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M49. Is the gain recognized on the one time sale of business assets and goodwill by an entity to another entity taxed under the Michigan Business Tax (MBT)?
Yes, the gain is taxed under the MBT. [The MBT does not provide an exception for non-corporate taxpayers for a casual transaction that was provided for under the SBTA.] To the extent the capital gain is derived from the business activity of the taxpayer and included in federal taxable income it must also be included in the business income tax base. The gain included in federal taxable income is also included in the modified gross receipts tax base. There are no statutory exceptions or exclusions that are applicable to capital gains recognized by a business from the sale of capital assets. As a result, these gains are included in gross receipts and the modified gross receipts tax base. Also see FAQs B4 and M10.