4895: Loss Adjustment for the Small Business Alternative Credit* (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form 4895 calculates loss adjustments for the 2025 Corporate Income Tax Small Business Alternative Credit. It reports current-year income, available losses from the five preceding tax periods, losses used, and loss adjustment carryforwards.
Who files this form
Use 2025 Form 4895 if you want to qualify for an otherwise disallowed or reduced Small Business Alternative Credit by adjusting current-year adjusted business income (ABI) and/or allocated income.
This adjustment is available only if you:
- Had negative ABI in at least one of the five tax years immediately before the current tax year, and
- Received a Michigan Business Tax or Corporate Income Tax Small Business Alternative Credit in that loss year.
Unitary Business Groups (UBGs) are directed to special instructions.
What you'll need
Have the following information available to complete the form:
- Your taxpayer name and Federal Employer Identification Number (FEIN).
- Form 4893, including line 9 for the ABI adjustment and line 6 for the shareholder allocated income adjustment.
- Form 4894, line 3, columns L and G, for the relevant shareholder's compensation and director fees and ownership percentage.
- Records for the five preceding tax periods, including each period's end date, ABI, losses used on prior returns, and whether a Small Business Alternative Credit was received.
UBGs are directed to special instructions and the “Loss Adjustment for a Shareholder with Multiple Allocations” worksheet for Parts 3 and 4.
Common mistakes
- Do not put a negative sign in front of loss amounts on lines 5 through 10 or lines 18 through 23.
- List the five preceding tax periods with the oldest on the left. Complete one column at a time, starting with the oldest.
- Complete loss columns only for periods that reported a loss, either generated or used, and received a Small Business Alternative Credit.
- Read the instructions before completing Parts 2 and 4. The form also directs you to instructions if line 14 is less than zero.
- Do not use a loss adjustment to reduce compensation reported on Form 4894, line 3, column L. If compensation exceeds $180,000 for any shareholder or officer, the credit cannot be claimed.
- A shareholder of a UBG member must combine all items paid or allocable by all members of the UBG.
Questions people ask
What does Form 4895 adjust?
It adjusts current-year ABI and/or allocated income to help qualify for an otherwise disallowed or reduced Small Business Alternative Credit.
How far back can the form look for losses?
The form looks at the five tax years immediately preceding the current tax year. Eligibility requires negative ABI and receipt of a Michigan Business Tax or Corporate Income Tax Small Business Alternative Credit in the loss year.
What business income disqualifier is printed on the 2025 form?
Part 1, line 2, lists $1,795,300. Line 3 instructs you to subtract that amount from the ABI on line 1 and enter zero if the result is less than zero.
Can a loss adjustment reduce shareholder or officer compensation?
No. The form says a loss adjustment cannot reduce compensation from Form 4894, line 3, column L. It also says the credit cannot be claimed if compensation exceeds $180,000 for any shareholder or officer.