January 23, 2008, Introduced by Senators PAPPAGEORGE, CASSIS and JANSEN and referred to the Committee on Finance.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending section 105 (MCL 208.1105), as amended by 2007 PA 145.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 105. (1) "Business activity" means a transfer of legal or
equitable title to or rental of property, whether real, personal,
or mixed, tangible or intangible, or the performance of services,
or a combination thereof, made or engaged in, or caused to be made
or engaged in, whether in intrastate, interstate, or foreign
commerce, with the object of gain, benefit, or advantage, whether
direct or indirect, to the taxpayer or to others, but does not
include the services rendered by an employee to his or her
employer, or
services as a director of a corporation, or services
rendered by an individual to a partnership in which he or she is a
partner. Although an activity of a taxpayer may be incidental to
another or to other of his or her business activities, each
activity shall be considered to be business engaged in within the
meaning of this act.
(2) "Business income" means that part of federal taxable
income
derived from business activity . and
as further described
for the following:
(a) For a partnership or S corporation, business income
includes
payments and items of income, and expense less expenses,
that are attributable to business activity of the partnership or S
corporation and separately reported to the partners or
shareholders.
(b) For an organization that is a mutual or cooperative
electric company exempt under section 501(c)(12) of the internal
revenue code, business income equals the organization's excess or
deficiency of revenues over expenses as reported to the federal
government by those organizations exempt from the federal income
tax under the internal revenue code, less capital credits paid to
members of that organization, less income attributed to equity in
another organization's net income, and less income resulting from a
charge approved by a state or federal regulatory agency that is
restricted for a specified purpose and refundable if it is not used
for the specified purpose.
(c) For a tax-exempt person, business income means only that
part of federal taxable income derived from unrelated business
activity.
(d) For an individual, estate, partnership organized
exclusively
for estate or gift planning purposes, or trust
organized
exclusively for estate or gift planning purposes, other
person organized for estate or gift planning purposes, or person
organized to conduct investment activity which does not conduct a
trade or business or conducts investment activity for a trade or
business, business income is that part of federal taxable income
derived from transactions, activities, and sources in the regular
course of the taxpayer's trade or business, including the
following:
(i) (a)
All income from tangible and
intangible property if the
acquisition, rental, management, or disposition of the property
constitutes integral parts of the taxpayer's regular trade or
business operations.
(ii) (b)
Gains or losses incurred in the
taxpayer's trade or
business from stock and securities of any foreign or domestic
corporation and dividend and interest income.
(iii) (c)
Income derived from isolated sales,
leases,
assignment, licenses, divisions, or other infrequently occurring
dispositions, transfers, or transactions involving property if the
property is or was used in the taxpayer's trade or business
operation.
(iv) (d)
Income derived from the sale of a
business.
(v) (e)
Income not included in business
income for an
individual, estate, partnership organized exclusively for estate or
gift planning purposes, or trust organized exclusively for estate
or gift planning purposes includes, but is not limited to, the
following:
(A) (i) Personal
investment activity, including interest,
dividends, and gains from a personal investment portfolio or
retirement account.
(B) (ii) Disposition
of tangible, intangible, or real property
held for personal use and enjoyment, such as a personal residence
or personal assets.