In the case of a brother-sister set of corporations wholly owned by a person, the corporations will satisfy the control test under MCL 208.1117. That is, the brother corporation - under IRC 318 - is the indirect owner of more than 50% of the ownership interests the sister corporation; and vice versa. However, the brother-sister corporations will not comprise a unitary business group unless the corporations also satisfy one of the two relationship tests.

If the brother-sister corporations have business activities or operations that result in a flow of value between them or have business activities or operations that are integrated with, are dependent upon, or contribute to each other, the corporations will comprise a unitary business group.

A unitary business group must file a single combined return. MCL 208.1511. Furthermore, the tax bases must be calculated on a combined basis. For purposes of calculating the business income tax base of a taxpayer that is a unitary business group, the business income of each group member must be combined less any income and related deductions arising from intra-group transactions. MCL 208.1201(4). This total is then adjusted to arrive at the unitary business group's business income tax base. MCL 208.1201(2). The modified gross receipts tax base of a taxpayer that is a unitary business group is the sum of the modified gross receipts of each member of the group less any modified gross receipts derived from intra-group transactions. MCL 208.1203(3).

So long as one member of a unitary business group has nexus with Michigan, all members of the unitary business group must be included when calculating the taxpayer's business income and modified gross receipts tax bases and apportionment formula.