HB-5194, As Passed Senate, September 23, 2007

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5194

      A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending sections 30, 261, 266, and 270 (MCL 206.30, 206.261,

206.266, and 206.270), section 30 as amended by 2005 PA 214,

section 261 as amended by 2000 PA 195, section 266 as amended by

2006 PA 52, and section 270 as amended by 2005 PA 234.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1        Sec. 30. (1) "Taxable income" means, for a person other than

 2  a corporation, estate, or trust, adjusted gross income as defined

 3  in the internal revenue code subject to the following adjustments

 4  under this section:

 5        (a) Add gross interest income and dividends derived from

 6  obligations or securities of states other than Michigan, in the

 1  same amount that has been excluded from adjusted gross income

 2  less related expenses not deducted in computing adjusted gross

 3  income because of section 265(a)(1) of the internal revenue code.

 4        (b) Add taxes on or measured by income to the extent the

 5  taxes have been deducted in arriving at adjusted gross income.

 6        (c) Add losses on the sale or exchange of obligations of the

 7  United States government, the income of which this state is

 8  prohibited from subjecting to a net income tax, to the extent

 9  that the loss has been deducted in arriving at adjusted gross

10  income.

11        (d) Deduct, to the extent included in adjusted gross income,

12  income derived from obligations, or the sale or exchange of

13  obligations, of the United States government that this state is

14  prohibited by law from subjecting to a net income tax, reduced by

15  any interest on indebtedness incurred in carrying the obligations

16  and by any expenses incurred in the production of that income to

17  the extent that the expenses, including amortizable bond

18  premiums, were deducted in arriving at adjusted gross income.

19        (e) Deduct, to the extent included in adjusted gross income,

20  compensation, including retirement benefits, received for

21  services in the armed forces of the United States.

22        (f) Deduct the following to the extent included in adjusted

23  gross income:

24        (i) Retirement or pension benefits received from a federal

25  public retirement system or from a public retirement system of or

26  created by this state or a political subdivision of this state.

27        (ii) Retirement or pension benefits received from a public

 1  retirement system of or created by another state or any of its

 2  political subdivisions if the income tax laws of the other state

 3  permit a similar deduction or exemption or a reciprocal deduction

 4  or exemption of a retirement or pension benefit received from a

 5  public retirement system of or created by this state or any of

 6  the political subdivisions of this state.

 7        (iii) Social security benefits as defined in section 86 of the

 8  internal revenue code.

 9        (iv) Before October 1, 1994, retirement or pension benefits

10  from any other retirement or pension system as follows:

11        (A) For a single return, the sum of not more than $7,500.00.

12        (B) For a joint return, the sum of not more than $10,000.00.

13  (iv) (v) After September 30, 1994, retirement Retirement or

14  pension benefits not deductible under subparagraph (i) or

15  subdivision (e) from any other retirement or pension system or

16  benefits from a retirement annuity policy in which payments are

17  made for life to a senior citizen, to a maximum of $30,000.00 for

18  a single return and $60,000.00 for a joint return. The maximum

19  amounts allowed under this subparagraph shall be reduced by the

20  amount of the deduction for retirement or pension benefits

21  claimed under subparagraph (i) or subdivision (e) and for tax

22  years after the 1996 tax year by the amount of a deduction

23  claimed under subdivision (r). For the 1995 tax year and each tax

24  year after 1995, the The maximum amounts allowed under this

25  subparagraph shall be adjusted by the percentage increase in the

26  United States consumer price index for the immediately preceding

27  calendar year. The department shall annualize the amounts

 1  provided in this subparagraph and subparagraph (iv) as necessary.

 2  for tax years that end after September 30, 1994. As used in this

 3  subparagraph, "senior citizen" means that term as defined in

 4  section 514.

 5  (v) (vi) The amount determined to be the section 22 amount

 6  eligible for the elderly and the permanently and totally disabled

 7  credit provided in section 22 of the internal revenue code.

 8        (g) Adjustments resulting from the application of section

 9  271.

10        (h) Adjustments with respect to estate and trust income as

11  provided in section 36.

12        (i) Adjustments resulting from the allocation and

13  apportionment provisions of chapter 3.

14        (j) Deduct political contributions as described in section 4

15  of the Michigan campaign finance act, 1976 PA 388, MCL 169.204,

16  or 2 USC 431, not in excess of $50.00 per annum, or $100.00 per

17  annum for a joint return.

18        (k) Deduct, to the extent included in adjusted gross income,

19  wages not deductible under section 280C of the internal revenue

20  code.

21        (l) Deduct the following payments made by the taxpayer in the

22  tax year:

23        (i) The amount of payment made under an advance tuition

24  payment contract as provided in the Michigan education trust act,

25  1986 PA 316, MCL 390.1421 to 390.1442.

26        (ii) The amount of payment made under a contract with a

27  private sector investment manager that meets all of the following

 1  criteria:

 2        (A) The contract is certified and approved by the board of

 3  directors of the Michigan education trust to provide equivalent

 4  benefits and rights to purchasers and beneficiaries as an advance

 5  tuition payment contract as described in subparagraph (i).

 6        (B) The contract applies only for a state institution of

 7  higher education as defined in the Michigan education trust act,

 8  1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior

 9  college in Michigan.

10        (C) The contract provides for enrollment by the contract's

11  qualified beneficiary in not less than 4 years after the date on

12  which the contract is entered into.

13        (D) The contract is entered into after either of the

14  following:

15        (I) The purchaser has had his or her offer to enter into an

16  advance tuition payment contract rejected by the board of

17  directors of the Michigan education trust, if the board

18  determines that the trust cannot accept an unlimited number of

19  enrollees upon an actuarially sound basis.

20        (II) The board of directors of the Michigan education trust

21  determines that the trust can accept an unlimited number of

22  enrollees upon an actuarially sound basis.

23        (m) If an advance tuition payment contract under the

24  Michigan education trust act, 1986 PA 316, MCL 390.1421 to

25  390.1442, or another contract for which the payment was

26  deductible under subdivision (l) is terminated and the qualified

27  beneficiary under that contract does not attend a university,

 1  college, junior or community college, or other institution of

 2  higher education, add the amount of a refund received by the

 3  taxpayer as a result of that termination or the amount of the

 4  deduction taken under subdivision (l) for payment made under that

 5  contract, whichever is less.

 6        (n) Deduct from the taxable income of a purchaser the amount

 7  included as income to the purchaser under the internal revenue

 8  code after the advance tuition payment contract entered into

 9  under the Michigan education trust act, 1986 PA 316, MCL 390.1421

10  to 390.1442, is terminated because the qualified beneficiary

11  attends an institution of postsecondary education other than

12  either a state institution of higher education or an institution

13  of postsecondary education located outside this state with which

14  a state institution of higher education has reciprocity.

15        (o) Add, to the extent deducted in determining adjusted

16  gross income, the net operating loss deduction under section 172

17  of the internal revenue code.

18        (p) Deduct a net operating loss deduction for the taxable

19  year as determined under section 172 of the internal revenue code

20  subject to the modifications under section 172(b)(2) of the

21  internal revenue code and subject to the allocation and

22  apportionment provisions of chapter 3 of this act for the taxable

23  year in which the loss was incurred.

24        (q) For a tax year beginning after 1986, deduct Deduct, to

25  the extent included in adjusted gross income, benefits from a

26  discriminatory self-insurance medical expense reimbursement plan.

27        (r) After September 30, 1994 and before the 1997 tax year, a

 1  taxpayer who is a senior citizen may deduct, to the extent

 2  included in adjusted gross income, interest and dividends

 3  received in the tax year not to exceed $1,000.00 for a single

 4  return or $2,000.00 for a joint return. However, for tax years

 5  before the 1997 tax year, the deduction under this subdivision

 6  shall not be taken if the taxpayer takes a deduction for

 7  retirement benefits under subdivision (e) or a deduction under

 8  subdivision (f)(i), (ii), (iv), or (v). For tax years after the 1996

 9  tax year, a A taxpayer who is a senior citizen may deduct to the

10  extent included in adjusted gross income, interest, dividends,

11  and capital gains received in the tax year not to exceed

12  $3,500.00 for a single return and $7,000.00 for a joint return

13  for the 1997 tax year, and $7,500.00 for a single return and

14  $15,000.00 for a joint return. for tax years after the 1997 tax

15  year. For tax years after the 1996 tax year, the The maximum

16  amounts allowed under this subdivision shall be reduced by the

17  amount of a deduction claimed for retirement benefits under

18  subdivision (e) or a deduction claimed under subdivision (f)(i),

19  (ii), (iv), or (v). For the 1995 tax year, for the 1996 tax year,

20  and for each tax year after the 1998 tax year, the The maximum

21  amounts allowed under this subdivision shall be adjusted by the

22  percentage increase in the United States consumer price index for

23  the immediately preceding calendar year. The department shall

24  annualize the amounts provided in this subdivision as necessary.

25  for tax years that end after September 30, 1994. As used in this

26  subdivision, "senior citizen" means that term as defined in

27  section 514.

 1        (s) Deduct, to the extent included in adjusted gross income,

 2  all of the following:

 3        (i) The amount of a refund received in the tax year based on

 4  taxes paid under this act.

 5        (ii) The amount of a refund received in the tax year based on

 6  taxes paid under the city income tax act, 1964 PA 284, MCL

 7  141.501 to 141.787.

 8        (iii) The amount of a credit received in the tax year based on

 9  a claim filed under sections 520 and 522 to the extent that the

10  taxes used to calculate the credit were not used to reduce

11  adjusted gross income for a prior year.

12        (t) Add the amount paid by the state on behalf of the

13  taxpayer in the tax year to repay the outstanding principal on a

14  loan taken on which the taxpayer defaulted that was to fund an

15  advance tuition payment contract entered into under the Michigan

16  education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if

17  the cost of the advance tuition payment contract was deducted

18  under subdivision (l) and was financed with a Michigan education

19  trust secured loan.

20        (u) For the 1998 tax year and each tax year after the 1998

21  tax year, deduct Deduct the amount calculated under section 30d.

22        (v) For tax years that begin on and after January 1, 1994,

23  deduct Deduct, to the extent included in adjusted gross income,

24  any amount, and any interest earned on that amount, received in

25  the tax year by a taxpayer who is a Holocaust victim as a result

26  of a settlement of claims against any entity or individual for

27  any recovered asset pursuant to the German act regulating

 1  unresolved property claims, also known as Gesetz zur Regelung

 2  offener Vermogensfragen, as a result of the settlement of the

 3  action entitled In re: Holocaust victim assets litigation, CV-96-

 4  4849, CV-96-5161, and CV-97-0461 (E.D. NY), or as a result of any

 5  similar action if the income and interest are not commingled in

 6  any way with and are kept separate from all other funds and

 7  assets of the taxpayer. As used in this subdivision:

 8        (i) "Holocaust victim" means a person, or the heir or

 9  beneficiary of that person, who was persecuted by Nazi Germany or

10  any Axis regime during any period from 1933 to 1945.

11        (ii) "Recovered asset" means any asset of any type and any

12  interest earned on that asset including, but not limited to, bank

13  deposits, insurance proceeds, or artwork owned by a Holocaust

14  victim during the period from 1920 to 1945, withheld from that

15  Holocaust victim from and after 1945, and not recovered,

16  returned, or otherwise compensated to the Holocaust victim until

17  after 1993.

18        (w) For tax years that begin after December 31, 1999, deduct

19  Deduct, to the extent not deducted in determining adjusted gross

20  income, both of the following:

21        (i) The total of all contributions made on and after October

22  1, 2000 by the taxpayer in the tax year less qualified

23  withdrawals made in the tax year to education savings accounts

24  pursuant to the Michigan education savings program act, 2000 PA

25  161, MCL 390.1471 to 390.1486, not to exceed $5,000.00 for a

26  single return or $10,000.00 for a joint return per tax year.

27        (ii) The amount under section 30f.

 1        (x) For tax years that begin after December 31, 1999, add

 2  Add, to the extent not included in adjusted gross income, the

 3  amount of money withdrawn by the taxpayer in the tax year from

 4  education savings accounts, not to exceed the total amount

 5  deducted under subdivision (w) in the tax year and all previous

 6  tax years, if the withdrawal was not a qualified withdrawal as

 7  provided in the Michigan education savings program act, 2000 PA

 8  161, MCL 390.1471 to 390.1486. This subdivision does not apply to

 9  withdrawals that are less than the sum of all contributions made

10  to an education savings account in all previous tax years for

11  which no deduction was claimed under subdivision (w), less any

12  contributions for which no deduction was claimed under

13  subdivision (w) that were withdrawn in all previous tax years.

14        (y) For tax years that begin after December 31, 1999, deduct

15  Deduct, to the extent included in adjusted gross income, the

16  amount of a distribution from individual retirement accounts that

17  qualify under section 408 of the internal revenue code if the

18  distribution is used to pay qualified higher education expenses

19  as that term is defined in the Michigan education savings program

20  act, 2000 PA 161, MCL 390.1471 to 390.1486.

21        (z) For tax years that begin after December 31, 2000, deduct

22  Deduct, to the extent included in adjusted gross income, an

23  amount equal to the qualified charitable distribution made in the

24  tax year by a taxpayer to a charitable organization. The amount

25  allowed under this subdivision shall be equal to the amount

26  deductible by the taxpayer under section 170(c) of the internal

27  revenue code with respect to the qualified charitable

 1  distribution in the tax year in which the taxpayer makes the

 2  distribution to the qualified charitable organization, reduced by

 3  both the amount of the deduction for retirement or pension

 4  benefits claimed by the taxpayer under subdivision (f)(i), (ii),

 5  (iv), or (v) and by 2 times the total amount of credits claimed

 6  under sections 260 and 261 for the tax year. As used in this

 7  subdivision, "qualified charitable distribution" means a

 8  distribution of assets to a qualified charitable organization by

 9  a taxpayer not more than 60 days after the date on which the

10  taxpayer received the assets as a distribution from a retirement

11  or pension plan described in subsection (8)(a). A distribution is

12  to a qualified charitable organization if the distribution is

13  made in any of the following circumstances:

14        (i) To an organization described in section 501(c)(3) of the

15  internal revenue code except an organization that is controlled

16  by a political party, an elected official or a candidate for an

17  elective office.

18        (ii) To a charitable remainder annuity trust or a charitable

19  remainder unitrust as defined in section 664(d) of the internal

20  revenue code; to a pooled income fund as defined in section

21  642(c)(5) of the internal revenue code; or for the issuance of a

22  charitable gift annuity as defined in section 501(m)(5) of the

23  internal revenue code. A trust, fund, or annuity described in

24  this subparagraph is a qualified charitable organization only if

25  no person holds any interest in the trust, fund, or annuity other

26  than 1 or more of the following:

27        (A) The taxpayer who received the distribution from the

 1  retirement or pension plan.

 2        (B) The spouse of an individual described in sub-

 3  subparagraph (A).

 4        (C) An organization described in section 501(c)(3) of the

 5  internal revenue code.

 6        (aa) A taxpayer who is a resident tribal member may deduct,

 7  to the extent included in adjusted gross income, all nonbusiness

 8  income earned or received in the tax year and during the period

 9  in which an agreement entered into between the taxpayer's tribe

10  and this state pursuant to section 30c of 1941 PA 122, MCL

11  205.30c, is in full force and effect. As used in this

12  subdivision:

13        (i) "Business income" means business income as defined in

14  section 4 and apportioned under chapter 3.

15        (ii) "Nonbusiness income" means nonbusiness income as defined

16  in section 14 and, to the extent not included in business income,

17  all of the following:

18        (A) All income derived from wages whether the wages are

19  earned within the agreement area or outside of the agreement

20  area.

21        (B) All interest and passive dividends.

22        (C) All rents and royalties derived from real property

23  located within the agreement area.

24        (D) All rents and royalties derived from tangible personal

25  property, to the extent the personal property is utilized within

26  the agreement area.

27        (E) Capital gains from the sale or exchange of real property

 1  located within the agreement area.

 2        (F) Capital gains from the sale or exchange of tangible

 3  personal property located within the agreement area at the time

 4  of sale.

 5        (G) Capital gains from the sale or exchange of intangible

 6  personal property.

 7        (H) All pension income and benefits including, but not

 8  limited to, distributions from a 401(k) plan, individual

 9  retirement accounts under section 408 of the internal revenue

10  code, or a defined contribution plan, or payments from a defined

11  benefit plan.

12        (I) All per capita payments by the tribe to resident tribal

13  members, without regard to the source of payment.

14        (J) All gaming winnings.

15        (iii) "Resident tribal member" means an individual who meets

16  all of the following criteria:

17        (A) Is an enrolled member of a federally recognized tribe.

18        (B) The individual's tribe has an agreement with this state

19  pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in

20  full force and effect.

21        (C) The individual's principal place of residence is located

22  within the agreement area as designated in the agreement under

23  sub-subparagraph (B).

24        (bb) For tax years that begin after December 31, 2006,

25  deduct, to the extent included in adjusted gross income, all or a

26  portion of the gain, as determined under this section, realized

27  from an initial equity investment of not less than $100,000.00

 1  made by the taxpayer before December 31, 2009, in a qualified

 2  business, if an amount equal to the sum of the taxpayer's basis

 3  in the investment as determined under the internal revenue code

 4  plus the gain, or a portion of that amount, is reinvested in an

 5  equity investment in a qualified business within 1 year after the

 6  sale or disposition of the investment in the qualified business.

 7  If the amount of the subsequent investment is less than the sum

 8  of the taxpayer's basis from the prior equity investment plus the

 9  gain from the prior equity investment, the amount of a deduction

10  under this section shall be reduced by the difference between the

11  sum of the taxpayer's basis from the prior equity investment plus

12  the gain from the prior equity investment and the subsequent

13  investment. As used in this subdivision:

14        (i) "Advanced automotive, manufacturing, and materials

15  technology" means any technology that involves 1 or more of the

16  following:

17        (A) Materials with engineered properties created through the

18  development of specialized process and synthesis technology.

19        (B) Nanotechnology, including materials, devices, or systems

20  at the atomic, molecular, or macromolecular level, with a scale

21  measured in nanometers.

22        (C) Microelectromechanical systems, including devices or

23  systems integrating microelectronics with mechanical parts and a

24  scale measured in micrometers.

25        (D) Improvements to vehicle safety, vehicle performance,

26  vehicle production, or environmental impact, including, but not

27  limited to, vehicle equipment and component parts.

 1        (E) Any technology that involves an alternative energy

 2  vehicle or its components. "Alternative energy vehicle" means

 3  that term as defined in section 2 of the Michigan next energy

 4  authority act, 2002 PA 593, MCL 207.822.

 5        (F) A new technology, device, or system that enhances or

 6  improves the manufacturing process of wood, timber, or

 7  agricultural-based products.

 8        (G) Advanced computing or electronic device technology

 9  related to technology described under this subparagraph.

10        (H) Design, engineering, testing, or diagnostics related to

11  technology described under this subparagraph.

12        (I) Product research and development related to technology

13  described under this subparagraph.

14        (ii) "Advanced computing" means any technology used in the

15  design and development of 1 or more of the following:

16        (A) Computer hardware and software.

17        (B) Data communications.

18        (C) Information technologies.

19        (iii) "Alternative energy technology" means applied research

20  or commercialization of new or next generation technology in 1 or

21  more of the following:

22        (A) Alternative energy technology as that term is defined in

23  section 2 of the Michigan next energy authority act, 2002 PA 593,

24  MCL 207.822.

25        (B) Devices or systems designed and used solely for the

26  purpose of generating energy from agricultural crops, residue and

27  waste generated from the production and processing of

 1  agricultural products, animal wastes, or food processing wastes,

 2  not including a conventional gasoline or diesel fuel engine or a

 3  retrofitted conventional gasoline or diesel fuel engine.

 4        (C) A new technology, product, or system that permits the

 5  utilization of biomass for the production of specialty,

 6  commodity, or foundational chemicals or of novel or economical

 7  commodity materials through the application of biotechnology that

 8  minimizes, complements, or replaces reliance on petroleum for the

 9  production.

10        (D) Advanced computing or electronic device technology

11  related to technology described under this subparagraph.

12        (E) Design, engineering, testing, or diagnostics related to

13  technology described under this subparagraph.

14        (F) Product research and development related to a technology

15  described under this subparagraph.

16        (iv) "Competitive edge technology" means 1 or more of the

17  following:

18        (A) Advanced automotive, manufacturing, and materials

19  technology.

20        (B) Alternative energy technology.

21        (C) Homeland security and defense technology.

22        (D) Life sciences technology.

23        (v) "Electronic device technology" means any technology that

24  involves microelectronics, semiconductors, electronic equipment,

25  and instrumentation, radio frequency, microwave, and millimeter

26  electronics; optical and optic-electrical devices; or data and

27  digital communications and imaging devices.

 1        (vi) "Homeland security and defense technology" means

 2  technology that assists in the assessment of threats or damage to

 3  the general population and critical infrastructure, protection

 4  of, defense against, or mitigation of the effects of foreign or

 5  domestic threats, disasters, or attacks, or support for crisis or

 6  response management, including, but not limited to, 1 or more of

 7  the following:

 8        (A) Sensors, systems, processes, or equipment for

 9  communications, identification and authentication, screening,

10  surveillance, tracking, and data analysis.

11        (B) Advanced computing or electronic device technology

12  related to technology described under this subparagraph.

13        (C) Aviation technology including, but not limited to,

14  avionics, airframe design, sensors, early warning systems, and

15  services related to the technology described in this

16  subparagraph.

17        (D) Design, engineering, testing, or diagnostics related to

18  technology described under this subparagraph.

19        (E) Product research and development related to technology

20  described under this subparagraph.

21        (vii) "Life sciences technology" means any technology derived

22  from life sciences intended to improve human health or the

23  overall quality of human life, including, but not limited to,

24  systems, processes, or equipment for drug or gene therapies,

25  biosensors, testing, medical devices or instrumentation with a

26  therapeutic or diagnostic value, a pharmaceutical or other

27  product that requires United States food and drug administration

 1  approval or registration prior to its introduction in the

 2  marketplace and is a drug or medical device as defined by the

 3  federal food, drug, and cosmetic act, 21 USC 301 to 399, or 1 or

 4  more of the following:

 5        (A) Advanced computing or electronic device technology

 6  related to technology described under this subparagraph.

 7        (B) Design, engineering, testing, or diagnostics related to

 8  technology or the commercial manufacturing of technology

 9  described under this subparagraph.

10        (C) Product research and development related to technology

11  described under this subparagraph.

12        (viii) "Life sciences" means science for the examination or

13  understanding of life or life processes, including, but not

14  limited to, all of the following:

15        (A) Bioengineering.

16        (B) Biomedical engineering.

17        (C) Genomics.

18        (D) Proteomics.

19        (E) Molecular and chemical ecology.

20        (F) Biotechnology, including any technology that uses living

21  organisms, cells, macromolecules, microorganisms, or substances

22  from living organisms to make or modify a product for useful

23  purposes. Biotechnology or life sciences do not include any of

24  the following:

25        (I) Activities prohibited under section 2685 of the public

26  health code, 1978 PA 368, MCL 333.2685.

27        (II) Activities prohibited under section 2688 of the public

 1  health code, 1978 PA 368, MCL 333.2688.

 2        (III) Activities prohibited under section 2690 of the public

 3  health code, 1978 PA 368, MCL 333.2690.

 4        (IV) Activities prohibited under section 16274 of the public

 5  health code, 1978 PA 368, MCL 333.16274.

 6        (V) Stem cell research with human embryonic tissue.

 7        (ix) "Qualified business" means a business that complies with

 8  all of the following:

 9        (A) The business is a seed or early stage business as

10  defined in section 3 of the Michigan early stage venture

11  investment act of 2003, 2003 PA 296, MCL 125.2233.

12        (B) The business has its headquarters in this state, is

13  domiciled in this state, or has a majority of its employees

14  working a majority of their time in this state.

15        (C) The business has a preinvestment valuation of less than

16  $10,000,000.00.

17        (D) The business has been in existence less than 5 years.

18  This sub-subparagraph does not apply to a business, the business

19  activity of which is derived from research at an institution of

20  higher education located within this state or an organization

21  exempt from federal taxation under section 501c(3) of the

22  internal revenue code and that is located within this state.

23        (E) The business is engaged only in competitive edge

24  technology.

25        (F) The business is certified by the Michigan strategic fund

26  as meeting the requirements of sub-subparagraphs (A) to (E) at

27  the time of each proposed investment.

 1        (2) The following Except as otherwise provided in subsection

 2  (7), a personal exemptions exemption of $2,500.00 multiplied by

 3  the number of personal or dependency exemptions allowable on the

 4  taxpayer's federal income tax return pursuant to the internal

 5  revenue code shall be subtracted in the calculation that

 6  determines taxable income. :

7       (a) For a tax year beginning during 1987 .....  $  1,600.00.

8       (b) For a tax year beginning during 1988 .....  $  1,800.00.

9       (c) For a tax year beginning during 1989 .....  $  2,000.00.

10      (d) For a tax year beginning after 1989

11 and before 1995 ...................................  $  2,100.00.

12      (e) For a tax year beginning during 1995

13 or 1996 ...........................................  $  2,400.00.

14      (f) Except as otherwise provided in

15 subsection (7), for a tax year beginning after

16 1996 ...............................  $  2,500.00.

17        (3) A Except as otherwise provided in subsection (7), a

18  single additional exemption determined as follows shall be

19  subtracted in the calculation that determines taxable income in

20  each of the following circumstances:

21        (a) For tax years beginning after 1989 and before 2000,

22  $900.00 in each of the following circumstances:

23        (i) The taxpayer is a paraplegic, a quadriplegic, a

24  hemiplegic, a person who is blind as defined in section 504, or a

25  person who is totally and permanently disabled as defined in

26  section 522.

27        (ii) The taxpayer is a deaf person as defined in section 2 of

 1  the deaf persons' interpreters act, 1982 PA 204, MCL 393.502.

 2        (iii) The taxpayer is 65 years of age or older.

 3        (iv) The return includes unemployment compensation that

 4  amounts to 50% or more of adjusted gross income.

 5  (a) (b) For tax years beginning after 1999, $1,800.00 for

 6  each taxpayer and every dependent of the taxpayer who is 65 years

 7  of age or older. When a dependent of a taxpayer files an annual

 8  return under this act, the taxpayer or dependent of the taxpayer,

 9  but not both, may claim the additional exemption allowed under

10  this subdivision. As used in this subdivision and subdivision

11  (c), "dependent" means that term as defined in section 30e.

12  (b) (c) For tax years beginning after 1999, $1,800.00 for

13  each taxpayer and every dependent of the taxpayer who is a deaf

14  person as defined in section 2 of the deaf persons' interpreters

15  act, 1982 PA 204, MCL 393.502; a paraplegic, a quadriplegic, or a

16  hemiplegic; a person who is blind as defined in section 504; or a

17  person who is totally and permanently disabled as defined in

18  section 522. When a dependent of a taxpayer files an annual

19  return under this act, the taxpayer or dependent of the taxpayer,

20  but not both, may claim the additional exemption allowed under

21  this subdivision.

22  (c) (d) For tax years beginning after 1999, $1,800.00 if the

23  taxpayer's return includes unemployment compensation that amounts

24  to 50% or more of adjusted gross income.

25        (d) For tax years beginning after 2007, $250.00 for each

26  taxpayer and every dependent of the taxpayer who is a qualified

27  disabled veteran. When a dependent of a taxpayer files an annual

 1  return under this act, the taxpayer or dependent of the taxpayer,

 2  but not both, may claim the additional exemption allowed under

 3  this subdivision. As used in this subdivision:

 4        (i) "Qualified disabled veteran" means a veteran with a

 5  service-connected disability.

 6        (ii) "Service-connected disability" means a disability

 7  incurred or aggravated in the line of duty in the active

 8  military, naval, or air service as described in 38 USC 101(16).

 9        (iii) "Veteran" means a person who served in the active

10  military, naval, marine, coast guard, or air service and who was

11  discharged or released from his or her service with an honorable

12  or general discharge.

13        (4) For a tax year beginning after 1987, an An individual

14  with respect to whom a deduction under section 151 of the

15  internal revenue code is allowable to another federal taxpayer

16  during the tax year is not considered to have an allowable

17  federal exemption for purposes of subsection (2), but may

18  subtract $500.00 $1,500.00 in the calculation that determines

19  taxable income for a tax year. beginning in 1988, $1,000.00 for a

20  tax year beginning after 1988 and before 2000, and $1,500.00 for

21  a tax year beginning after 1999.

22        (5) A nonresident or a part-year resident is allowed that

23  proportion of an exemption or deduction allowed under subsection

24  (2), (3), or (4) that the taxpayer's portion of adjusted gross

25  income from Michigan sources bears to the taxpayer's total

26  adjusted gross income.

27        (6) For a tax year beginning after 1987, in In calculating

 1  taxable income, a taxpayer shall not subtract from adjusted gross

 2  income the amount of prizes won by the taxpayer under the

 3  McCauley-Traxler-Law-Bowman-McNeely lottery act, 1972 PA 239, MCL

 4  432.1 to 432.47.

 5        (7) For each tax year, after the 1997 tax year, the personal

 6  exemption allowed under subsection (2) shall be adjusted by

 7  multiplying the exemption for the tax year beginning in 1997 by a

 8  fraction, the numerator of which is the United States consumer

 9  price index for the state fiscal year ending in the tax year

10  prior to the tax year for which the adjustment is being made and

11  the denominator of which is the United States consumer price

12  index for the 1995-96 state fiscal year. The resultant product

13  shall be rounded to the nearest $100.00 increment. The personal

14  exemption for the tax year shall be determined by adding $200.00

15  to that rounded amount. As used in this section, "United States

16  consumer price index" means the United States consumer price

17  index for all urban consumers as defined and reported by the

18  United States department of labor, bureau of labor statistics.

19  For each tax year, after the 2000 tax year, the exemptions

20  allowed under subsection (3) shall be adjusted by multiplying the

21  exemption amount under subsection (3) for the tax year beginning

22  in 2000 by a fraction, the numerator of which is the United

23  States consumer price index for the state fiscal year ending the

24  tax year prior to the tax year for which the adjustment is being

25  made and the denominator of which is the United States consumer

26  price index for the 1998-1999 state fiscal year. The resultant

27  product shall be rounded to the nearest $100.00 increment.

 1        (8) As used in subsection (1)(f), "retirement or pension

 2  benefits" means distributions from all of the following:

 3        (a) Except as provided in subdivision (d), qualified pension

 4  trusts and annuity plans that qualify under section 401(a) of the

 5  internal revenue code, including all of the following:

 6        (i) Plans for self-employed persons, commonly known as Keogh

 7  or HR 10 HR10 plans.

 8        (ii) Individual retirement accounts that qualify under

 9  section 408 of the internal revenue code if the distributions are

10  not made until the participant has reached 59-1/2 years of age,

11  except in the case of death, disability, or distributions

12  described by section 72(t)(2)(A)(iv) of the internal revenue code.

13        (iii) Employee annuities or tax-sheltered annuities purchased

14  under section 403(b) of the internal revenue code by

15  organizations exempt under section 501(c)(3) of the internal

16  revenue code, or by public school systems.

17        (iv) Distributions from a 401(k) plan attributable to

18  employee contributions mandated by the plan or attributable to

19  employer contributions.

20        (b) The following retirement and pension plans not qualified

21  under the internal revenue code:

22        (i) Plans of the United States, state governments other than

23  this state, and political subdivisions, agencies, or

24  instrumentalities of this state.

25        (ii) Plans maintained by a church or a convention or

26  association of churches.

27        (iii) All other unqualified pension plans that prescribe

 1  eligibility for retirement and predetermine contributions and

 2  benefits if the distributions are made from a pension trust.

 3        (c) Retirement or pension benefits received by a surviving

 4  spouse if those benefits qualified for a deduction prior to the

 5  decedent's death. Benefits received by a surviving child are not

 6  deductible.

 7        (d) Retirement and pension benefits do not include:

 8        (i) Amounts received from a plan that allows the employee to

 9  set the amount of compensation to be deferred and does not

10  prescribe retirement age or years of service. These plans

11  include, but are not limited to, all of the following:

12        (A) Deferred compensation plans under section 457 of the

13  internal revenue code.

14        (B) Distributions from plans under section 401(k) of the

15  internal revenue code other than plans described in subdivision

16  (a)(iv).

17        (C) Distributions from plans under section 403(b) of the

18  internal revenue code other than plans described in subdivision

19  (a)(iii).

20        (ii) Premature distributions paid on separation, withdrawal,

21  or discontinuance of a plan prior to the earliest date the

22  recipient could have retired under the provisions of the plan.

23        (iii) Payments received as an incentive to retire early unless

24  the distributions are from a pension trust.

25        Sec. 261. (1) For the 1989 tax year and each tax year after

26  1989 and subject to the applicable limitations in this section, a

27  taxpayer may credit against the tax imposed by this act 50% of

 1  the amount the taxpayer contributes during the tax year to an

 2  endowment fund of a community foundation or for the 1992 tax year

 3  and each tax year after 1992 and subject to the applicable

 4  limitations in this section, a taxpayer may credit against the

 5  tax imposed by this act 50% of the cash amount the taxpayer

 6  contributes during the tax year to a shelter for homeless

 7  persons, food kitchen, food bank, or other entity located in this

 8  state, the primary purpose of which is to provide overnight

 9  accommodation, food, or meals to persons who are indigent if a

10  contribution to that entity is tax deductible for the donor under

11  the internal revenue code.

12        (2) For a taxpayer other than a resident estate or trust,

13  the credit allowed by this section for a contribution to a

14  community foundation shall not exceed $100.00, or $200.00 for a

15  husband and wife filing a joint return for tax years before the

16  2000 tax year and $100.00 or $200.00 for a husband and wife

17  filing a joint return for tax years after the 1999 tax year. For

18  the 1992 tax year and each tax year after 1992, a taxpayer may

19  claim an additional credit under this section not to exceed

20  $100.00, or $200.00 for a husband and wife filing a joint return,

21  for total cash contributions made in the tax year to shelters for

22  homeless persons, food kitchens, food banks, and, except for

23  community foundations, other entities allowed under subsection

24  (1). For a resident estate or trust, the credit allowed by this

25  section for a contribution to a community foundation shall not

26  exceed 10% of the taxpayer's tax liability for the tax year

27  before claiming any credits allowed by this act or $5,000.00,

 1  whichever is less. For the 1992 tax year and each tax year after

 2  1992, a resident estate or trust may claim an additional credit

 3  under this section not to exceed 10% of the taxpayer's tax

 4  liability for the tax year before claiming any credits allowed by

 5  this act or $5,000.00, whichever is less, for total cash

 6  contributions made in the tax year to shelters for homeless

 7  persons, food kitchens, food banks, and, except for community

 8  foundations, other entities allowed under subsection (1). For a

 9  resident estate or trust, the amount used to calculate the

10  credits under this section shall not have been deducted in

11  arriving at federal taxable income.

12        (3) The credits allowed under this section are nonrefundable

13  so that a taxpayer shall not claim under this section a total

14  credit amount that reduces the taxpayer's tax liability to less

15  than zero.

16        (4) As used in this section, "community foundation" means an

17  organization that applies for certification on or before May 15

18  of the tax year for which the taxpayer is claiming the credit and

19  that the department certifies for that tax year as meeting all of

20  the following requirements:

21        (a) Qualifies for exemption from federal income taxation

22  under section 501(c)(3) of the internal revenue code.

23        (b) Supports a broad range of charitable activities within

24  the specific geographic area of this state that it serves, such

25  as a municipality or county.

26        (c) Maintains an ongoing program to attract new endowment

27  funds by seeking gifts and bequests from a wide range of

 1  potential donors in the community or area served.

 2        (d) Is publicly supported as defined by the regulations of

 3  the United States department of treasury, 26 C.F.R. CFR 1.170A-

 4  9(e)(10). To maintain certification, the community foundation

 5  shall submit documentation to the department annually that

 6  demonstrates compliance with this subdivision.

 7        (e) Is not a supporting organization as an organization is

 8  described in section 509(a)(3) of the internal revenue code and

 9  the regulations of the United States department of treasury, 26

10  C.F.R. CFR 1.509(a)-4 and 1.509(a)-5.

11        (f) Meets the requirements for treatment as a single entity

12  contained in the regulations of the United States department of

13  treasury, 26 C.F.R. CFR 1.170A-9(e)(11).

14        (g) Except as provided in subsection (6), is incorporated or

15  established as a trust at least 6 months before the beginning of

16  the tax year for which the credit under this section is claimed

17  and that has an endowment value of at least $100,000.00 before

18  the expiration of 18 months after the community foundation is

19  incorporated or established.

20        (h) Has an independent governing body representing the

21  general public's interest and that is not appointed by a single

22  outside entity.

23        (i) Provides evidence to the department that the community

24  foundation has, before the expiration of 6 months after the

25  community foundation is incorporated or established, and

26  maintains continually during the tax year for which the credit

27  under this section is claimed, at least 1 part-time or full-time

 1  employee.

 2        (j) For community foundations that have an endowment value

 3  of $1,000,000.00 or more only, the community foundation is

 4  subject to an annual independent financial audit and provides

 5  copies of that audit to the department not more than 3 months

 6  after the completion of the audit. For community foundations that

 7  have an endowment value of less than $1,000,000.00, the community

 8  foundation is subject to an annual review and an audit every

 9  third year.

10        (k) In addition to all other criteria listed in this

11  subsection for a community foundation that is incorporated or

12  established after the effective date of the amendatory act that

13  added this subdivision, operates in a county of this state that

14  was not served by a community foundation when the community

15  foundation was incorporated or established or operates as a

16  geographic component of an existing certified community

17  foundation.

18        (5) An entity other than a community foundation may request

19  that the department determine if a contribution to that entity

20  qualifies for the credit under this section. The department shall

21  make a determination and respond to a request no later than 30

22  days after the department receives the request.

23        (6) A taxpayer may claim a credit under this section for

24  contributions to a community foundation made before the

25  expiration of the 18-month period after a community foundation

26  was incorporated or established during which the community

27  foundation must build an endowment value of $100,000.00 as

 1  provided in subsection (4)(g). If the community foundation does

 2  not reach the required $100,000.00 endowment value during that

 3  18-month period, contributions to the community foundation made

 4  after the date on which the 18-month period expires shall not be

 5  used to calculate a credit under this section. At any time after

 6  the expiration of the 18-month period under subsection (4)(g)

 7  that the community foundation has an endowment value of

 8  $100,000.00, the community foundation may apply to the department

 9  for certification under this section.

10        (7) On or before July 1 of each year, the department shall

11  report to the house committee on tax policy and the senate

12  finance committee the total amount of tax credits claimed under

13  this section and under section 38c of the single business tax

14  act, 1975 PA 228, MCL 208.38c, or section 425 of the Michigan

15  business tax act, 2007 PA 36, MCL 208.1425, for the immediately

16  preceding tax year.

17        Sec. 266. (1) A qualified taxpayer with a rehabilitation

18  plan certified after December 31, 1998 may credit against the tax

19  imposed by this act the amount determined pursuant to subsection

20  (2) for the qualified expenditures for the rehabilitation of a

21  historic resource pursuant to the rehabilitation plan in the year

22  in which the certification of completed rehabilitation of the

23  historic resource is issued provided that the certification of

24  completed rehabilitation was issued not more than 5 years after

25  the rehabilitation plan was certified by the Michigan historical

26  center.

27        (2) The credit allowed under this section shall be 25% of

 1  the qualified expenditures that are eligible for the credit under

 2  section 47(a)(2) of the internal revenue code if the taxpayer is

 3  eligible for the credit under section 47(a)(2) of the internal

 4  revenue code or, if the taxpayer is not eligible for the credit

 5  under section 47(a)(2) of the internal revenue code, 25% of the

 6  qualified expenditures that would qualify under section 47(a)(2)

 7  of the internal revenue code except that the expenditures are

 8  made to a historic resource that is not eligible for the credit

 9  under section 47(a)(2) of the internal revenue code, subject to

10  both of the following:

11        (a) A taxpayer with qualified expenditures that are eligible

12  for the credit under section 47(a)(2) of the internal revenue

13  code may not claim a credit under this section for those

14  qualified expenditures unless the taxpayer has claimed and

15  received a credit for those qualified expenditures under section

16  47(a)(2) of the internal revenue code.

17        (b) A credit under this section shall be reduced by the

18  amount of a credit received by the taxpayer for the same

19  qualified expenditures under section 47(a)(2) of the internal

20  revenue code.

21        (3) To be eligible for the credit under this section, the

22  taxpayer shall apply to and receive from the Michigan historical

23  center certification that the historic significance, the

24  rehabilitation plan, and the completed rehabilitation of the

25  historic resource meet the criteria under subsection (6) and

26  either of the following:

27        (a) All of the following criteria:

 1        (i) The historic resource contributes to the significance of

 2  the historic district in which it is located.

 3        (ii) Both the rehabilitation plan and completed

 4  rehabilitation of the historic resource meet the federal

 5  secretary of the interior's standards for rehabilitation and

 6  guidelines for rehabilitating historic buildings, 36 CFR part 67.

 7        (iii) All rehabilitation work has been done to or within the

 8  walls, boundaries, or structures of the historic resource or to

 9  historic resources located within the property boundaries of the

10  resource.

11        (b) The taxpayer has received certification from the

12  national park service that the historic resource's significance,

13  the rehabilitation plan, and the completed rehabilitation qualify

14  for the credit allowed under section 47(a)(2) of the internal

15  revenue code.

16        (4) If a qualified taxpayer is eligible for the credit

17  allowed under section 47(a)(2) of the internal revenue code, the

18  qualified taxpayer shall file for certification with the center

19  to qualify for the credit allowed under section 47(a)(2) of the

20  internal revenue code. If the qualified taxpayer has previously

21  filed for certification with the center to qualify for the credit

22  allowed under section 47(a)(2) of the internal revenue code,

23  additional filing for the credit allowed under this section is

24  not required.

25        (5) The center may inspect a historic resource at any time

26  during the rehabilitation process and may revoke certification of

27  completed rehabilitation if the rehabilitation was not undertaken

 1  as represented in the rehabilitation plan or if unapproved

 2  alterations to the completed rehabilitation are made during the 5

 3  years after the tax year in which the credit was claimed. The

 4  center shall promptly notify the department of a revocation.

 5        (6) Qualified expenditures for the rehabilitation of a

 6  historic resource may be used to calculate the credit under this

 7  section if the historic resource meets 1 of the criteria listed

 8  in subdivision (a) and 1 of the criteria listed in subdivision

 9  (b):

10        (a) The resource is 1 of the following during the tax year

11  in which a credit under this section is claimed for those

12  qualified expenditures:

13        (i) Individually listed on the national register of historic

14  places or state register of historic sites.

15        (ii) A contributing resource located within a historic

16  district listed on the national register of historic places or

17  the state register of historic sites.

18        (iii) A contributing resource located within a historic

19  district designated by a local unit pursuant to an ordinance

20  adopted under the local historic districts act, 1970 PA 169, MCL

21  399.201 to 399.215.

22        (b) The resource meets 1 of the following criteria during

23  the tax year in which a credit under this section is claimed for

24  those qualified expenditures:

25        (i) The historic resource is located in a designated historic

26  district in a local unit of government with an existing ordinance

27  under the local historic districts act, 1970 PA 169, MCL 399.201

 1  to 399.215.

 2        (ii) The historic resource is located in an incorporated

 3  local unit of government that does not have an ordinance under

 4  the local historic districts act, 1970 PA 169, MCL 399.201 to

 5  399.215, and has a population of less than 5,000.

 6        (iii) The historic resource is located in an unincorporated

 7  local unit of government.

 8        (iv) The historic resource is located in an incorporated

 9  local unit of government that does not have an ordinance under

10  the local historic districts act, 1970 PA 169, MCL 399.201 to

11  399.215, and is located within the boundaries of an association

12  that has been chartered under 1889 PA 39, MCL 455.51 to 455.72.

13        (7) A credit amount assigned under section 39c(7) of the

14  single business tax act, 1975 PA 228, MCL 208.39c, or section 435

15  of the Michigan business tax act, 2007 PA 36, MCL 208.1435, may

16  be claimed against the partner's, member's, or shareholder's tax

17  liability under this act as provided in section 39c(7) of the

18  single business tax act, 1975 PA 228, MCL 208.39c, or section 435

19  of the Michigan business tax act, 2007 PA 36, MCL 208.1435.

20        (8) If the credit allowed under this section for the tax

21  year and any unused carryforward of the credit allowed by this

22  section exceed the taxpayer's tax liability for the tax year,

23  that portion that exceeds the tax liability for the tax year

24  shall not be refunded but may be carried forward to offset tax

25  liability in subsequent tax years for 10 years or until used up,

26  whichever occurs first.

27        (9) If the taxpayer sells a historic resource for which a

 1  credit under this section was claimed less than 5 years after the

 2  year in which the credit was claimed, the following percentage of

 3  the credit amount previously claimed relative to that historic

 4  resource shall be added back to the tax liability of the taxpayer

 5  in the year of the sale:

 6        (a) If the sale is less than 1 year after the year in which

 7  the credit was claimed, 100%.

 8        (b) If the sale is at least 1 year but less than 2 years

 9  after the year in which the credit was claimed, 80%.

10        (c) If the sale is at least 2 years but less than 3 years

11  after the year in which the credit was claimed, 60%.

12        (d) If the sale is at least 3 years but less than 4 years

13  after the year in which the credit was claimed, 40%.

14        (e) If the sale is at least 4 years but less than 5 years

15  after the year in which the credit was claimed, 20%.

16        (f) If the sale is 5 years or more after the year in which

17  the credit was claimed, an addback to the taxpayer's tax

18  liability shall not be made.

19        (10) If a certification of completed rehabilitation is

20  revoked under subsection (5) less than 5 years after the year in

21  which a credit was claimed, the following percentage of the

22  credit amount previously claimed relative to that historic

23  resource shall be added back to the tax liability of the taxpayer

24  in the year of the revocation:

25        (a) If the revocation is less than 1 year after the year in

26  which the credit was claimed, 100%.

27        (b) If the revocation is at least 1 year but less than 2

 1  years after the year in which the credit was claimed, 80%.

 2        (c) If the revocation is at least 2 years but less than 3

 3  years after the year in which the credit was claimed, 60%.

 4        (d) If the revocation is at least 3 years but less than 4

 5  years after the year in which the credit was claimed, 40%.

 6        (e) If the revocation is at least 4 years but less than 5

 7  years after the year in which the credit was claimed, 20%.

 8        (f) If the revocation is 5 years or more after the year in

 9  which the credit was claimed, an addback to the taxpayer's tax

10  liability shall not be made.

11        (11) The department of history, arts, and libraries through

12  the Michigan historical center may impose a fee to cover the

13  administrative cost of implementing the program under this

14  section.

15        (12) The qualified taxpayer shall attach all of the

16  following to the qualified taxpayer's annual return under this

17  act:

18        (a) Certification of completed rehabilitation.

19        (b) Certification of historic significance related to the

20  historic resource and the qualified expenditures used to claim a

21  credit under this section.

22        (c) A completed assignment form if the qualified taxpayer is

23  an assignee under section 39c of the single business tax act,

24  1975 PA 228, MCL 208.39c, or section 435 of the Michigan business

25  tax act, 2007 PA 36, MCL 208.1435, of any portion of a credit

26  allowed under that section.

27        (13) The department of history, arts, and libraries shall

 1  promulgate rules to implement this section pursuant to the

 2  administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 3  24.328.

 4        (14) The total of the credits claimed under this section and

 5  section 39c of the single business tax act, 1975 PA 228, MCL

 6  208.39c, or section 435 of the Michigan business tax act, 2007 PA

 7  36, MCL 208.1435, for a rehabilitation project shall not exceed

 8  25% of the total qualified expenditures eligible for the credit

 9  under this section for that rehabilitation project.

10        (15) The department of history, arts, and libraries through

11  the Michigan historical center shall report all of the following

12  to the legislature annually for the immediately preceding state

13  fiscal year:

14        (a) The fee schedule used by the center and the total amount

15  of fees collected.

16        (b) A description of each rehabilitation project certified.

17        (c) The location of each new and ongoing rehabilitation

18  project.

19        (16) As used in this section:

20        (a) "Contributing resource" means a historic resource that

21  contributes to the significance of the historic district in which

22  it is located.

23        (b) "Historic district" means an area, or group of areas not

24  necessarily having contiguous boundaries, that contains 1

25  resource or a group of resources that are related by history,

26  architecture, archaeology, engineering, or culture.

27        (c) "Historic resource" means a publicly or privately owned

 1  historic building, structure, site, object, feature, or open

 2  space located within a historic district designated by the

 3  national register of historic places, the state register of

 4  historic sites, or a local unit acting under the local historic

 5  districts act, 1970 PA 169, MCL 399.201 to 399.215; or that is

 6  individually listed on the state register of historic sites or

 7  national register of historic places and includes all of the

 8  following:

 9        (i) An owner-occupied personal residence or a historic

10  resource located within the property boundaries of that personal

11  residence.

12        (ii) An income-producing commercial, industrial, or

13  residential resource or a historic resource located within the

14  property boundaries of that resource.

15        (iii) A resource owned by a governmental body, nonprofit

16  organization, or tax-exempt entity that is used primarily by a

17  taxpayer lessee in a trade or business unrelated to the

18  governmental body, nonprofit organization, or tax-exempt entity

19  and that is subject to tax under this act.

20        (iv) A resource that is occupied or utilized by a

21  governmental body, nonprofit organization, or tax-exempt entity

22  pursuant to a long-term lease or lease with option to buy

23  agreement.

24        (v) Any other resource that could benefit from

25  rehabilitation.

26        (d) "Local unit" means a county, city, village, or township.

27        (e) "Long-term lease" means a lease term of at least 27.5

 1  years for a residential resource or at least 31.5 years for a

 2  nonresidential resource.

 3        (f) "Michigan historical center" or "center" means the state

 4  historic preservation office of the Michigan historical center of

 5  the department of history, arts, and libraries or its successor

 6  agency.

 7        (g) "Open space" means undeveloped land, a naturally

 8  landscaped area, or a formal or man-made landscaped area that

 9  provides a connective link or a buffer between other resources.

10        (h) "Person" means an individual, partnership, corporation,

11  association, governmental entity, or other legal entity.

12        (i) "Qualified expenditures" means capital expenditures that

13  qualify for a rehabilitation credit under section 47(a)(2) of the

14  internal revenue code if the taxpayer is eligible for the credit

15  under section 47(a)(2) of the internal revenue code or, if the

16  taxpayer is not eligible for the credit under section 47(a)(2) of

17  the internal revenue code, the qualified expenditures that would

18  qualify under section 47(a)(2) of the internal revenue code

19  except that the expenditures are made to a historic resource that

20  is not eligible for the credit under section 47(a)(2) of the

21  internal revenue code, that were paid not more than 5 years after

22  the certification of the rehabilitation plan that included those

23  expenditures was approved by the center, and that were paid after

24  December 31, 1998 for the rehabilitation of a historic resource.

25  Qualified expenditures do not include capital expenditures for

26  nonhistoric additions to a historic resource except an addition

27  that is required by state or federal regulations that relate to

 1  historic preservation, safety, or accessibility.

 2        (j) "Qualified taxpayer" means a person that is an assignee

 3  under section 39c of the single business tax act, 1975 PA 228,

 4  MCL 208.39c, or section 435 of the Michigan business tax act,

 5  2007 PA 36, MCL 208.1435, or either owns the resource to be

 6  rehabilitated or has a long-term lease agreement with the owner

 7  of the historic resource and that has qualified expenditures for

 8  the rehabilitation of the historic resource equal to or greater

 9  than 10% of the state equalized valuation of the property. If the

10  historic resource to be rehabilitated is a portion of a historic

11  or nonhistoric resource, the state equalized valuation of only

12  that portion of the property shall be used for purposes of this

13  subdivision. If the assessor for the local tax collecting unit in

14  which the historic resource is located determines the state

15  equalized valuation of that portion, that assessor's

16  determination shall be used for purposes of this subdivision. If

17  the assessor does not determine that state equalized valuation of

18  that portion, qualified expenditures, for purposes of this

19  subdivision, shall be equal to or greater than 5% of the

20  appraised value as determined by a certified appraiser. If the

21  historic resource to be rehabilitated does not have a state

22  equalized valuation, qualified expenditures for purposes of this

23  subdivision shall be equal to or greater than 5% of the appraised

24  value of the resource as determined by a certified appraiser.

25        (k) "Rehabilitation plan" means a plan for the

26  rehabilitation of a historic resource that meets the federal

27  secretary of the interior's standards for rehabilitation and

 1  guidelines for rehabilitation of historic buildings under 36 CFR

 2  part 67.

 3        Sec. 270. (1) For tax years that begin after December 31,

 4  2008, a taxpayer to whom a tax voucher certificate is issued or a

 5  taxpayer that is the transferee of a tax voucher certificate may

 6  use the tax voucher certificate to pay any liability of the

 7  taxpayer under section 51 or to pay any amount owed by the

 8  taxpayer under section 351.

 9        (2) A tax voucher certificate shall be used for the purposes

10  allowed under subsection (1) and only in a tax year that begins

11  after December 31, 2008.

12        (3) The amount of the tax voucher that may be used to pay a

13  liability due under this act in any tax year shall not exceed the

14  lesser of the following:

15        (a) The amount of the tax voucher stated in the tax voucher

16  certificate held by the taxpayer.

17        (b) The amount authorized to be used in the tax year under

18  the terms of the tax voucher certificate.

19        (c) The taxpayer’s liability under this act for the tax year

20  for which the tax voucher is used.

21        (4) If the amount of any tax voucher certificate held by a

22  taxpayer or transferee exceeds the amount the taxpayer may use

23  under subsection (3)(b) or (c) in a tax year, that excess may be

24  used by the taxpayer or transferee to pay, subject to the

25  limitations of subsection (3), any future liability of the

26  taxpayer or transferee under this act.

27        (5) The tax voucher certificate, and any completed transfer

 1  form that was issued pursuant to the Michigan early stage venture

 2  investment act of 2003, 2003 PA 296, MCL 125.2231 to 125.2263,

 3  shall be attached to the annual return under this act. The

 4  department may prescribe and implement alternative methods of

 5  reporting and recording ownership, transfer, and utilization of

 6  tax voucher certificates that are not inconsistent with the

 7  provisions of this act. The department shall administer this

 8  section to assure that any amount of a tax voucher certificate

 9  used to pay any liability under this act shall not also be

10  applied to pay any liability of the taxpayer or any other person

11  under the single business tax act, 1975 PA 228, MCL 208.1 to

12  208.145 Michigan business tax act, 2007 PA 36, MCL 208.1101 to

13  208.1601. The department shall take any action necessary to

14  enforce and effectuate the permissible issuance and use of tax

15  voucher certificates in a manner authorized under this section

16  and the Michigan early stage venture investment act of 2003, 2003

17  PA 296, MCL 125.2231 to 125.2263.

18        (6) As used in this section:

19        (a) "Certificate" or "tax voucher certificate" means the tax

20  voucher certificate issued under section 23 of the Michigan early

21  stage venture capital investment act of 2003, 2003 PA 296, MCL

22  125.2253, or any replacement tax voucher certificate issued under

23  former section 37e(9)(b) or (d) of the single business tax act,

24  1975 PA 228, MCL 208.37e or section 419 of the Michigan business

25  tax act, 2007 PA 36, MCL 208.1419.

26        (b) "Transferee" means a taxpayer to whom a tax voucher

27  certificate has been transferred under section 23 of the Michigan

 1  early stage venture investment act of 2003, 2003 PA 296, MCL

 2  125.2253, and former section 37e of the single business tax act,

 3  1975 PA 228, MCL 208.37e or section 419 of the Michigan business

 4  tax act, 2007 PA 36, MCL 208.1419.

 5        Enacting section 1. This amendatory act does not take effect

 6  unless all of the following bills of the 94th Legislature are

 7  enacted into law:

 8        (a) Senate Bill No. 1.

 9        (b) Senate Bill No. 395.

10        (c) Senate Bill No. 396.

11        (d) Senate Bill No. 397.

12        (e) Senate Bill No. 398.

13        (f) Senate Bill No. 418.

14        (g) Senate Bill No. 419.

15        (h) Senate Bill No. 420.

16        (i) Senate Bill No. 421.

17        (j) Senate Bill No. 546.

18        (k) Senate Bill No. 547.

19        (l) Senate Bill No. 549.

20        (m) Senate Bill No. 622.

21        (n) Senate Bill No. 632.

22        (o) Senate Bill No. 772.

23        (p) Senate Bill No. 773.

24        (q) Senate Bill No. 790.

25        (r) Senate Bill No. 791.

26        (s) Senate Bill No. 792.

27        (t) Senate Bill No. 793.

 1        (u) House Bill No. 4246.

 2        (v) House Bill No. 4266.

 3        (w) House Bill No. 4799.

 4        (x) House Bill No. 4800.