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Multistate Tax Alert: Michigan Court of Appeals

Holds that business income under the Former Single Business Tax is limited for subchapter s corporations


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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.    

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