Tax Alert

Year-End Planning for the New Michigan Corporate Income Tax

(Dec. 7, 2011)

The Michigan Business Tax (MBT) will sunset on Dec. 31, 2011, and be replaced by a new corporate income tax on Jan. 1, 2012. Businesses should consider the following items as they plan for the transition to the new tax:

  • MBT Industrial Property Tax Credit – The credit for personal property taxes paid on industrial property will not be available under the corporate income tax. Pay these property taxes by Dec. 31, 2011, to claim the credit on your final MBT return.
  • Net Operating Loss Planning – For the vast majority of taxpayers, net operating losses incurred under the MBT will not be available under the corporate income tax. Taxpayers facing the loss of net operating loss carryforwards should consider accelerating income by the end of the year.
  • Fixed Asset Acquisitions – The investment tax credit under the MBT will not be available under the corporate income tax. Fixed assets purchased before the end of the year will qualify for the credit as well as provide a deduction against the final modified gross receipts tax liability.
  • Income Recognition – Partnerships, LLCs, and S corporations should defer income beyond the end of the year if possible. Income recognized by the end of the year will be subject to the MBT but not to the corporate income tax if recognized after Jan. 1, 2012.

For more information on how these issues might affect you, please contact Howard Wagner at 502.420.4567 or, Brian Myers at 317.208.2478 or, or any Crowe Horwath LLP tax professional.

Under U.S. Treasury rules issued in 2005, we must inform you that any advice in this communication to you was not intended or written to be used, and cannot be used, to avoid any government penalties that may be imposed on a taxpayer.

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Howard M. Wagner
Partner, National Tax Services