4577: Schedule of Shareholders and Officers (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Michigan Form 4577 is a 2024 Michigan Business Tax schedule for corporations claiming the Small Business Alternative Credit or Start-Up Business Credit. It reports shareholder and officer information, stock ownership, family relationships, compensation, and shares of business inc
Who files this form
Corporations claiming either the Small Business Alternative Credit or the Start-Up Business Credit must complete 2024 Michigan Form 4577 and include it with their tax return.
This includes limited liability companies (LLCs) taxed as corporations for federal purposes. An LLC member is treated as a shareholder for Michigan Business Tax purposes when the LLC is federally taxed as a corporation.
A unitary business group (UBG) must complete a separate Form 4577 for each member that is a corporation, including an entity federally taxed as a corporation.
What you'll need
Have the following information and forms available:
- MBT Annual Return (Form 4567): Use the taxpayer name and account number shown on page 1.
- Shareholder and officer details: Names, Social Security numbers or business identification numbers, officer status, stock ownership percentages, and periods of ownership.
- Family relationships: Spouse, parent, child, and grandchild relationships needed to report ownership through attribution.
- Income and benefit amounts: Dividends, salaries, wages, director fees, employee insurance payments, and pensions attributable to each listed person. Dividends include regular S corporation distributions.
- MBT Common Credits for Small Businesses (Form 4571): Line 5c is used to calculate the share of business income or loss in column M.
- For UBGs: Form 4580, Part 2A, lines 30 and 34, plus capital losses deducted on all members’ federal returns, are used for column M.
How to file
Include completed Form 4577 as part of your tax return filing. The supplied text does not give a mailing address or e-file directions.
- Enter the taxpayer name and account number as shown on Form 4567. For a UBG, enter the Designated Member’s name in the Taxpayer Name field and identify the member covered by the schedule on the line below.
- In Part 1, list the required shareholders and C corporation officers. Assign member numbers starting with 1, in order of stock ownership percentage in column G, highest first. Use the same numbers in columns A, H, and O.
- In Part 2, enter the member numbers for each shareholder’s spouse, parent, child, or grandchild. Check column T only when no attributable relationship exists.
- For the Small Business Alternative Credit, enter active shareholders’ total compensation and director fees on line 3 and Form 4571, line 6. Enter the total for C corporation officers who are not active shareholders on line 4 and Form 4571, line 7.
- If you need more space, include additional Forms 4577 with taxpayer identification and Parts 1 and 2 completed as needed. Continue the member numbering across all copies.
Common mistakes
- Not accounting for all stock: You must account for 100% of the stock. Otherwise, processing may be delayed.
- Leaving out amounts paid for work outside Michigan: Include all applicable compensation, employee insurance payments, and pensions, whether or not the shareholder or C corporation officer worked in Michigan.
- Reporting annualized amounts instead of actual amounts: For part-year shareholders or officers, report actual compensation and benefits attributable to the time they held that role. Annualize those amounts when determining disqualifiers.
- Using commas or number ranges in Part 2: Separate member numbers with dashes and list every number. For example, use “5-6-7-8,” not “5-8” to mean a range.
- Completing line 4 for an S corporation: Line 4 must be blank for an S corporation. Include its active shareholders in line 3, even if a shareholder is also a C corporation officer.
Questions people ask
Who must be listed in Part 1?
List shareholders and C corporation officers who are employees, are directors, or own at least 10% of the corporation’s stock, including ownership through attribution. Shareholders’ attributable family members who receive compensation from the business must also be listed in Parts 1 and 2.
What is an active shareholder?
An active shareholder is a shareholder, including through attribution, who owns at least 5% of outstanding stock and receives at least $10,000 in compensation, director fees, and dividends from the business. For short-period returns or part-year shareholders, those income amounts must be annualized when applying this test.
Which family relationships count for attribution?
The form identifies spouses, parents, children, and grandchildren. The attribution rules do not distinguish between adult and minor children.
What if an individual or foreign entity has no Social Security number or FEIN?
The instructions allow “APPLD FOR” or “FOREIGNUS” in column C for an individual or foreign entity without a Social Security number or FEIN.