4946: Schedule of Corporate Income Tax Liability for a Michigan Business Tax Filer (2024)
Michigan · Michigan Treasury · Used for tax years 2024
Michigan Form 4946 calculates Corporate Income Tax (CIT) liability for standard taxpayers filing a Michigan Business Tax (MBT) return. It reports sales apportionment, business income adjustments, credits and recaptures, and compares the resulting CIT and MBT amounts to determine
Who files this form
Form 4946 is for standard taxpayers filing a Michigan Business Tax (MBT) return. It calculates Corporate Income Tax (CIT) liability for comparison with MBT liability. The taxpayer must pay the higher liability or take the smaller refund.
A Unitary Business Group (UBG) completes one Form 4946 for the group, using totals for all group members.
What you'll need
Have these forms and figures available, as applicable:
- Michigan Form 4567: Use the same taxpayer name and FEIN shown on the MBT Annual Return. Form 4946 also uses the liability from Form 4567, line 57.
- Federal Form 1120: Provides federal taxable income for line 4. Non-C corporations use business income as described in the instructions.
- Sales and income figures: Michigan sales, total sales, income adjustments, depreciation adjustments, and applicable additions and subtractions.
- Forms 4947 and 4574: Provide the credit and recapture amounts used in the comparison.
- Form 4900: Used to calculate sales from unitary flow-through entities.
- Form 4898: Used for applicable income or loss from non-unitary flow-through entities. Keep it in your records rather than submitting it.
- Small Business Alternative Credit worksheet and Form 4894: Use these when claiming the CIT credit. Use Form 4895 if claiming a loss adjustment. Keep these documents in your records rather than attaching them.
If line 25 is not zero, attach a statement separately identifying the apportioned income or loss from non-unitary flow-through entities and the pro forma CIT business loss amount.
How to file
Include the completed Form 4946 as part of your tax return filing.
Carry the amount from Form 4946, line 39, to Form 4567, line 58.
Do not include Form 4898, the Small Business Alternative Credit worksheet, or its supporting Forms 4894 and 4895 with the filing. Keep them with your tax records.
The supplied text does not give a mailing address or e-file directions.
Common mistakes
- Completing protected-activity lines: If your business activity is protected under Public Law 86-272, leave lines 4 through 29 blank.
- Using the wrong credit calculation: Use the CIT Small Business Alternative Credit worksheet, not MBT Form 4571, to calculate the CIT credit.
- Overlooking the gross receipts rule: Enter zero on line 27 if apportioned or allocated gross receipts, as defined under the MBT, are less than $350,000. If the business operated for fewer than 12 months, annualize gross receipts to check this rule.
- Losing track of a negative calculation: If line 26 is negative, enter zero on the form but retain the negative amount for use on next year's Form 4946, line 25. This pro forma CIT loss cannot be claimed on an actual CIT return and expires when the MBT election ends.
- Using revenue miles for other activities: Only transportation services use revenue-mile sourcing. Source other business receipts according to the rules for those activities.
Questions people ask
What if I have no Michigan sales?
Enter zero on line 1.
What tax rate does Form 4946 use?
Line 27 multiplies line 26 by 6%. However, enter zero if apportioned or allocated gross receipts are less than $350,000. Businesses operating for fewer than 12 months must annualize gross receipts to check that rule.
How do I complete line 39?
If line 35 is greater than line 38, enter the difference. If line 38 is greater than or equal to line 35, enter zero. Carry the result to Form 4567, line 58.
Can a nonrefundable credit create a refund?
No. A nonrefundable credit cannot reduce liability below zero.
In what order should I complete the income subtractions?
Complete lines 19 through 21 before completing line 18. Use Form 4898 to calculate the amount for line 18, and retain that form in your records.