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CCH Axcess Tax

Introduction to the Michigan Corporate Income Tax Return

The Michigan Corporate Income Tax (CIT) return is prepared for calendar-year, fiscal-year, and short-year corporations. From amounts on the federal return and entries on Michigan worksheets, the following forms and schedules are prepared:

A copy of federal Forms 1120, Schedule D and Schedule 4797 is attached to file with the CIT return.

Application for Extension

Form 4, Application for Extension of Time to File Michigan Tax Returns, can be requested by entering "MI" in the "State Code" field in the Extension worksheet > Form 7004 Information section.

CIT Business Activity Protected Under (PL 86-272)

Use CIT General worksheet > Public Law 86-272 section to select activities that determine the business is protected under Public Law 86-272. If an activity is selected, a statement will be attached to Form 4891 for the business activity which is protected under Public Law 86-272.

Footnotes

A footnote entered in the Notes worksheet > Federal and States Footnotes section, with "8" in "State/City Use" appears in the CIT return.

FS Codes

The Michigan return starts with federal income. Do not use FS codes for income and expenses. For footnotes, do not use the combination "F" (FS code) and "MI" (state code). In a multi-state return, leave the FS code blank for a footnote to the federal and Michigan returns only. Just enter "MI" as the state code.

Depreciation

Michigan does not allow a Section 168(k) Bonus for depreciation. A "Net Bonus Depreciation Adjustment" is made to business income on Form 4891 for the federal and state depreciation difference.

Domestic Production Activities Deduction - 1120 Only

Michigan does not allow a domestic production activities deduction. An adjustment is made to business income on Form 4891.

Municipal Bond Interest

Municipal bond interest entered with a state code other than "MI" (or with no state code, if Michigan is not the home state) is reported on Form 4891 as an addition to business income.

Be sure to indicate the source of municipal bond interest by entering a state code with the amount.

Tax Accrual

Use the "State and City Tax Accrual Option" box in the State and City Tax Accrual Option field in the Return Options worksheet > Calculation Options section to carry the tax computed on the Michigan return to the federal return. If no such entry is made, the computed Michigan tax does not carry to the federal return. The tax can be entered as an expense in the Trade or Business Income and Expenses worksheet > Taxes and Licenses Detail section.

The CIT addback can be overridden in the Michigan CIT Income/Deductions worksheet > Additions section.

Tax Refunds

On the CIT return, state and city income tax refunds reduce the addback of either:

• taxes imposed on or measured by income (refunds from states other than Michigan, and refunds from all cities), or
• CIT (Michigan refunds)

General Questions

Q. My CIT Annual Return did NOT get produced?

A. Per Michigan Department of Treasury, if apportioned or allocated gross receipts (annualized for a short year) are below the filing requirement of $350,000, there is no legal obligation to file a return or pay a tax. The filing threshold does not apply to insurance companies or financial institutions.

Q. Will the CIT Annual Return produce if the filing requirement is not met, but would like to get a refund?

A. Yes. If either an estimated tax was paid and/or flow-through withholding payments are present.

Q. Why are my lines blank on Form 4891?

A. If apportioned or allocated gross receipts are less than $350,000 and there is no recapture and there is a refund present, the program is assuming you are preparing a "refund only" return. Therefore, the calculations to Form 4891, Lines 12 through 43 and Lines 49 through 53 are skipped.

Q. What is the Michigan UBG Return Automated Feature and how does it work?

A. This feature uses Michigan MBT UBG Return Automated Feature worksheet to select the non-designated members that are to be included in the unitary return. The non-designated members can be corporations, S corporations, partnerships or individuals.

This method will be completed on the member's return that will be the designated member for the unitary group. The return that is to be the designated member will need an entry on Michigan General > CIT/MBT UBG Combined Filing Schedule worksheet. The non-designated members will not have an entry in this box. This input will need to be completed as applicable for each member that will be included in the UBG automated return.

On the designated member's return, Michigan MBT UBG Return Automated Feature worksheetwill be used to select the non-designated members of the UBG. The designated member must be entered on the first line of the form. The non-designated members will be entered beginning on the second line. Add the members by double clicking in the Member Name or Client I.D. box and selecting the return from the picklist provided. The returns should be selected in the order they are desired for the return. By selecting the return, the information necessary to complete the member's share of the unitary return will be carried to the designated member's return.

Additional non-designated members that are to be included in the group that are not included on Michigan MBT UBG Return Automated Feature worksheet will be added to the unitary group using Michigan Corporate Tax > UBG > CIT UBG Member Information worksheet. These members will be referred to as the "keyed-in members". The member number entered here for the keyed-in members will be the same member number for the rest of the Michigan UBG input.

Michigan Corporate Tax > UBG > CIT UBG Member Information and CIT UBG Excluded Affiliates Information will need to be completed, as applicable, for the keyed-in members. The members that are entered on Michigan MBT UBG Return Automated Feature worksheet will have this information already present in the designated member return. The only additional input required for the members entered on Michigan MBT UBG Return Automated Feature worksheetwould be on Michigan Corporate Tax > UBG >CIT UBG Form 4910 Financial Member's Elimination worksheet to enter the member's eliminations for financial institutions when filing Form 4910/4908.