Taxes - U54. Financial Institutions pay tax under the MBT on net capital. Computation of this tax base requires a financial institution to average the past five years of net equity with certain deductions. How does a unitary business group of financial i

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U54. Financial Institutions pay tax under the MBT on net capital. Computation of this tax base requires a financial institution to average the past five years of net equity with certain deductions. How does a unitary business group of financial i

The term "financial institution" includes a unitary business group of financial institutions. MCL 208.1261(f). A financial institution must compute the current tax year tax base by taking a five year average of net capital. MCL 208.1265(2). For a UBG of financial institutions each member entity of the group must compute net capital, using the five year average, individually. Instructions for Form 4580, MBT Unitary Business Group Combined Filing Schedule. The group then sums the resultsof the entities' calculations to reach net capital for the group. Id. This requirement applies equally to the first year of the MBT, when no members of a UBG of financial institutions will have been members for five years, as it does to tax years ten years out from the first year. Once a member entity is considered a part of a UBG of financial institutions it must compute its individual net equity in accordance with this requirement. This means that an entity that was newly added to the UBG will compute its net capital by using the average of five years of net capital and then adding this result to the results of the other member entities of the group. A shorter look-back period may apply if the new UBG member has not itself been in existence for five years. MCL 208.1265(2).