|
|  |
 Printer Friendly
 Text Version  Email Page
| Mi38. Are regulated investment companies subject to the Michigan Business Tax? If so, does the MBT provide a deduction for dividends paid similar to Federal Form 1120-RIC, U.S. Tax Return for Regulated Investment Companies? |
Yes. Regulated Investment Companies (RIC) are subject to the MBT. An RIC is
any domestic corporation that registers or files an election to be an RIC and
meets specific criteria in Section 851 of the IRC. These corporations are
taxable in both the business income and modified gross receipts tax bases of the
MBT.
"Business income" is defined generally as "that part of federal taxable
income derived from business activity." MCL 208.1105(2). This means, for the
business income tax base, that the federal return flows through to the MBT
return to the extent the federal return represents income from business
activity. Because Form 1120-RIC allows a deduction for dividends paid (defined
at IRC 561) that deduction will flow through to the MBT return. There is no
additional deduction for this expense in the MBT.
The modified gross receipts tax base is gross receipts less "purchases from
other firms," as defined in MCL 208.1113(6), before apportionment. MCL
208.1203(3). "Purchases from other firms" does not include the dividends paid
expense. There is not a deduction for dividends paid in this tax base.
|
|
