Mich. Admin. Code R. 206.12 - Allocation and apportionment of income; adjustments
Rule 12.
(1)
Salaries, wages, and other compensation received by a Michigan resident are
allocated to Michigan. The credit provided in section 255 of Act No. 281 of the
Public Acts of 1967, being §
206.255
of the Michigan Compiled Laws, may be claimed if the compensation was earned in
another state and taxed by that state.
(2) Salaries and wages earned in Michigan by
a nonresident are allocated to Michigan.
(3) Income from a trade or business as
defined in
R
206.1 is allocated or apportioned to the state in
which the activity takes place.
(4)
Business income that is attributable to Michigan and 1 or more other states
shall be apportioned as provided in sections 115 to 195 of Act No. 281 of the
Public Acts of 1967, as amended, being §§
206.115
to
206.195
of the Michigan Compiled Laws.
(5)
Net rents and royalties from real property are allocated to the state in which
the real property is located.
(6)
Net rents and royalties from tangible property are allocated to Michigan, if
either of the following provisions applies:
(a) The personal property is utilized in
Michigan.
(b) The rent is received
by a Michigan resident or the recipient has a commercial domicile in Michigan
and is not organized under the laws of, or subject to tax by, the state in
which the property was utilized.
(7) Capital gains and losses from the
disposition of real property are allocated to the state in which the real
property is located.
(8) Capital
gains and losses from the disposition of personal property are allocated to
Michigan if any of the following provisions apply:
(a) The property was located in Michigan at
the time of sale.
(b) The taxpayer
is a Michigan resident.
(c) The
taxpayer has a commercial domicile in this state and is not taxable in the
state in which the property had a situs.
(9) Capital gains and losses from the
disposition of intangible personal property are allocated to Michigan if
received by a Michigan resident.
(10) Interest, dividends, and pension and
annuity income are allocated to Michigan if received by a Michigan
resident.
(11) Patent and copyright
royalties are allocated to Michigan if either of the following provisions
applies:
(a) The patent or copyright is used
in Michigan.
(b) The owner is a
Michigan resident or has a commercial domicile in Michigan and is not taxable
in the state in which the patent or copyright was used.
(12) A patent is used in Michigan if the
patented product is produced in Michigan or the patent is used in Michigan
production, fabrication, manufacturing, or other processing.
(13) A copyright is used in Michigan if the
printing or publication of the copyrighted item takes place in
Michigan.
(14) Income includable in
federal adjusted gross income not specifically allocated or apportioned by this
rule is allocated to Michigan when received by a Michigan resident. Credit for
tax paid to another state on income subject to tax in the other state may be
claimed by the Michigan resident.
(15) The following forms of income may be
claimed as a subtraction from adjusted gross income if not allocated or
apportioned to Michigan; conversely, losses not allocated or apportioned to
Michigan shall be added to adjusted gross income:
(a) Trade or business, including
farming.
(b) Rents and royalties
from real and personal property.
(c) Capital gains from the disposition of
real and tangible personal property.
(d) Capital gains from the disposition of
intangible personal property.
(e)
Interest and dividends.
(f)
Pensions and annuities.
(g) Patent
and copyright royalties.
(16) Distributive share items received by a
partner are allocated or apportioned as follows:
(a) Ordinary income is apportioned to
Michigan by the partnership apportionment factors provided in sections 115 to
195 of Act No. 281 of the Public Acts of 1967, as amended, being §§
206.115
to
206.195
of the Michigan Compiled Laws.
(b)
Salary allocated to Michigan when received by a Michigan resident. Credit may
be claimed for tax paid to another state if the salary was earned in the other
state. Salary earned in Michigan by a nonresident partner is allocated to
Michigan.
(c) Short-term capital
gains (losses), long-term capital gains (losses), involuntary conversion gains
(losses), and other gains (losses) from real or personal property that had a
situs in Michigan at the time of sale are allocated to Michigan. Capital gains
from the sale of intangible personal property are allocated to Michigan when
received by a Michigan resident.
(d) Additional first-year depreciation on
property located in Michigan is allocated to Michigan.
(e) Distributive items from a partnership not
allocated or apportioned to Michigan may be claimed as a deduction from
adjusted gross income. Conversely, losses and deductions not allocated or
apportioned to Michigan shall be added to adjusted gross income.
(17) All distributive income from
a subchapter S corporation includable in the shareholder's adjusted gross
income is subject to tax if allocated or apportioned to Michigan.
(18) Dividend distributions taxable as
ordinary income, plus undistributed income taxable as ordinary income, are
apportioned to Michigan if all of the corporation's business activities are
confined to Michigan. If the corporation is taxable both within and without
Michigan, such income is apportioned to Michigan as provided in sections 115 to
195 of Act No. 281 of the Public Acts of 1967, as amended, being §§
206.115
to
206.195
of the Michigan Compiled Laws.
(19)
Dividend distributions taxable as long-term capital gains and undistributed
long-term capital gains are allocated as follows:
(a) Capital gains from the disposition of
real property are allocated to Michigan if the property is located in
Michigan.
(b) Capital gains from
the disposition of tangible personal property are allocated to Michigan if the
property has a situs in Michigan at the time of sale.
(c) Capital gains from the sale of intangible
personal property are allocated to Michigan when received by a Michigan
resident.
(20)
Distributive income from a subchapter S corporation not allocated or
apportioned to Michigan may be claimed as a subtraction from adjusted gross
income. Conversely, losses not allocated or apportioned to Michigan shall be
added to adjusted gross income.
Notes
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