4575: Loss Adjustment Worksheet for the Small Business Alternative Credit (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form 4575 is a worksheet for adjusting current-year adjusted business income to qualify for an otherwise disallowed Small Business Alternative Credit. It calculates the loss adjustment needed, available losses from the five preceding tax years, and any loss adjustment ca
Who files this form
The 2025 Form 4575 worksheet is for taxpayers seeking to qualify for an otherwise disallowed Michigan Business Tax Small Business Alternative Credit by adjusting current-year adjusted business income.
It is available only if the taxpayer had negative adjusted business income in at least one of the five immediately preceding tax years and received an MBT Small Business Alternative Credit in that loss year.
Partnerships and members of Unitary Business Groups are directed to read the instructions before completing the worksheet.
What you'll need
Have these forms and details available:
- Taxpayer name and Federal Employer Identification Number (FEIN) or TR Number. Unitary Business Groups also provide the designated member's name and the reporting member's name and identification number.
- Form 4571, lines 5 and 8.
- Form 4577, column L for compensation and director fees, and column G for ownership percentage, for the shareholder creating the disqualifier or reduction.
- Information for the five immediately preceding tax years, including tax year-end dates, adjusted business income, losses used on prior returns, and whether a Small Business Alternative Credit was received.
The worksheet also refers to an instructions chart for line 5. That chart is not included in the supplied text.
Common mistakes
- Do not enter negative signs before loss amounts on lines 11 through 16.
- Read the instructions before completing Part 2. Enter the five immediately preceding tax years on line 10, with the oldest on the left.
- Complete lines 11 through 16 one column at a time, starting with the oldest. Complete only columns for periods that reported a loss, either generated or used, and received a Small Business Alternative Credit.
- If compensation exceeds $180,000 for any C Corporation shareholder or officer, the credit cannot be claimed. A loss adjustment cannot reduce compensation from Form 4577, column L.
- If line 7 is less than zero, the worksheet directs you to the instructions rather than providing the next step on the form.
Questions people ask
What business income disqualifier goes on line 2?
For the 2025 worksheet, enter $180,000 for individuals or $1,899,300 for all other organization types.
How do I calculate the loss adjustment required on line 3?
Subtract line 2 from line 1. If the result is less than zero, enter zero.
Which prior years does Part 2 cover?
Part 2 covers the five tax years immediately preceding the current tax year. Enter their tax year-end dates in MM-DD-YYYY format, oldest first.
Can a loss adjustment reduce shareholder compensation?
The form warns that a loss adjustment cannot reduce compensation from Form 4577, column L. It also states that the credit cannot be claimed if compensation exceeds $180,000 for any C Corporation shareholder or officer.