CFC's as Taxpayers.  Under the MBT, taxpayer means "a person or a unitary business group liable for a tax, interest, or penalty."  MCL 208.1117(5).  "Person" means "an individual, firm, bank, financial institution, insurance company, limited partnership, limited liability partnership, co-partnership, partnership, joint venture, association, corporation, subchapter S corporation, limited liability company, receiver, estate, trust, or any other group or combination of groups acting as a unit."  MCL 208.1113(3).  Other than the definition of unitary business group under MCL 208.1117, which is limited to U.S. persons, the MBT does not distinguish between foreign and U.S. persons.  Thus, controlled foreign corporations are taxpayers under the MBT.

CFC's as Members of a Unitary Business Group.  A unitary business group is defined, in part, as:

a group of United States persons, other than a foreign operating entity, 1 of which owns or controls, directly or indirectly, more than 50% of the ownership interest with voting rights or ownership interests that confer comparable rights to voting rights of the other United States persons . . . . [MCL 208.1117(6) (emphasis added).]

"United States person" means "that term as defined in [IRC] 7701(a)(30)." MCL 208.117(7). Under IRC 7701(a)(30), "United States person" means:

(A)       a citizen or resident of the United States,
(B)       a domestic partnership,
(C)       a domestic corporation,
(D)       any estate (other than a foreign estate, within the meaning, of paragraph (31)), and
(E)       any trust if -

(i)         a court within the United States is able to exercise primary supervision over the administration of the trust, and
(ii)        one or more United States persons have the authority to control all substantial decisions of the trust.  [IRC 7701(a)(30).]

A controlled foreign corporation means:

any foreign corporation if more than 50 percent of ?
(1)       the total combined voting power of all classes of stock of such corporation entitled to vote, or
(2)       the total value of the stock of such corporation, is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b) , by United States shareholders on any day during the taxable year of such foreign corporation.     [IRC 957(a).]

As a foreign corporation, a controlled foreign corporation is not a U.S. person and is thus excluded from the definition of unitary business group under the MBT.

CFC's as Disregarded Subsidiary of U.S. Parent.  A controlled foreign corporation that is a disregarded entity for federal income tax purposes is classified as a disregarded entity for MBT purposes.  MCL 208.1512.  That is, the disregarded entity is treated as a branch or division of its owner and will be included in a unitary business group as part of its owner if the owner is a member of a unitary business group.  However, a controlled foreign corporation that is a disregarded entity for federal income tax purposes that filed separate from its owner under MCL 208.1512(2) or (3) is treated as a person separate from its owner for MBT purposes.  Therefore, the controlled foreign corporation that files separate from its owner is a foreign person and would not be includable in any unitary business group.