State and Local Tax Alert - March 2014

March 2014

On February 25, 2014, Michigan Governor Rick Snyder signed into law House Bill 5010, which made two significant changes to the Michigan Corporate Income Tax (“CIT”): (1) domestic international sales corporations (“DISCs”) are now included as entities exempt from the CIT; and (2) sales between a taxpayer and a unitary flow-through entity (“FTE”), or between two FTEs unitary with the taxpayer, are only eliminated to the extent of the taxpayer’s interest in the FTE (or selling FTE, if the sale is between two FTEs). Also on February 25, 2014, the governor signed into law House Bills 5008, 5009, and 5011, which address various CIT issues, including clarifying the definitions of “ultimate destination” for sales-factor purposes and “officer” for purposes of the small business credit. The bills also create a successor mechanism for business loss carry forwards in certain reorganizations, add to the intercompany transaction exclusion and revise the credit recapture provisions for the investment tax credit (“ITC”).