Multistate Tax Alert: Michigan Court of Appeals
Holds that business income under the Former Single Business Tax is limited for subchapter s corporations
The Michigan Court of Appeals recently issued a published decision in TMW Enterprises, Inc. v. Michigan Department of Treasury, addressing the manner in which a Subchapter S corporation computes business income under the former Michigan Single Business Tax (“SBT”). The Court of Appeals held that the taxpayer, an S corporation, is a corporation under the SBT and, therefore, computes business income by reference to federal taxable income. For an S corporation, federal taxable income would generally be limited to recognized built-in gains or excess passive income.
In the attached Tax Alert we summarize this appellate court decision and highlight a time-sensitive potential SBT refund claim opportunity.