February 6, 2013, Introduced by Senators BRANDENBURG, JANSEN and HILDENBRAND and referred to the Committee on Finance.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 111, 113, 403, and 511 (MCL 208.1111,
208.1113, 208.1403, and 208.1511), section 111 as amended by 2012
PA 605, section 113 as amended by 2011 PA 77, section 403 as
amended by 2008 PA 434, and section 511 as amended by 2011 PA 292.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 111. (1) "Gross receipts" means the entire amount
received by the taxpayer as determined by using the taxpayer's
method of accounting used for federal income tax purposes, less any
amount deducted as bad debt for federal income tax purposes that
corresponds to items of gross receipts included in the modified
gross receipts tax base for the current tax year or a past tax year
phased in over a 5-year period starting with 50% of that amount in
the 2008 tax year, 60% in the 2009 tax year, 60% in the 2010 tax
year, 75% in the 2011 tax year, and 100% in the 2012 tax year and
each tax year thereafter, from any activity whether in intrastate,
interstate, or foreign commerce carried on for direct or indirect
gain, benefit, or advantage to the taxpayer or to others except for
the following:
(a) Proceeds from sales by a principal that the taxpayer
collects in an agency capacity solely on behalf of the principal
and delivers to the principal.
(b) Amounts received by the taxpayer as an agent solely on
behalf of the principal that are expended by the taxpayer for any
of the following:
(i) The performance of a service by a third party for the
benefit of the principal that is required by law to be performed by
a licensed person.
(ii) The performance of a service by a third party for the
benefit of the principal that the taxpayer has not undertaken a
contractual duty to perform.
(iii) Principal and interest under a mortgage loan or land
contract, lease or rental payments, or taxes, utilities, or
insurance premiums relating to real or personal property owned or
leased by the principal.
(iv) A capital asset of a type that is, or under the internal
revenue code will become, eligible for depreciation, amortization,
or accelerated cost recovery by the principal for federal income
tax purposes, or for real property owned or leased by the
principal.
(v) Property not described under subparagraph (iv) that is
purchased by the taxpayer on behalf of the principal and that the
taxpayer does not take title to or use in the course of performing
its contractual business activities.
(vi) Fees, taxes, assessments, levies, fines, penalties, or
other payments established by law that are paid to a governmental
entity and that are the legal obligation of the principal.
(c) Amounts that are excluded from gross income of a foreign
corporation engaged in the international operation of aircraft
under section 883(a) of the internal revenue code.
(d) Amounts received by an advertising agency used to acquire
advertising media time, space, production, or talent on behalf of
another person.
(e) Amounts received by a newspaper to acquire advertising
space not owned by that newspaper in another newspaper on behalf of
another person. This subdivision does not apply to any
consideration received by the taxpayer for acquiring that
advertising space.
(f) Notwithstanding any other provision of this section,
amounts received by a taxpayer that manages real property owned by
a third party that are deposited into a separate account kept in
the name of that third party and that are not reimbursements to the
taxpayer and are not indirect payments for management services that
the taxpayer provides to that third party.
(g) Proceeds from the taxpayer's transfer of an account
receivable if the sale that generated the account receivable was
included in gross receipts for federal income tax purposes. This
subdivision does not apply to a taxpayer that during the tax year
both buys and sells any receivables.
(h) Proceeds from any of the following:
(i) The original issue of stock or equity instruments or equity
issued by a regulated investment company as that term is defined
under section 851 of the internal revenue code.
(ii) The original issue of debt instruments.
(i) Refunds from returned merchandise.
(j) Cash and in-kind discounts.
(k) Trade discounts.
(l) Federal, state, or local tax refunds.
(m) Security deposits.
(n) Payment of the principal portion of loans.
(o) Value of property received in a like-kind exchange.
(p) Proceeds from a sale, transaction, exchange, involuntary
conversion, maturity, redemption, repurchase, recapitalization, or
other disposition or reorganization of tangible, intangible, or
real property, less any gain from the disposition or reorganization
to the extent that the gain is included in the taxpayer's federal
taxable income, if the property satisfies 1 or more of the
following:
(i) The property is a capital asset as defined in section
1221(a) of the internal revenue code.
(ii) The property is land that qualifies as property used in
the trade or business as defined in section 1231(b) of the internal
revenue code.
(iii) The property is used in a hedging transaction entered into
by the taxpayer in the normal course of the taxpayer's trade or
business primarily to manage the risk of exposure to foreign
currency fluctuations that affect assets, liabilities, profits,
losses, equity, or investments in foreign operations; interest rate
fluctuations; or commodity price fluctuations. For purposes of this
subparagraph, the actual transfer of title of real or tangible
personal property to another person is not a hedging transaction.
Only the overall net gain from the hedging transactions entered
into during the tax year is included in gross receipts. As used in
this subparagraph, "hedging transaction" means that term as defined
under section 1221 of the internal revenue code regardless of
whether the transaction was identified by the taxpayer as a hedge
for federal income tax purposes, provided, however, that
transactions excluded under this subparagraph and not identified as
a hedge for federal income tax purposes shall be identifiable to
the department by the taxpayer as a hedge in its books and records.
(iv) The property is investment and trading assets managed as
part of the person's treasury function. For purposes of this
subparagraph, a person principally engaged in the trade or business
of purchasing and selling investment and trading assets is not
performing a treasury function. Only the overall net gain from the
treasury function incurred during the tax year is included in gross
receipts. As used in this subparagraph, "treasury function" means
the pooling and management of investment and trading assets for the
purpose of satisfying the cash flow or liquidity needs of the
taxpayer's trade or business.
(q) The proceeds from a policy of insurance, a settlement of a
claim, or a judgment in a civil action less any proceeds under this
subdivision that are included in federal taxable income.
(r) For a sales finance company, as defined in section 2 of
the motor vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL
492.102, and directly or indirectly owned in whole or in part by a
motor vehicle manufacturer as of January 1, 2008, and for a person
that is a broker or dealer as defined under section 78c(a)(4) or
(5) of the securities exchange act of 1934, 15 USC 78c, or a person
included in the unitary business group of that broker or dealer
that buys and sells for its own account, contracts that are subject
to the commodity exchange act, 7 USC 1 to 27f, amounts realized
from the repayment, maturity, sale, or redemption of the principal
of a loan, bond, or mutual fund, certificate of deposit, or similar
marketable instrument provided such instruments are not held as
inventory.
(s) For a sales finance company, as defined in section 2 of
the motor vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL
492.102, and directly or indirectly owned in whole or in part by a
motor vehicle manufacturer as of January 1, 2008, and for a person
that is a broker or dealer as defined under section 78c(a)(4) or
(5) of the securities exchange act of 1934, 15 USC 78c, or a person
included in the unitary business group of that broker or dealer
that buys and sells for its own account, contracts that are subject
to the commodity exchange act, 7 USC 1 to 27f, the principal amount
received under a repurchase agreement or other transaction properly
characterized as a loan.
(t) For a mortgage company, proceeds representing the
principal balance of loans transferred or sold in the tax year. For
purposes of this subdivision, "mortgage company" means a person
that is licensed under the mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, or the
secondary mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, and
has greater than 90% of its revenues, in the ordinary course of
business, from the origination, sale, or servicing of residential
mortgage loans.
(u) For a professional employer organization, any amount
charged by a professional employer organization that represents the
actual cost of wages and salaries, benefits, worker's compensation,
payroll taxes, withholding, or other assessments paid to or on
behalf of a covered employee by the professional employer
organization under a professional employer arrangement.
(v) Any invoiced items used to provide more favorable floor
plan assistance to a person subject to the tax imposed under this
act than to a person not subject to this tax and paid by a
manufacturer, distributor, or supplier.
(w) For an individual, estate, or person organized for estate
or gift planning purposes, amounts received other than those from
transactions, activities, and sources in the regular course of the
person's trade or business. For purposes of this subdivision, all
of the following apply:
(i) Amounts received from transactions, activities, and sources
in the regular course of the person's business include, but are not
limited to, the following:
(A) Receipts from tangible and intangible property if the
acquisition, rental, lease, management, or disposition of the
property constitutes integral parts of the person's regular trade
or business operations.
(B) Receipts received in the course of the person's trade or
business from stock and securities of any foreign or domestic
corporation and dividend and interest income.
(C) Receipts derived from isolated sales, leases, assignments,
licenses, divisions, or other infrequently occurring dispositions,
transfers, or transactions involving tangible, intangible, or real
property if the property is or was used in the person's trade or
business operation.
(D) Receipts derived from the sale of an interest in a
business that constitutes an integral part of the person's regular
trade or business.
(E) Receipts derived from the lease or rental of real
property.
(ii) Receipts excluded from gross receipts include, but are not
limited to, the following:
(A) Receipts derived from investment activity, including
interest, dividends, royalties, and gains from an investment
portfolio or retirement account, if the investment activity is not
part of the person's trade or business.
(B) Receipts derived from the disposition of tangible,
intangible, or real property held for personal use and enjoyment,
such as a personal residence or personal assets.
(x) Receipts derived from investment activity other than
receipts from transactions, activities, and sources in the regular
course of the person's trade or business by a person that is
organized exclusively to conduct investment activity and that does
not conduct investment activity for any person other than an
individual or a person related to that individual or by a common
trust fund established under the collective investment funds act,
1941 PA 174, MCL 555.101 to 555.113. For purposes of this
subdivision, a person is related to an individual if that person is
a spouse, brother or sister, whether of the whole or half blood or
by adoption, ancestor, lineal descendent of that individual or
related person, or a trust benefiting that individual or 1 or more
persons related to that individual.
(y) Interest income and dividends derived from obligations or
securities of the United States government, this state, or any
governmental unit of this state. As used in this subdivision,
"governmental unit" means that term as defined in section 3 of the
shared credit rating act, 1985 PA 227, MCL 141.1053.
(z) Dividends and royalties received or deemed received from a
foreign operating entity or a person other than a United States
person, including, but not limited to, the amounts determined under
section 78 of the internal revenue code and sections 951 to 964 of
the internal revenue code, phased in over a 5-year period starting
with 50% of that amount in the 2008 tax year, 60% in the 2009 tax
year, 60% in the 2010 tax year, 75% in the 2011 tax year, and 100%
in the 2012 tax year and each tax year thereafter.
(aa) To the extent not deducted as purchases from other firms
under section 203, each of the following:
(i) Sales or use taxes collected from or reimbursed by a
consumer or other taxes the taxpayer collected directly from or was
reimbursed by a purchaser and remitted to a local, state, or
federal tax authority, phased in over a 5-year period starting with
50% of that amount in the 2008 tax year, 60% in the 2009 tax year,
60% in the 2010 tax year, 75% in the 2011 tax year, and 100% in the
2012 tax year and each tax year thereafter.
(ii) In the case of receipts from the sale of cigarettes or
tobacco products by a wholesale dealer, retail dealer, distributor,
manufacturer, or seller, an amount equal to the federal and state
excise taxes paid by any person on or for such cigarettes or
tobacco products under subtitle E of the internal revenue code or
other applicable state law, phased in over a 3-year period starting
with 60% of that amount in the 2008 tax year, 75% in the 2009 tax
year, and 100% in the 2010 tax year and each tax year thereafter.
(iii) In the case of receipts from the sale of motor fuel by a
person with a motor fuel tax license or a retail dealer, an amount
equal to federal and state excise taxes paid by any person on such
motor fuel under section 4081 of the internal revenue code or under
other applicable state law, phased in over a 5-year period starting
with 50% of that amount in the 2008 tax year, 60% in the 2009 tax
year, 60% in the 2010 tax year, 75% in the 2011 tax year, and 100%
in the 2012 tax year and each tax year thereafter.
(iv) In the case of receipts from the sale of beer, wine, or
intoxicating liquor by a person holding a license to sell,
distribute, or produce those products, an amount equal to federal
and state excise taxes paid by any person on or for such beer,
wine, or intoxicating liquor under subtitle E of the internal
revenue code or other applicable state law, phased in over a 5-year
period starting with 50% of that amount in the 2008 tax year, 60%
in the 2009 tax year, 60% in the 2010 tax year, 75% in the 2011 tax
year, and 100% in the 2012 tax year and each tax year thereafter.
(v) In the case of receipts from the sale of communication,
video, internet access and related services and equipment, any
government imposed tax, fee, or other imposition in the nature of a
tax or fee required by law, ordinance, regulation, ruling, or other
legal authority and authorized to be charged on a customer's bill
or invoice, phased in over a 5-year period starting with 50% of
that amount in the 2008 tax year, 60% in the 2009 tax year, 60% in
the 2010 tax year, 75% in the 2011 tax year, and 100% in the 2012
tax year and each tax year thereafter. This subparagraph does not
include the recovery of net income taxes, net worth taxes, property
taxes, or the tax imposed under this act.
(vi) In the case of receipts from the sale of electricity,
natural gas, or other energy source, any government imposed tax,
fee, or other imposition in the nature of a tax or fee required by
law, ordinance, regulation, ruling, or other legal authority and
authorized to be charged on a customer's bill or invoice, phased in
over a 5-year period starting with 50% of that amount in the 2008
tax year, 60% in the 2009 tax year, 60% in the 2010 tax year, 75%
in the 2011 tax year, and 100% in the 2012 tax year and each tax
year thereafter. This subparagraph does not include the recovery of
net income taxes, net worth taxes, property taxes, or the tax
imposed under this act.
(vii) Any deposit required under any of the following, phased
in over a 5-year period starting with 50% of that amount in the
2008 tax year, 60% in the 2009 tax year, 60% in the 2010 tax year,
75% in the 2011 tax year, and 100% in the 2012 tax year and each
tax year thereafter:
(A) 1976 IL 1, MCL 445.571 to 445.576.
(B) R 436.1629 of the Michigan administrative code.
(C) R 436.1723a of the Michigan administrative code.
(D) Any substantially similar beverage container deposit law
of another state.
(viii) An excise tax collected pursuant to the airport parking
tax act, 1987 PA 248, MCL 207.371 to 207.383, collected from or
reimbursed by a consumer and remitted as provided in the airport
parking tax act, 1987 PA 248, MCL 207.371 to 207.383, phased in
over a 5-year period starting with 50% of that amount in the 2008
tax year, 60% in the 2009 tax year, 60% in the 2010 tax year, 75%
in the 2011 tax year, and 100% in the 2012 tax year and each tax
year thereafter.
(bb) Amounts attributable to an ownership interest in a pass-
through entity, regulated investment company, real estate
investment trust, or cooperative corporation whose business
activities are taxable under section 203 or would be subject to the
tax under section 203 if the business activities were in this
state. For purposes of this subdivision:
(i) "Cooperative corporation" means those organizations
described under subchapter T of the internal revenue code.
(ii) "Pass-through" entity means a partnership, subchapter S
corporation, or other person, other than an individual, that is not
classified for federal income tax purposes as an association taxed
as a corporation.
(iii) "Real estate investment trust" means that term as defined
under section 856 of the internal revenue code.
(iv) "Regulated investment company" means that term as defined
under section 851 of the internal revenue code.
(cc) For a regulated investment company as that term is
defined under section 851 of the internal revenue code, receipts
derived from investment activity by that regulated investment
company.
(dd) For fiscal years that begin after September 30, 2009,
unless the state budget director certifies to the state treasurer
by January 1 of that fiscal year that the federally certified rates
for actuarial soundness required under 42 CFR 438.6 and that are
specifically developed for Michigan's health maintenance
organizations that hold a contract with this state for medicaid
services provide explicit adjustment for their obligations required
for payment of the tax under this act, amounts received by the
taxpayer during that fiscal year for medicaid premium or
reimbursement of costs associated with service provided to a
medicaid recipient or beneficiary.
(ee) For a taxpayer that provides health care management
consulting services, amounts received by the taxpayer as fees from
its clients that are expended by the taxpayer to reimburse those
clients for labor and nonlabor services that are paid by the client
and reimbursed to the client pursuant to a services agreement.
(ff) Amounts attributed to the taxpayer pursuant to a
discharge of indebtedness as described under section 61(a)(12) of
the internal revenue code, including forgiveness of a nonrecourse
debt.
(2) "Insurance company" means an authorized insurer as defined
in sections 106 and 108 of the insurance code of 1956, 1956 PA 218,
MCL 500.106 and 500.108.
(3) "Internal revenue code" means the United States internal
revenue code of 1986 in effect on January 1, 2008 or, at the option
of the taxpayer, in effect for the tax year.
(4) "Inventory" means, except as provided in subdivision (e),
all of the following:
(a) The stock of goods held for resale in the regular course
of trade of a retail or wholesale business, including electricity
or natural gas purchased for resale.
(b) Finished goods, goods in process, and raw materials of a
manufacturing business purchased from another person.
(c) For a person that is a new motor vehicle dealer licensed
under the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923,
floor plan interest expenses for new motor vehicles. For purposes
of this subdivision, "floor plan interest" means interest paid that
finances any part of the person's purchase of new motor vehicle
inventory from a manufacturer, distributor, or supplier. However,
amounts attributable to any invoiced items used to provide more
favorable floor plan assistance to a person subject to the tax
imposed under this act than to a person not subject to this tax is
considered interest paid by a manufacturer, distributor, or
supplier.
(d) For a person that is a securities trader, broker, or
dealer or a person included in the unitary business group of that
securities trader, broker, or dealer that buys and sells for its
own account, contracts that are subject to the commodity exchange
act, 7 USC 1 to 27f, the cost of securities as defined under
section 475(c)(2) of the internal revenue code and for a securities
trader the cost of commodities as defined under section 475(e)(2)
and for a broker or dealer the cost of commodities as defined under
section 475(e)(2)(b), (c), and (d) of the internal revenue code,
excluding interest expense other than interest expense related to
repurchase agreements. As used in this subdivision:
(i) "Broker" means that term as defined under section 78c(a)(4)
of the securities exchange act of 1934, 15 USC 78c.
(ii) "Dealer" means that term as defined under section
78c(a)(5) of the securities exchange act of 1934, 15 USC 78c.
(iii) "Securities trader" means a person that engages in the
trade or business of purchasing and selling investments and trading
assets.
(e) Inventory does not include either of the following:
(i) Personal property under lease or principally intended for
lease rather than sale.
(ii) Property allowed a deduction or allowance for depreciation
or depletion under the internal revenue code.
(5) "Officer" means an officer of a corporation other than a
subchapter S corporation, including all of the following:
(a) The chairperson of the board.
(b) The president, vice president, secretary, or treasurer of
the corporation or board.
(c) Persons performing similar duties and responsibilities to
persons described in subdivisions (a) and (b) that include, at a
minimum, major decision making.
Sec. 113. (1) "Partner" means a partner or member of a
partnership.
(2) "Partnership" means a taxpayer that is required to or has
elected to file as a partnership for federal income tax purposes.
(3) "Person" means an individual, firm, bank, financial
institution, insurance company, limited partnership, limited
liability partnership, copartnership, partnership, joint venture,
association, corporation, subchapter S corporation, limited
liability company, receiver, estate, trust, or any other group or
combination of groups acting as a unit.
(4) "Professional employer organization" means an organization
that provides the management and administration of the human
resources of another entity by contractually assuming substantial
employer rights and responsibilities through a professional
employer agreement that establishes an employer relationship with
the leased officers or employees assigned to the other entity by
doing all of the following:
(a) Maintaining a right of direction and control of employees'
work, although this responsibility may be shared with the other
entity.
(b) Paying wages and employment taxes of the employees out of
its own accounts.
(c) Reporting, collecting, and depositing state and federal
employment taxes for the employees.
(d) Retaining a right to hire and fire employees.
(5) Professional employer organization is not a staffing
company as that term is defined in subsection (6).
(6) "Purchases from other firms" means all of the following:
(a) Inventory acquired during the tax year, including freight,
shipping, delivery, or engineering charges included in the original
contract price for that inventory.
(b) Assets, including the costs of fabrication and
installation, acquired or self-constructed during the tax year of a
type that are, or under the internal revenue code will become,
eligible for depreciation, amortization, or accelerated capital
cost recovery for federal income tax purposes.
(c) To the extent not included in inventory or depreciable
property, materials and supplies, including repair parts and fuel.
For purposes of this subdivision, materials and supplies mean
tangible personal property expensed by the taxpayer and not
capitalized for federal income tax purposes.
(d) For a staffing company, compensation of personnel supplied
to customers of staffing companies. As used in this subdivision:
(i) "Compensation" means that term as defined under section 107
plus all payroll tax and worker's compensation costs.
(ii) "Staffing company" means a taxpayer whose business
activities are included in industry group 736 under the standard
industrial classification code as compiled by the United States
department of labor.
(e) For a person included in major group 15, 16, or 17 under
the standard industrial classification code as compiled by the
United States department of labor that does not qualify for a
credit under section 417, both of the following:
(i) Payments to subcontractors for a construction project under
a contract specific to that project.
(ii) To the extent not deducted under subdivisions (a) and (c),
payments for materials deducted as purchases in determining the
cost of goods sold for the purpose of calculating total income on
the taxpayer's federal income tax return.
(f) For the 2008 tax year and each tax year after 2008, all
film rental or royalty payments paid by a theater owner to a film
distributor, a film producer, or a film distributor and producer.
(g) For a taxpayer licensed under article 25 or 26 of the
occupational code, 1980 PA 299, MCL 339.2501 to 339.2518 and
339.2601 to 339.2637, payments to an independent contractor
licensed under article 25 or 26 of the occupational code, 1980 PA
299, MCL 339.2501 to 339.2518 and 339.2601 to 339.2637.
(h) For a person classified under the 2002 North American
industrial classification system number 484 as compiled by the
United States office of management and budget that does not qualify
for a credit under section 417, payments to subcontractors to
transport freight by motor vehicle under a contract specific to
that freight to be transported by motor vehicle.
(7) "Revenue mile" means the transportation for a
consideration of 1 net ton in weight or 1 passenger the distance of
1 mile.
Sec. 403. (1) Notwithstanding any other provision in this act,
the credits provided in this section and section 405 shall be taken
before any unused carryforward allowed under section 401 and before
any other credit under this act. Except as otherwise provided in
subsection (6), for the 2008 tax year, the total combined credit
allowed under this section shall not exceed 50% of the tax
liability imposed under this act before the imposition and levy of
the surcharge under section 281. For the 2009 tax year and each tax
year after 2009, the total combined credit allowed under this
section shall not exceed 52% of the tax liability imposed under
this act before the imposition and levy of the surcharge under
section 281.
(2) Subject to the limitation in subsection (1), for the 2008
tax year a taxpayer may claim a credit against the tax imposed by
this act equal to 0.296% of the taxpayer's compensation in this
state. For the 2009 tax year and each tax year after 2009, subject
to the limitation in subsection (1), a taxpayer may claim a credit
against the tax imposed by this act equal to 0.370% of the
taxpayer's compensation in this state. For purposes of this
subsection, a taxpayer includes a person subject to the tax imposed
under chapter 2A and a person subject to the tax imposed under
chapter 2B. A professional employer organization shall not include
payments by the professional employer organization to the officers
and employees of a client of the professional employer organization
whose employment operations are managed by the professional
employer organization. A client may include payments by the
professional employer organization to the officers and employees of
the client whose employment operations are managed by the
professional employer organization.
(3) Subject to the limitation in subsection (1), for the 2008
tax year a taxpayer may claim a credit against the tax imposed by
this act equal to 2.32% multiplied by the result of subtracting the
sum of the amounts calculated under subdivisions (d), (e), and (f)
from the sum of the amounts calculated under subdivisions (a), (b),
and (c). Subject to the limitation in subsection (1), for the 2009
tax year and each tax year after 2009, a taxpayer may claim a
credit against the tax imposed by this act equal to 2.9% multiplied
by the result of subtracting the sum of the amounts calculated
under subdivisions (d), (e), and (f) from the sum of the amounts
calculated under subdivisions (a), (b), and (c):
(a) Calculate the cost, including fabrication and
installation, paid or accrued in the taxable year of tangible
assets of a type that are, or under the internal revenue code will
become, eligible for depreciation, amortization, or accelerated
capital cost recovery for federal income tax purposes, provided
that the assets are physically located in this state for use in a
business activity in this state and are not mobile tangible assets.
(b) Calculate the cost, including fabrication and
installation, paid or accrued in the taxable year of mobile
tangible assets of a type that are, or under the internal revenue
code will become, eligible for depreciation, amortization, or
accelerated capital cost recovery for federal income tax purposes.
This amount shall be multiplied by the apportionment factor for the
tax year as prescribed in chapter 3.
(c) For tangible assets, other than mobile tangible assets,
purchased or acquired for use outside of this state in a tax year
beginning after December 31, 2007 and subsequently transferred into
this state and purchased or acquired for use in a business
activity, calculate the federal basis used for determining gain or
loss as of the date the tangible assets were physically located in
this state for use in a business activity plus the cost of
fabrication and installation of the tangible assets in this state.
(d) If the cost of tangible assets described in subdivision
(a) was paid or accrued in a tax year beginning after December 31,
2007, or before December 31, 2007 to the extent the credit is used
and at the rate at which the credit was used under former 1975 PA
228 or this act, calculate the gross proceeds or benefit derived
from the sale or other disposition of the tangible assets minus the
gain, multiplied by the apportionment factor for the taxable year
as prescribed in chapter 3, and plus the loss, multiplied by the
apportionment factor for the taxable year as prescribed in chapter
3 from the sale or other disposition reflected in federal taxable
income and minus the gain from the sale or other disposition added
to the business income tax base in section 201.
(e) If the cost of tangible assets described in subdivision
(b) was paid or accrued in a tax year beginning after December 31,
2007, or before December 31, 2007 to the extent the credit is used
and at the rate at which the credit was used under former 1975 PA
228 or this act, calculate the gross proceeds or benefit derived
from the sale or other disposition of the tangible assets minus the
gain and plus the loss from the sale or other disposition reflected
in federal taxable income and minus the gain from the sale or other
disposition added to the business income tax base in section 201.
This amount shall be multiplied by the apportionment factor for the
tax year as prescribed in chapter 3.
(f) For assets purchased or acquired in a tax year beginning
after December 31, 2007, or before December 31, 2007 to the extent
the credit is used and at the rate at which the credit was used
under former 1975 PA 228 or this act, that were eligible for a
credit under subdivision (a) or (c) and that were transferred out
of this state, calculate the federal basis used for determining
gain or loss as of the date of the transfer.
(4) For a tax year in which the amount of the credit
calculated under subsection (3) is negative, the absolute value of
that amount is added to the taxpayer's tax liability for the tax
year.
(5) A taxpayer that claims a credit under this section is not
prohibited from claiming a credit under section 405. However, the
taxpayer shall not claim a credit under this section and section
405 based on the same costs and expenses.
(6) For a taxpayer primarily engaged in furnishing electric
and gas utility service that makes capital investments in electric
and gas distribution assets for which a portion of the credit
provided under subsection (3) would be denied for the 2008 tax year
by reason of the 50% limitation of subsection (1), the 50%
limitation on the total combined credit for the 2008 tax year
provided in subsection (1) shall be increased by an amount not to
exceed the lesser of the amount of the denied credit or 50% of the
tax increase under this act accrued for financial reporting
purposes due to the elimination of the deduction under section
168(k) of the internal revenue code by the amendatory act that
added this subsection. Provided, however, that the total combined
credit allowed under this section for the 2008 tax year shall not
exceed 80% of the tax liability imposed under this act after the
imposition and levy of the surcharge under section 281.
Sec. 511. A unitary business group shall file a combined
return that includes each United States person, other than a
foreign operating entity, that is included in the unitary business
group. Each United States person included in a unitary business
group or included in a combined return shall be treated as a single
person and all transactions between those persons included in the
unitary business group shall be eliminated from the business income
tax
base, modified gross receipts tax base, and the for purposes of
determining the exemptions, deductions, subtractions, credits,
apportionment formula, and filing threshold under this act. If a
United States person included in a unitary business group or
included in a combined return is subject to the tax under chapter
2A or 2B, any business income attributable to that person shall be
eliminated from the business income tax base, any modified gross
receipts attributable to that person shall be eliminated from the
modified gross receipts tax base, and any sales attributable to
that person shall be eliminated from the apportionment formula
under this act.
Enacting section 1. This amendatory act is curative and
intended to clarify the original intent of 2007 PA 36.