Bill Text: MI SB0480 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Income tax; income; business income tax base; modify. Amends sec. 623 of 1967 PA 281 (MCL 206.623).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-06-16 - Referred To Committee On Reforms, Restructuring And Reinventing [SB0480 Detail]
Download: Michigan-2011-SB0480-Introduced.html
SENATE BILL No. 480
June 16, 2011, Introduced by Senator JANSEN and referred to the Committee on Reforms, Restructuring and Reinventing.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 623 (MCL 206.623), as added by 2011 PA 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 623. (1) Except as otherwise provided in this part, there
is levied and imposed a corporate income tax on every taxpayer with
business activity within this state or ownership interest or
beneficial interest in a flow-through entity that has business
activity in this state unless prohibited by 15 USC 381 to 384. The
corporate income tax is imposed on the corporate income tax base,
after allocation or apportionment to this state, at the rate of
6.0%.
(2) The corporate income tax base means a taxpayer's business
income subject to the following adjustments, before allocation or
apportionment, and the adjustment in subsection (4) after
allocation or apportionment:
(a) Add interest income and dividends derived from obligations
or securities of states other than this state, in the same amount
that was excluded from federal taxable income, less the related
portion of expenses not deducted in computing federal taxable
income because of sections 265 and 291 of the internal revenue
code.
(b) Add all taxes on or measured by net income and the tax
imposed under this part to the extent that the taxes were deducted
in arriving at federal taxable income.
(c) Add any carryback or carryover of a net operating loss to
the extent deducted in arriving at federal taxable income.
(d) To the extent included in federal taxable income, deduct
dividends and royalties received from persons other than United
States persons and foreign operating entities, including, but not
limited to, amounts determined under section 78 of the internal
revenue code or sections 951 to 964 of the internal revenue code.
(e) Except as otherwise provided under this subdivision, to
the extent deducted in arriving at federal taxable income, add any
royalty, interest, or other expense paid to a person related to the
taxpayer by ownership or control for the use of an intangible asset
if the person is not included in the taxpayer's unitary business
group. The addition of any royalty, interest, or other expense
described under this subdivision is not required to be added if the
taxpayer can demonstrate that the transaction has a nontax business
purpose, is conducted with arm's-length pricing and rates and terms
as applied in accordance with sections 482 and 1274(d) of the
internal revenue code, and 1 of the following is true:
(i) The transaction is a pass through of another transaction
between a third party and the related person with comparable rates
and terms.
(ii) An addition would result in double taxation. For purposes
of this subparagraph, double taxation exists if the transaction is
subject to tax in another jurisdiction.
(iii) An addition would be unreasonable as determined by the
treasurer.
(iv) The related person recipient of the transaction is
organized under the laws of a foreign nation which has in force a
comprehensive income tax treaty with the United States.
(f) To the extent included in federal taxable income, deduct
interest income derived from United States obligations.
(g) For tax years beginning after December 31, 2011, eliminate
all of the following:
(i) Income from producing oil and gas to the extent included in
federal taxable income.
(ii) Expenses of producing oil and gas to the extent deducted
in arriving at federal taxable income.
(h) A unitary business group that filed the Michigan business
tax book-tax difference form 4593 to adjust its business income tax
base pursuant to section 201 of the Michigan business tax act, 2007
PA 36, MCL 208.1201, may adjust its business income under this
subdivision to account for the assets that generated the book-tax
differences reported on form 4593. The adjustment under this
subdivision shall be applied only in the computation of gain or
loss on the sale or disposition of those assets in a transaction in
which business income or business loss is recognized. If those
assets are sold or otherwise disposed of prior to 2015, then the
adjustment associated with those assets shall be proportionately
allocated, based on relative positive basis adjustment, to the
taxpayer's remaining assets on which the book-tax differences were
computed. To the extent the adjustment provided in this subdivision
would produce a loss upon the sale or disposition of an asset, then
the adjustment shall not be recognized and the disallowed basis
shall be proportionately allocated to the taxpayer's remaining
assets, based on relative positive basis adjustment, on which the
book-tax differences were computed. For purposes of this
subdivision, a loss occurs if the taxpayer's corporate income tax
base before the adjustment under this subdivision plus the basis
provided for under this subdivision exceeds the proceeds from the
sale of the asset.
(3) For purposes of subsection (2), the business income of a
unitary business group is the sum of the business income of each
person included in the unitary business group less any items of
income and related deductions arising from transactions including
dividends between persons included in the unitary business group.
(4) Deduct any available business loss incurred after December
31, 2011. As used in this subsection, "business loss" means a
negative business income taxable amount after allocation or
apportionment. The business loss shall be carried forward to the
year immediately succeeding the loss year as an offset to the
allocated or apportioned corporate income tax base, then
successively to the next 9 taxable years following the loss year or
until the loss is used up, whichever occurs first, but for not more
than 10 taxable years after the loss year.
(5) As used in this section, "oil and gas" means oil and gas
that is subject to severance tax under 1929 PA 48, MCL 205.301 to
205.317.
Enacting section 1. This amendatory act takes effect January
1, 2012.
