Taxes - M68. May taxpayers take the IRC 199 deduction for MBT purposes?

Michigan.gov, Official Portal for the State of Michigan

Michigan.gov Home	Taxes Home \| FAQ \| Site Map \| Contact Treasury \| Forms \| Online Services

Printer Friendly Text Only Version

Text Version

Share this link:

M68. May taxpayers take the IRC 199 deduction for MBT purposes?

No. For federal tax purposes, the domestic production activities deduction under IRC 199 provides a tax benefit for certain domestic production activities. In particular, IRC 199 allows a deduction equal to a specified percentage of the taxpayer's qualified production activities income for the tax year.

This federal deduction, however, does not flow through to the MBT. The MBT defines "federal taxable income" to mean "taxable income as defined in section 63 of the internal revenue code, except that federal taxable income shall be calculated as if . . . section 199 of the [IRC was] not in effect." MCL 208.1109 (emphasis added). Thus, to the extent that the IRC 199 deduction is included in federal taxable income for federal tax purposes, that deduction must be added back in calculating federal taxable income for MBT purposes.