS RECEIPTS FILING THRESHOLD CREDIT Complete this section if apportioned gross receipts are equal to or greater than $350,000 but less than $700,000. See instructions for tax years less than 12 months. 21. Tax before credit from line 1, 14 or 20, whichever applies .................................................................................... 21. 00 22. Threshold Ceiling .................................................................................................................................................. 22. 700,000 00 23. Gross Receipts from Form 4567, line 12 (see instructions) .................................................................................. 23. 00 24. Apportioned Gross Receipts. Multiply line 23 by percentage from Form 4567, line 11c ....................................... 24. 00 25. Excess Gross Receipts. Subtract line 24 from line 22. If negative, enter zero on line 27 (no credit allowed) ...... 25. 00 26. Gross Receipts Filing Threshold Credit Percentage. Divide line 25 by $350,000, and enter as a percentage ..... 26. % 27. Gross Receipts Filing Threshold Credit. Multiply line 26 by line 21. Carry amount to Form 4568, line 8 ........ 27. 00 28. Tax After Gross Receipts Filing Threshold Credit. Subtract line 27 from line 21. (This line must be equal to Form 4568, line 9.) ................................................................................................................................................ 28. 00 REDUCED CREDIT TABLE If allocated* income is: The reduced credit is: $0 - $160,000 ........................ 100% of the Small Business Alternative Credit $160,001 - $164,999 ........... 80% of the Small Business Alternative Credit $165,000 - $169,999 ........... 60% of the Small Business Alternative Credit $170,000 - $174,999 ........... 40% of the Small Business Alternative Credit $175,000 - $180,000 ........... 20% of the Small Business Alternative Credit * See instructions for tax years less than 12 months. + 0000 2022 27 02 27 6 |
Instructions for Form 4571 Michigan Business Tax (MBT) Common Credits for Small Businesses determined on the MBT Schedule of Shareholders and Purpose Officers (Form 4577) or the MBT Schedule of Partners To allow taxpayers to calculate the Small Business Alternative (Form 4578). Credit and the Gross Receipts Filing Threshold Credit. Credits are calculated here and then carried to the MBT Nonrefundable In addition, the Small Business Alternative Credit is reduced Credits Summary (Form 4568). if an Individual, a partner in a Partnership, a shareholder of a Corporation, or an officer of a C Corporation has allocated A taxpayer is disqualified from taking the Small Business income (or distributive share of income, for a partner) after Alternative Credit under certain circumstances, which are loss adjustment moreof than $160,000. This reduction basedis detailed below. on the individual/partner/officer/shareholder with the largest A taxpayer with gross receipts allocated or apportioned to allocated distributiveor share income.of Michigan equal to or greater than $350,000, but less than The Small Business Alternative Credit also isreduced if gross $700,000, may claim a Gross Receipts Filing Threshold Credit. receipts exceed $19,000,000 but are not more than $20,000,000. Unitary Business Groups (UBGs): Taxpayers that are part of C Corporations a UBG must use the gross receipts of the entire group before Allocated income for CCorporations either: is eliminations to determine if the gross receipts allocated or apportioned to Michigan are between $350,000 and $700,000. (a) A shareholder or officer’s compensation and director fees from Form 4577, column L, or NOTE: Beginning January 1, 2012, only those taxpayers with a certificated credit, which is awarded but not yet fully (b) A shareholder’s compensation, director fees, and share of claimed or utilized, may elect to be MBT taxpayers. If a business income (or loss) after loss adjustment, from Form taxpayer files an MBT return and claims a certificated credit, 4577, column N. the taxpayer makes the election to file and pay under the MBT If either (a) or(b) is greater than $180,000 for any shareholder until the certificated credit and any carryforward of that credit officer, the Corporation not is eligible for the Small Business or are exhausted. A taxpayer making a valid certificated credit Credit. Inaddition, if either (a) or(b) is more than Alternative election may also claim the credits on this form. but not more than $180,000 for any shareholder $160,000 NOTE: A member of a Limited Liability Company (LLC) is or officer, the Corporation must reduce the Small Business characterized for MBT purposes as a partner, shareholder, or Alternative Credit based on the officer shareholder or with the owner, based on the federal tax classification of the LLC. An largest allocated income. LLC taxed as a Partnership for federal purposes is required to S Corporations file as a Partnership for MBT. Similarly, an LLC taxed as a C Corporation or an S Corporation for federal purposes must file Allocated income for S Corporations is shareholder’s under that same entity type for MBT. compensation, director fees, and share of business income (or loss), after loss adjustment, from Form 4577, column N. NOTE: A person that is a disregarded entity for federal income tax purposes under the internal revenue code shall be classified NOTE: Individuals and Fiduciaries filing Individuals as do not as a disregarded entity for the purposes of filing the MBT need file to Form 4577 Form or 4578. annual return. NOTE: Taxpayers leasing employees from professional Fiscal Year Filers: See “Supplemental Instructions for employer organizations must include the compensation of Standard Fiscal MBT Filers” in the MBT Forms and officers (of the operating company) and shareholders who Instructions for Standard Taxpayers (Form 4600). receive compensation determining in the eligibility for the Small Business Alternative Credit even though their compensation is Eligibility for the Small Business Alternative paid the by professional employer organization. Credit NOTE: If a shareholder owned stock for less than the entire tax Taxpayers are not eligible for the Small Business Alternative year ofthe corporation, or an officer served as an officer less Credit if any theof following conditions exist: than the entire tax year, shareholder compensation amounts must annualized be when determining disqualifiers. • Gross receipts exceed $20,000,000. • Adjusted business income after loss adjustment exceeds: Tax Years Less Than 12 Months ○ $1,609,400 for Corporations Partnershipsor (and LLCs If the reported tax year is less than 12 months, gross receipts, federally taxed such). as adjusted business income, partners’ distributive share of business income, and shareholders’ and officers’ allocated or distributive ○ $180,000 for Individuals Fiduciaries. or of income must be annualized to determine eligibility. If share • Any shareholder or officer has allocated income after loss annualized gross receipts exceed $19,000,000 but do not exceed adjustment over of $180,000 any or partner has distributive $20,000,000, annualize figures to compute the Reduction Based share ofincome after loss adjustment of over $180,000, as on Gross Receipts, lines 15 through 20. 63 |
Annualizing Adjusted Business Income Multiply each applicable amount, total gross receipts, adjusted Line 2: Enter business income from Form 4567, line 28. If not business income, and shareholder, officer, and partner income by subject to Business Income Tax, enter business income from 12 and divide the result by the number of months the business the Business Income Worksheet (Worksheet 4746) in Form operated. Generally, a business is considered in business for one 4600. Attach this worksheet to the return. month if the business operated for more than half the days of the Enter the business income before eliminations from UBGs: month. If the tax year is less than one month, consider the tax Form 4580, Part 2B, line 30A. year to be one month for the purposes of the calculation. Line 3: Enter all capital losses that were used federally to offset Loss Adjustment capital gain. This is not the net figure found on the Schedule D If taxpayers are not eligible for the full Small Business lines identified below. It is the amount of capital losses that were Alternative Credit due to an adjusted business income or used in reaching the net figure on the federal return lines. If allocated income disqualifier, they may benefit from the MBT filing a U.S. Form 1040 or 1041, include the capital loss amount Loss Adjustment for the Small Business Alternative Credit that the Individual or Fiduciary was able to use against the (Form 4575). If the adjusted business income was less than capital gain and the capital loss amount that the Individual or zero in any of the five years immediately preceding the tax year Fiduciary was permitted to deduct from ordinary income ($3,000 for which a taxpayer is claiming a credit and an MBT Small or less). Use both long-term and short-term capital losses here. Business Alternative Credit was received for that same year, the taxpayer may be able to reduce the current year’s adjusted Include the capital losses used in calculating the net figure business income or allocated income amounts by the loss. See using “Net short-term capital gain or (loss)” and “Net long- Form 4575 for more details. term capital gain or (loss)” from Schedule D of federal Forms 1040, 1041, 1065, 1120 and 1120S as applicable. A loss adjustment will not prevent a reduction to the Small UBGs: Combine all capital losses for all members and enter on Business Alternative Credit based on gross receipts that line 3. exceed $19,000,000. It will also not change the amount of compensation on Form 4577, column L, for aC Corporation. Line 6 and line 7: Fiscal Year Filers: See “Supplemental Instructions for Standard Fiscal MBT Filers” in Form 4600. Special Instructions for UBGs Small Business Alternative Credit Calculation UBGs calculate the gross receipts and adjusted business income Line 11: The Small Business Alternative Credit is reduced disqualifiers at the UBG level without eliminating intercompany if an Individual, a partner in a Partnership, a shareholder of transactions. For a UBG to claim a small business alternative a Corporation, or an officer of a C Corporation has allocated credit, each member of the UBG that is a corporation (including income (or distributive share of income, for a partner) after an entity taxed federally as such) must file Form 4577. Each loss adjustment of more than $160,000. This reduction is based member of the UBG that is a partnership (including an entity on the individual/partner/officer/shareholder with the largest taxed federally as such) must file Form 4578. The disqualifier allocated or distributive share of income. Enter the allocated that is based on allocated or distributive share of income is income of the shareholder or officer with the highest allocated applied on a separate entity basis using a pro forma calculation income after loss adjustment or the highest distributive share of for business income and is not acombined amount received from income assigned to a partner or individual, even if that figure is all members of a UBG. See the “Supplemental Instructions for $160,000 or less. Standard Members in UBGs” section in Form 4600. If loss adjustment is successfully applied to fully or partially Line-by-Line Instructions cure an owner’s allocated or distributive income disqualifier, enter on line 11 the number from Form 4575, line 5. Lines not listed are explained on the form. Line 12: For a taxpayer whose owners or officers all have Name and Account Number: Enter name and account number allocated or distributive share of income after loss adjustment as reported on page 1 of the MBT Annual Return (Form 4567). of $160,000 or less, enter 100 percent. All other taxpayers, see UBGs: Complete one form for the group. Enter the Designated the table at the bottom of page 2 of this form to determine what Member (DM) name in the Name field and the DM account percent to enter on this line. number in the Federal Employer Identification Number (FEIN) Line 13: All taxpayers must complete this line. or TR Number field. If gross receipts from Form 4567, line 12, are $19,000,000 or PART 1: SMALL BUSINESS ALTERNATIVE CREDIT less, carry the amount on line 13 to Form 4568, line 7. For tax Skip to Part 2 of this form if not claiming a Small Business years less than 12 months, use annualized gross receipts. For Alternative Credit. guidance, see the “Annualizing” section at the beginning of Business income is adjusted by federal net operating loss these instructions. carryover or carryback from Form 4567, line 32. It is UBGs: For the purpose of calculating the credit reduction also adjusted by compensation and director fees of active based on gross receipts, the UBG combined gross receipts shareholders and officers from Form 4577 and by capital losses. must reflect the sum of every member’s gross receipts on a 12-month basis, before eliminations. Therefore, if no members of the UBG are short-year filers, use the amount from the 64 |
MBT Unitary Business Group Combined Filing Schedule for Standard Members (Form 4580), Part 2B, line 17A. Otherwise, for all short-year members of the group, annualize their gross receipts amount from Form 4580, Part 2A, line 17A, and then combine the annualized amounts with the gross receipts (Form 4580, Part 2A, line 17A) for the remaining group members. Reduction Based on Gross Receipts Line 15: For tax periods less than 12 months, enter annualized gross receipts to determine if annualized gross receipts are more than $19,000,000 but not more than $20,000,000. UBGs: To calculate the entry for this line, see the UBG guidance under line 13. Enter the sum of all members’ 12-month basis gross receipts, before eliminations, on line 15 of this form. PART 2: GROSS RECEIPTS FILING THRESHOLD CREDIT Complete Part 2 if apportioned gross receipts are equal to or greater than $350,000 but less than $700,000. Line 23: For tax periods less than 12 months, enter annualized gross receipts. For guidance, see the “Annualizing” section at the beginning of these instructions. UBGs: To calculate the entry for this line, see the UBG guidance under line 13. Enter the sum of all members’ 12-month basis gross receipts, before eliminations, on line 23 of this form. Include completed Form 4571 as part of the tax return filing. 65 |