4578: Schedule of Partners (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Form 4578 is the 2024 Michigan Business Tax Schedule of Partners. It reports each partner’s identity, ownership percentage, and share of business income to determine the partnership’s eligibility for the Small Business Alternative Credit or Start-Up Business Credit.
Who files this form
Form 4578 is for partnerships claiming the Michigan Business Tax Small Business Alternative Credit or Start-Up Business Credit.
A partnership is a taxpayer required to, or choosing to, file as a partnership for federal income tax purposes. Members of an LLC taxed federally as a partnership are treated as partners for MBT purposes.
A unitary business group (UBG) must complete a separate form for each member that is a partnership, including an entity taxed federally as a partnership.
What you'll need
Have these forms and details ready:
- MBT Annual Return, Form 4567: Use the taxpayer name and account number shown on page 1.
- Partner identification: Each partner’s name and Social Security number, FEIN, or Michigan Treasury-assigned TR number, as applicable.
- Ownership details: Each partner’s percentage of profits or capital interest and the number of months owned if less than the partnership’s tax year.
- U.S. Form 1065, Schedule K-1: Use each partner’s distributive share of income, losses, and deductions. Include guaranteed payments made to that partner.
- Business Income Worksheet, Worksheet 4746: Use this worksheet, found in Form 4600, to calculate partnership business income. Attach it to the filing.
- For a UBG: The Designated Member’s and reporting member’s names and account numbers.
How to file
Include completed Form 4578 as part of the tax return filing, and attach Worksheet 4746.
- Enter the taxpayer name and account number as reported on page 1 of Form 4567.
- Complete the partner identification, ownership percentage, and share of business income columns.
- If you need more space, add copies of Form 4578. Complete the name, account number, and line 1 on each copy. Combine all column C totals on line 2 and all column D totals on line 3 of the main form for that taxpayer or UBG member.
For a UBG, enter the Designated Member’s name in the Taxpayer Name field and the reporting member’s name on the line below. If reporting the Designated Member’s own data, enter its name and account number on both lines.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Exceeding the totals allowed: Line 2 cannot exceed 100%. Line 3 cannot exceed the partnership’s business income.
- Overlooking credit limits: A partner’s column D share over $180,000 after loss adjustment makes the partnership ineligible for the Small Business Alternative Credit. A share over $135,000 makes it ineligible for the Start-Up Business Credit.
- Not annualizing short-period income: For short-period returns, each partner’s share of business income must be annualized for the credit requirements. Multiply the applicable amount by 12, then divide by the number of months the business operated or the person was a partner. Generally, a month counts if the business operated for more than half its days. Operations lasting less than one month count as one month.
- Leaving additional pages unidentified: Enter the taxpayer name and account number and complete partner identification on every additional Form 4578.
- Forgetting required attachments: Include Form 4578 with the return and attach Worksheet 4746.
Questions people ask
What income limit applies to the Small Business Alternative Credit?
The partnership is not eligible if any partner’s column D share of business income is over $180,000 after loss adjustment.
What income limit applies to the Start-Up Business Credit?
The partnership is not eligible if any partner’s column D share of business income is over $135,000.
How do I report ownership for someone who was a partner for only part of the tax year?
Multiply the partner’s ownership percentage by the number of months owned, then divide by the number of months in the partnership’s tax year. Enter the result in column C.
What if an individual or foreign entity has no Social Security number or FEIN?
The instructions allow that partner to enter “APPLD FOR” or “FOREIGNUS” in column B.
Do guaranteed payments count in a partner’s share of business income?
Yes. Each partner’s distributive share includes guaranteed payments made to that partner.