Final Unitary Michigan Business Tax Returns With Differing Year-end's
Posted on Wed, Feb 01, 2012
Included in this blog is Michgan Department of Treasury, "FAQ U57". You will find this FAQ helpful as you start preparing your client's final unitary MBT return(s). The FAQ is not what I expected, but I think it is appropriate and helpful.
FAQ U57. How must a unitary business group file its final MBT annual return in order to properly report the final MBT year of all its members?
Answer:
The combined return is filed on the basis of the designated member's (DM) tax year. A combined return thus includes all member tax years that end with or within the tax year of the DM. All taxpayers must file a final MBT return for the period ending December 31, 2011. This is true regardless of whether the group will continue as a group for the 2012 tax year.
A fiscal year taxpayer with a tax year ending after that date is considered to have two separate tax years: the first short tax year is for the part of fiscal year ending before January 1, 2012, and the second short tax year is for the part of the fiscal year beginning after December 31, 2011.
In order for the entire group to file as unitary for the final MBT tax year, the final MBT unitary return must contain all member tax years ending before January 1, 2012, including any short periods which may be created by operation of the statutory cut-off. In the instance where a member must include more than twelve months of activity with the group's final return, that member will file two Form 4580's, MBT UBG Combined Filing Schedule for Standard Members, to report its data.
Example 1.
UBG consists of three members, "DM A", "Member B", and "Member C". "DM A" is a calendar year taxpayer. "Member B" is a fiscal year taxpayer with a tax year of April 1 through March 31. "Member C's" tax year is October 1 through September 31. The final MBT return will contain:
"DM A's" 2011 calendar year; filing one supporting schedule.
"Member B's" full fiscal year ending March 31, 2011, and its short year ending December 31, 2011; filing two supporting schedules with the group's return.
"Member C's" full fiscal year ending September 30, 2011, and its short year ending December 31, 2011; filing two supporting schedules with the group's return.
Example 2.
Same facts as Example 1, except "DM A" has a fiscal year ending July 31, 2011. The UBG's tax year will end July 31 and its annual return will be due November 30, 2011. That combined return for the UBG will include "DM A's" fiscal year ending July 31, 2011, "Member B's" fiscal year ending March 31, 2011, and "Member C's" fiscal year ending September 30, 2010.
In addition, because all three members are required to report a short state tax year ending December 31, 2011, this group must file an additional return for that end date, which will include:
DM A's short year ending December 31, 2011.
Member B's short year ending December 31, 2011.
"Member C's" full fiscal year ending September 30, 2011, and a short year ending December 31, 2011; filing two supporting schedules.
