Michigan Small Business Alternative Credit*

Small Business Alternative Credit*
4893, 2022 Michigan Corporate Income Tax Small Business Alternative Credit
Attachment 2

Michigan Department of Treasury
4893 (Rev. 05-22), Page 1

2022 MICHIGAN Corporate Income Tax Small Business Alternative Credit
Issued under authority of Public Act 38 of 2011.
Taxpayer Name

Federal Employer Identification Number (FEIN)

The Small Business Alternative Credit is NOT available if any
of the following conditions exist:
• Gross receipts exceed $20,000,000;
• Adjusted business income after loss adjustment exceeds
$1,521,000;
• Any shareholder or officer has allocated income after loss
adjustment of over $180,000, as determined on the CIT
Schedule of Shareholders and Officers (Form 4894).
• Compensation and director fees of a shareholder or officer
exceed $180,000.

The Small Business Alternative Credit must be reduced
if any of the following conditions exist (see Reduced
Credit Table at bottom of the page):
• Any shareholder or officer has allocated income after
loss adjustment of over $160,000 but not over $180,000,
as determined on Form 4894.
• Gross receipts exceed $19,000,000 but are not more
than $20,000,000.

NOTE: All taxpayers claiming the Small Business Alternative Credit must include Form 4894.
1.
2.

00
00

Business Income (see instructions).......................................................................................................................
Carryback or carryover of a capital loss. Enter as a positive number (see instructions) .......................................
Carryback or carryover of a federal net operating loss from Form 4891, line 20. Enter as a positive number .....
Subtotal. Add lines 3, 4 and 5 ...............................................................................................................................
Compensation and director fees of active shareholders from Form 4894, line 1 .................................................
Compensation and director fees of officers from Form 4894, line 2 .....................................................................
Adjusted Business Income. Add lines 6, 7, and 8..................................................................................................

3.
4.
5.
6.
7.
8.
9.

00
00
00
00
00
00
00

10. Small Business Alternative Tax. Multiply line 9 by 1.8% (0.018). If less than zero, enter zero ............................
11. Small Business Alternative Credit. Subtract line 10 from line 2. If less than zero, enter zero .......................
12. Allocated income used for reduction (see instructions) ...................................... 12.
00
13. Reduction percentage from Reduced Credit Table at bottom of this page (based on amount from line 12) .......

10.
11.

00
00

13.

%

Reduced Credit. Multiply the percentage on line 13 by the credit on line 11. If gross receipts from line 1 are
less than or equal to $19,000,000, carry amount to Form 4891, line 39 (see instructions)...................................

14.

00

Complete this section if gross receipts are more than $19,000,000 but not more than $20,000,000.
15. Excess gross receipts. Subtract $19,000,000 from line 1 ....................................................................................
16. Excess percentage. Divide line 15 by $1,000,000 (enter as a percentage) ..........................................................
17. Allowable percentage. Subtract line 16 from 100%...............................................................................................

15.
16.
17.

00
%
%

18. Small Business Alternative Credit. Multiply the percentage on line 17 by the credit on line 14.
Carry amount to Form 4891, line 39......................................................................................................................

18.

00

1.
2.

Gross Receipts (see instructions)..........................................................................................................................
Tax liability prior to this credit from Form 4891, line 38 .........................................................................................

Adjusted Business Income
3.
4.
5.
6.
7.
8.
9.

Small Business Alternative Credit Calculation

14.

Reduction Based on Gross Receipts

REDUCED CREDIT TABLE
If allocated* income is:
The reduced credit is:
$0 - $160,000 ......................... 100% of the Small Business Alternative Credit
$160,001 - $164,999 ............ 80% of the Small Business Alternative Credit
$165,000 - $169,999 ............ 60% of the Small Business Alternative Credit
$170,000 - $174,999 ............ 40% of the Small Business Alternative Credit
$175,000 - $180,000 ............ 20% of the Small Business Alternative Credit
* See instructions for tax years less than 12 months.

+

0000 2022 16 01 27 1

Instructions for Form 4893
Michigan Corporate Income Tax (CIT) Small Business Alternative Credit
Purpose
To	 allow	 taxpayers	 to	 calculate	 the	 Small	 Business	 Alternative	
Credit	(SBAC).	The	credit	is	calculated	here	and	then	carried	to	
the	CIT Annual Return (Form	4891).
The CIT Schedule of Shareholders and Officers (Form 4894)
also must be filed with a return to qualify for the SBAC. An
SBAC claimed on Form 4893 will be denied if Form 4894 is
not included with the return.
A	 taxpayer	 is	 disqualified	 from	 taking	 the	 SBAC	 under	 certain	
circumstances,	 which	 are	 detailed	 below.	 Financial	 institutions	
and	 insurance	 companies	 are	 not	 eligible	 for	 this	 credit.	
For	 guidance	 in	 addition	 to	 these	 instructions,	 see	 Revenue	
Administrative	 Bulletin	 (RAB)	 2020-26	 at	 www.michigan.
gov/taxes.
NOTE: A	 person	 that	 is	 a	 disregarded	 entity	 for	 federal	
income	 tax	 purposes	 under	 the	 Internal	 Revenue	 Code	 shall	 be	
classified	 as	 a	 disregarded	 entity	 for	 the	 purposes	 of	 filing	 the	
CIT	annual	return.

Eligibility for the SBAC
Taxpayers	 are	 not	 eligible	 for	 the	 SBAC	 if	 any	 of	 the	 following	
conditions	exist:
• Gross	receipts	exceed	$20,000,000.
• Adjusted	 business	 income	 after	 loss	 adjustment	 exceeds	
$1,521,000	 for	 Corporations	 (and	 LLCs	 federally	 taxed	 as	
such).
• Any	 shareholder	 or	 officer	 has	 allocated	 income	 after	 loss	
adjustment	of	over	$180,000,	as	determined	on	Form	4894.
In	 addition,	 the	 SBAC	 is	 reduced	 if	 any	 of	 the	 following	
conditions	exist:
• Gross	 receipts	 exceed	 $19,000,000	 but	 are	 not	 more	 than	
$20,000,000.
• A	 shareholder	 or	 an	 officer	 has	 allocated	 income	 after	 loss	
adjustment	 of	 more	 than	 $160,000	 but	 not	 over	 $180,000.	 This	
reduction	 is	 based	 on	 the	 officer/shareholder	 with	 the	 largest	
allocated	income.
Allocated income	is	the	greater	of	either:
(a)	 A	 shareholder	 or	 officer’s	 compensation	 and	 director	 fees	
from	Form	4894,	column	L,	or	
(b)	 A	 shareholder’s	 compensation,	 director	 fees,	 and	 share	
of	 business	 income	 (or	 loss)	 after	 loss	 adjustment,	 from	 Form	
4894,	column	N.
If	 either	 (a)	 or	 (b)	 is	 greater	 than	 $180,000	 for	 any	 shareholder	
or	officer,	the	taxpayer	is	not	eligible	for	the	SBAC.	In	addition,	
if	 either	 (a)	 or	 (b)	 is	 over	 $160,000	 but	 not	 more	 than	 $180,000	
for	 any	 shareholder	 or	 officer,	 the	 taxpayer	 must	 reduce	 the	
SBAC	 based	 on	 the	 officer	 or	 shareholder	 with	 the	 largest	
allocated	income.
NOTE:	 Taxpayers	 leasing	 employees	 from	 professional	

employer	 organizations	 must	 include	 the	 compensation	 of	
officers	 (of	 the	 operating	 company)	 and	 shareholders	 who	
receive	 compensation	 in	 determining	 the	 eligibility	 for	
the	 SBAC	 even	 though	 their	 compensation	 is	 paid	 by	 the	
professional	employer	organization.
Tax Years Less Than 12 Months
If	 the	 reported	 tax	 year	 is	 less	 than	 12	 months,	 gross	 receipts,	
adjusted	 business	 income,	 and	 shareholders’	 and	 officers’	
allocated	 income	 must	 be	 annualized	 to	 determine	 eligibility	
and	 reduction	 percentage.	 Where	 those	 same	 amounts	 are	
reported	 on	 SBAC	 forms,	 they	 are	 reported on forms as
actual, not annualized, amounts.	 If	 annualized	 gross	 receipts	
exceed	 $19,000,000	 but	 do	 not	 exceed	 $20,000,000,	 annualize	
amounts	 to	 compute	 the	 Reduction	 Based	 on	 Gross	 Receipts,	
lines	15	through	18.
NOTE:	If	a	shareholder	owned	stock	for	less	than	the	entire	tax	
year	 of	 the	 corporation,	 or	 an	 officer	 served	 as	 an	 officer	 less	
than	the	entire	tax	year:
• For	 purposes	 of	 determining	 credit	 disqualifiers	 and	 credit	
reduction,	 compensation	 and	 director	 fees	 must	 be	 annualized.	
The	determination	of	credit	disqualifiers	and	credit	reduction	is	
performed	off-form.
• For	 purposes	 of	 determining	 active	 shareholders,	
compensation,	 director	 fees,	 and	 dividends	 must	 be	 annualized.	
The	determination	of	active	shareholders	is	performed	off-form.
Annualizing
Where	 annualization	 applies	 (see	 above	 NOTE),	 multiply	
each	 applicable	 amount,	 total	 gross	 receipts,	 adjusted	 business	
income,	 and	 allocated	 income,	 by	 12	 and	 divide	 the	 result	 by	
the	 number	 of	 months	 in	 the	 tax	 year.	 Generally,	 a	 business	
counts	 a	 month	 if	 the	 business	 operated	 for	 more	 than	 half	
the	 days	 of	 the	 month.	 If	 the	 tax	 year	 is	 less	 than	 one	 month,	
consider	 the	 tax	 year	 to	 be	 one	 month	 for	 the	 purposes	 of	 the	
calculation.
Loss Adjustment
If	 the	 adjusted	 business	 income	 was	 less	 than	 zero	 in	 any	 of	
the	five	tax	years	immediately	preceding	the	tax	year	for	which	
a	 taxpayer	 is	 claiming	 an	 SBAC	 and	 an	 SBAC	 was	 received	
for	 that	 same	 tax	 year,	 the	 taxpayer	 may	 be	 able	 to	 reduce	 the	
current	 year’s	 adjusted	 business	 income	 or	 allocated	 income	
amounts	 by	 the	 loss.	 See	 CIT Loss Adjustment for the Small
Business Alternative Credit	(Form	4895)	for	more	details.
If	 the	 SBAC	 is	 reduced	 or	 eliminated	 because	 gross	 receipts	
exceed	 $19,000,000,	 a	 loss	 adjustment	 cannot	 be	 used	 to	 prevent	
that	 reduction	 or	 elimination.	 Similarly,	 if	 the	 SBAC	 is	 reduced	
or	 eliminated	 due	 to	 compensation	 reported	 on	 Form	 4894,	
column	L,	a	loss	adjustment	cannot	be	used	to	prevent	that	result.	

Special Instructions for Unitary Business
Groups (UBGs)
UBGs	 calculate	 the	 gross	 receipts	 and	 adjusted	 business	
income	 disqualifiers	 at	 the	 UBG	 level	 AFTER	 intercompany	

27

eliminations.	 For	 a	 UBG	 to	 claim	 an	 SBAC,	 each	 member	 of	
the	UBG	that	is	a	corporation,	as	that	term	is	defined	under	the	
CIT,	must	file	Form	4894.
The	 allocated	 income	 disqualifier	 is	 based	 on	 all	 items	 paid	
or	 allocable	 to	 a	 shareholder	 or	 officer	 by	 all	 members	 of	 the	
UBG.		All	items	paid	or	allocable	to	a	single	individual	must	be	
combined	when	calculating	this	disqualifier.
In	 addition,	 a	 disqualifier	 applies	 to	 a	 UBG	 if	 such	 disqualifier	
applies	 to	 any	 member	 of	 that	 UBG.	 For	 example,	 a	 UBG	
is	 disqualified	 from	 taking	 the	 SBAC	 if	 that	 UBG	 includes	
a	 member	 for	 which	 the	 allocated	 income	 of	 a	 shareholder	
after	 loss	 adjustment	 is	 in	 excess	 of	 $180,000.	 The	 reduction	
percentages	 for	 the	 credit	 also	 apply	 to	 the	 entire	 group	 if	 they	
apply	to	one	member.
For	 more	 information	 on	 UBGs,	 see	 the	 “Supplemental	
Instructions	 for	 UBGs”	 in	 the	 Corporate Income Tax Forms
and Instructions for Standard Taxpayers	(Form	4890).	

Line-by-Line Instructions
Lines not listed are explained on the form.
Taxpayer Name and Account Number: Enter	 taxpayer	 name	
and	account	number	as	reported	on	page	1	of	Form	4891.
UBGs: Complete	 one	 form	 for	 the	 group.	 Enter	 the	 Designated	
Member	 (DM)	 name	 in	 the	 Taxpayer	 Name	 field	 and	 the	 DM	
account	number	in	the	Federal	Employer	Identification	Number	
(FEIN)	field.
Line 1: Enter	amount	from	Form	4891,	line	10a.	This	line	must	
be	completed.
Non-UBG taxpayers reporting a tax year of less than 12
months	 must	 annualize	 the	 amount	 on	 Form	 4891,	 line	 10a,	
and	report	the	result	here.		For	guidance,	see	the	“Annualizing”	
section	at	the	beginning	of	these	instructions.
UBG taxpayers reporting a tax year of less than 12 months
will	 report	 on	 this	 line	 the	 amount	 from	 Form	 4891,	 line	 10a.	
For	 UBGs	 with	 a	 member(s)	 reporting	 a	 period	 of	 less	 than	 12	
months,	 Form	 4891,	 line	 10a,	 reflects	 the	 already	 annualized	
gross	receipts	after	eliminations	for	purposes	of	the	SBAC.
Adjusted Business Income
Line 3:	 In	 general,	 enter	 business	 income	 from	 Form	 4891,	 line	
17.	 Exclude	 distributive	 share	 of	 business	 income	 from	 a	 flowthrough	 entity	 (FTE)	 that	 files	 a	 Michigan	 Business	 Tax	 (MBT)	
return	for	its	tax	year	that	ends	with	or	within	this	taxpayer’s	tax	
year.	The	distributive	share	of	business	income	from	FTEs	that	is	
being	 excluded	 must	 be	 appropriately	 reported	 on	 the	 Corporate
Income Tax: Non-Unitary Relationships with Flow-Through
Entities	(Form	4898),	columns	A	through	C	only.
NOTE:	 The	 adjusted	 business	 income	 (ABI)	 disqualifier	 is	
based	 on	 annualized	 ABI,	 but	 the	 credit	 calculations	 performed	
here	are	based	on	actual	ABI.
UBGs:		 Combine	 all	 business	 income	 for	 all	 members	 from	 CIT
Data on Unitary Business Group Members	(Form	4897),	line	25.

28

Line 4:	 Enter,	 to	 the	 extent	 deducted	 in	 determining	 federal	
taxable	 income	 (as	 defined	 for	 CIT	 purposes),	 a	 carryback	 or	
carryover	 of	 a	 capital	 loss	 from	 Schedule	 D	 of	 federal	 Form	
1120.	Enter	as	a	positive	number.
UBGs:	 Combine	 for	 all	 members	 all	 carryback	 or	 carryover	
of	 a	 capital	 loss,	 to	 the	 extent	 deducted	 in	 determining	 federal	
taxable	 income	 (as	 defined	 for	 CIT	 purposes),	 from	 Form	 4897,	
line	12,	and	enter	on	line	4.	Enter	as	a	positive	number.
SBAC Calculation
Line 12: The	 SBAC	 is	 reduced	 if	 a	 shareholder	 or	 an	 officer	 has	
allocated	income	after	loss	adjustment	of	more	than	$160,000	but	
not	 more	 than	 $180,000.	 This	 reduction	 is	 based	 on	 the	 officer/
shareholder	with	the	largest	allocated	income.	Enter	the	allocated	
income	 of	 the	 shareholder	 or	 officer	 with	 the	 highest	 allocated	
income	 after	 loss	 adjustment,	 even	 if	 that	 amount	 is	 $160,000	 or	
less.	Enter	the	highest	value	on	Form	4894,	Column	N.
If	 loss	 adjustment	 is	 successfully	 applied	 to	 fully	 or	 partially	
cure	 a	 shareholder’s	 allocated	 income	 disqualifier,	 enter	 on	 line	
12	the	number	from	Form	4895,	line	12.
Line 13:	 For	 a	 taxpayer	 whose	 shareholders	 and	 officers	 all	
have	 allocated	 income	 after	 loss	 adjustment	 of	 $160,000	 or	
less,	 enter	 100	 percent.	 All	 other	 taxpayers,	 see	 the	 table	 at	
the	 bottom	 of	 page	 1	 of	 this	 form	 to	 determine	 what	 percent	 to	
enter	on	this	line.
Line 14:	 All	 taxpayers	 must	 complete	 this	 line.	 Multiply	 Line	
11	 by	 the	 percentage	 on	 Line	 13	 and	 enter	 that	 amount	 on	 this	
line.
If	 gross	 receipts	 from	 line	 1	 are	 $19,000,000	 or	 less,	 carry	 the	
amount	on	line	14	to	Form	4891,	line	39.		
Reduction Based on Gross Receipts
Complete	 this	 section	 if	 gross	 receipts	 on	 Line	 1	 are	 more	 than	
$19,000,000	but	not	more	than	$20,000,000.
Line 17:	For	a	result	less	than	zero,	enter	zero.
Include completed Form 4893 as part of the tax return filing.
Form 4894 must be included with the filing of Form 4893.