Michigan Non-Unitary Relationships with Flow-Through Entities*

Non-Unitary Relationships with Flow-Through Entities*
4898, 2022 Michigan Corporate Income Tax: Non-Unitary Relationships with Flow-Through Entities
Attachment 6

Michigan Department of Treasury
4898 (Rev. 03-22), Page 1

2022 Michigan Corporate Income Tax:
Non-Unitary Relationships with Flow-Through Entities
(To report flow-through entities that are unitary with the taxpayer, see Form 4900)
Issued under authority of Public Act 38 of 2011.

A Corporate Income Tax (CIT) taxpayer is unitary with a flow-through entity if the CIT taxpayer owns or controls, directly or indirectly, more than 50% of the
voting interests of the flow-through entity, and the parties have business activities that satisfy either a flow of value test or a business integration test.
Taxpayer Name (If Unitary Business Group, Name of Designated Member)

Taxpayer or DM Federal Employer Identification Number (FEIN)

Unitary Business Groups Only: Name of the Unitary Business Group Member Reporting on This Form

Member Federal Employer Identification Number (FEIN)

IMPORTANT: If a flow-through entity (FTE) made a Michigan Business Tax (MBT) election and files an MBT return for its tax year that ends with or within
the tax year of the CIT taxpayer (or for UBGs, the member) named above, leave Column D and E blank for that FTE.
A.

Flow-Through Entity Name

B.

C.

D.

E.

FEIN

Distributive Share
of Flow-Through Entity
Income

Flow-Through Entity
Apportionment
Percentage

Apportioned Distributive
Share of Flow-Through
Entity Income (Loss)

If more space is needed, include additional copies of Form 4898. Repeat the taxpayer name and FEIN at the top of every copy.

+

0000 2022 26 01 27 0

Instructions for Form 4898
Corporate Income Tax: Non-Unitary Relationships with Flow-Through Entities
Purpose
The	 purpose	 of	 this	 form	 is	 to	 gather	 information	 on	 the	
distributive	 share	 of	 flow-through	 income	 (loss)	 attributable	
to	 flow-through	 entities	 (FTEs)	 that	 are	 directly	 or	 indirectly	
owned	 but	 not	 unitary	 for	 apportionment	 purposes	 with	 the	
taxpayer,	 or	 with	 the	 member	 of	 a	 Unitary	 Business	 Group	
(UBG).

General Information
This	 form	 is	 intended	 to	 only	 be	 used	 by	 a	 Corporate	 Income	
Tax	 (CIT)	 taxpayer	 (or	 member	 of	 a	 UBG)	 to	 report	 the	
distributive	income	(loss)	from	its	interests	in	FTEs	that	are	not	
unitary	 for	 apportionment	 purposes	 with	 the	 taxpayer	 or	 UBG.	
This	 form	 must	 be	 filed	 by	 any	 taxpayer	 that	 has	 a	 distributive	
share	 of	 income	 (loss)	 attributable	 to	 an	 FTE	 with	 which	 the	
taxpayer	 is	 not	 unitary	 for	 apportionment	 purposes.	 If	 the	
taxpayer	 is	 a	 UBG,	 then	 each	 member	 of	 the	 UBG	 that	 has	 a	
distributive	 share	 of	 income	 (loss)	 from	 an	 FTE	 that	 the	 UBG	
is	 not	 unitary	 with	 for	 apportionment	 purposes	 must	 file	 this	
form.	 If	 more	 space	 is	 needed,	 use	 additional	 copies	 of	 Form	
4898.	 Repeat	 the	 taxpayer’s	 and	 UBG	 member’s	 name	 and	
Federal	 Employer	 Identification	 Number	 (FEIN)	 (if	 applicable)	
at	the	top	of	every	copy	of	Form	4898.
Flow-through entity	 means	 an	 entity	 that	 for	 the	 applicable	
tax	 year	 is	 treated	 as	 a	 subchapter	 S	 Corporation	 under	
section	 1362(a)	 of	 the	 Internal	 Revenue	 Code	 (IRC),	 a	 general	
partnership,	 a	 trust,	 a	 limited	 partnership,	 a	 limited	 liability	
partnership,	 or	 a	 limited	 liability	 company,	 that	 for	 the	 tax	
year	 is	 not	 taxed	 as	 a	 C	 Corporation	 for	 federal	 income	 tax	
purposes.
A taxpayer is unitary for apportionment purposes with an FTE
if the taxpayer:
• Owns	 or	 controls,	 directly	 or	 indirectly,	 more	 than	 50%	
of	 the	 ownership	 interests	 with	 voting	 rights	 (or	 ownership	
interests	 that	 confer	 comparable	 rights	 to	 voting	 rights)	 of	 the	
FTE;	AND
• The	 taxpayer	 and	 FTE	 have	 activities	 or	 operations	 which	
result	 in	 a	 flow	 of	 value	 between	 the	 taxpayer	 and	 the	 FTE,	 or	
between	 the	 FTE	 and	 another	 FTE	 unitary	 with	 the	 taxpayer,	
or	has	business	activities	or	operations	that	are	integrated	with,	
are	dependant	upon,	or	contribute	to	each	other.
The	 determination	 of	 whether	 a	 taxpayer	 is	 unitary	 for	
apportionment	 purposes	 with	 an	 FTE	 is	 made	 at	 the	 taxpayer	
level.	 If	 the	 taxpayer	 at	 issue	 is	 a	 UBG,	 the	 ownership	
requirement	will	be	made	at	the	UBG	level.	So,	if	the	combined	
ownership	 of	 the	 FTE	 by	 the	 UBG	 is	 greater	 than	 50%,	 then	
the	ownership	requirement	will	be	satisfied.
An FTE is not unitary with a taxpayer	 when	 either	 of	 the	 tests	
above	is	not	met.
Public Act (PA) 266 of 2013
PA	 266	 of	 2013	 authorizes	 an	 affiliated	 group	 election	 that	
applies	 an	 alternate	 test	 for	 finding	 a	 unitary	 relationship	

between	 corporations.	 This	 act	 DID NOT	 create	 a	
corresponding	 “affiliated	 group”	 test	 for	 finding	 a	 unitary	
relationship	 between	 a	 corporation	 and	 an	 FTE.	 The	 existence	
of	 a	 unitary	 relationship	 between	 a	 corporation	 and	 an	 FTE	 is	
still	based	exclusively	on	the	traditional	two-part	test	described	
above.
NOTE:	 An	 FTE	 owned	 directly	 or	 indirectly	 by	 a	 taxpayer	 or	
a	member	of	a	UBG	may	or	may	not	be	unitary	with	a	taxpayer	
or	UBG	member.	This	form	asks	for	information	only	about	the	
FTEs	 that	 are	 NOT	 unitary	 for	 apportionment	 purposes	 with	
the	 taxpayer	 or	 UBG	 member.	 For	 those	 FTEs	 that	 are	 unitary	
for	 apportionment	 purposes	 with	 the	 taxpayer,	 use	 the	 CIT
Unitary Relationships with FTEs	(Form	4900).

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	 the	 CIT Annual
Return	(Form	4891).
Unitary Business Groups (UBGs):	 Complete	 one	 form	 for	
each	 member	 included	 in	 the	 standard	 return	 that	 received	 a	
distributive	 share	 of	 income	 (loss)	 from	 an	 FTE	 not	 unitary	 for	
apportionment	 purposes	 with	 the	 UBG.	 Enter	 the	 Designated	
Member’s	 (DM’s)	 name	 and	 FEIN	 in	 the	 Taxpayer	 Name	 and	
FEIN	 fields	 and	 the	 name	 and	 FEIN	 of	 the	 member	 to	 which	
the	schedule	applies	on	the	line	below.
Column A and B:	Identify	each	non-unitary	FTE	by	name	and	
FEIN.
Column C:	 To	 the	 extent	 included	 in	 federal	 taxable	 income	
and	 the	 corporate	 income	 tax	 base	 before	 apportionment,	 enter	
the	 distributive	 share	 of	 income	 (loss)	 attributable	 to	 the	 nonunitary	FTE	listed	in	Columns	A	and	B.	Enter	loss	as	negative.	
A	 UBG	 member	 will	 enter	 the	 amount	 of	 distributive	 income	
(loss)	 from	 each	 non-unitary	 FTE	 listed	 in	 Columns	 A	 and	 B.	
For	 each	 UBG	 member,	 the	 sum	 of	 all	 distributive	 shares	 of	
flow-through	 income	 (loss)	 entered	 in	 Column	 C	 shall	 equal	
the	 sum	 of	 all	 distributive	 shares	 of	 flow-through	 income	 (loss)	
entered	 on	 line	 32	 of	 the	 CIT Data on Unitary Business Group
Members	(Form	4897).
To	 compute	 the	 amount	 required	 to	 be	 reported	 in	 Column	 C,	
for	each	FTE	listed	in	Columns	A	and	B:
• Begin	 with	 the	 amount	 of	 distributive	 share	 of	 income	 (loss)	
included	in	federal	taxable	income.	
• Adjust	 that	 amount	 by	 amounts	 attributable	 to	 the	 FTE	
that	 are	 included	 on	 the	 following	 lines	 of	 Form	 4891:	 12,	 13,	
14c,18,	19,	20,	21,	22,	23,	27,	28,	29,	and	30.
• Report	the	result	in	Column	C.
Exclusion of MBT Filer Distributive Shares
Public	 Act	 233	 of	 2013	 provides	 that,	 in	 the	 case	 of	 an	 FTE	
that	 made	 the	 election	 to	 remain	 taxable	 under	 the	 MBT,	
each	 member	 of	 the	 FTE	 that	 does	 not	 file	 as	 a	 member	 of	 a	

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UBG	 with	 the	 FTE	 shall	 disregard	 all	 items	 attributable	 to	
that	 member’s	 ownership	 interest	 in	 the	 electing	 FTE	 for	 all	
purposes	 of	 the	 CIT.	 If	 the	 taxpayer	 owns	 an	 interest	 in	 an	
FTE	 that	 files	 an	 MBT	 return	 for	 a	 tax	 year	 that	 ends	 with	 or	
within	 this	 taxpayer’s	 tax	 year,	 the	 taxpayer’s	 distributive	
share	 of	 income	 (loss)	 from	 such	 FTE	 will	 be	 exempt	 from	
the	 taxpayer’s	 corporate	 income	 tax	 base.	 Report	 distributive	
income	 (loss)	 exempt	 under	 2013	 PA	 233	 in	 column	 C,	 then	
leave	Columns	D	and	E	blank.
Tiered Entities:	 In	 the	 event	 of	 a	 tiered	 entity,	 enter	 in	 this	
column	 the	 distributive	 share	 of	 income	 or	 loss	 attributable	
to	 a	 non-unitary	 FTE	 in	 which	 the	 taxpayer	 has	 an	 indirect	
ownership	interest.
When	 computing	 the	 distributive	 share	 of	 income	 attributable	
to	 the	 non-unitary	 FTE	 in	 which	 the	 taxpayer	 has	 a	 direct	
ownership	 interest,	 only	 enter	 the	 direct	 income	 of	 that	 FTE.	
This	is	done	by	subtracting	any	income	(loss)	attributable	to	the	
filer’s	 indirectly	 owned	 FTEs	 from	 the	 income	 (loss)	 reported	
here	that	is	attributable	to	the	directly	owned	FTE.
Example:	 C	 Corporation	 1	 owns	 50%	 of	 FTE	 B	 and	 FTE	
B	 owns	 40%	 of	 FTE	 A.	 FTE	 B	 received	 from	 FTE	 A	 a	
distributive	 share	 of	 income	 of	 $20,000.	 C	 Corporation	
1	 received	 from	 FTE	 B	 a	 distributive	 share	 of	 income	 of	
$100,000.	 On	 the	 line	 corresponding	 to	 FTE	 A,	 C	 Corporation	
1	 would	 enter	 $10,000.	 This	 is	 the	 indirect	 distributive	 share	
that	C	Corporation	 1	received	from	FTE	A	and	is	calculated	 by	
multiplying	 C	 Corporation	 1’s	 ownership	 interest	 in	 FTE	 B	 by	
the	distributive	share	FTE	B	received	from	FTE	A:
	

50%	x	$20,000	=	$10,000

On	 the	 line	 corresponding	 to	 FTE	 B,	 C	 Corporation	 1	 would	
enter	 $90,000.	 This	 is	 the	 distributive	 share	 C	 Corporation	 1	
received	 from	 FTE	 B	 less	 the	 distributive	 share	 C	 Corporation	
1	received	from	FTE	A:
	

$100,000	-	$10,000	=	$90,000

NOTE:	 The	 sum	 of	 the	 amount	 in	 every	 line	 on	 column	 C	
(plus,	 in	 the	 case	 of	 a	 UBG,	 the	 sum	 of	 column	 C	 for	 all	 other	
UBG	 members	 that	 filed	 this	 form)	 should	 equal	 the	 amount	
reported	on	Form	4891,	line	26.
Column D:	 Enter	 in	 this	 column	 the	 non-unitary	 FTE’s	
apportionment	 percentage.	 The	 non-unitary	 FTE’s	
apportionment	 percentage	 is	 the	 FTE’s	 sales	 factor.	 	 The	
sales	 factor	 is	 a	 fraction,	 the	 numerator	 of	 which	 is	 the	 total	
sales	 of	 the	 FTE	 in	 this	 state	 during	 the	 tax	 year	 and	 the	
denominator	 of	 which	 is	 the	 total	 sales	 of	 the	 FTE	 everywhere	
during	 the	 tax	 year.	 For	 more	 information	 on	 what	 is	 a	 sale,	
see	 the	 instructions	 for	 Form	 4891.	 Use	 the	 information	 in	
the	 “Sourcing	 of	 Sales	 to	 Michigan”	 section	 of	 Form	 4890	 to	
determine	 Michigan	 sales.	 Enter	 this	 amount	 as	 a	 percentage,	
carrying	 it	 out	 4	 digits	 to	 the	 right	 of	 the	 decimal	 point	 (i.e.	
12.3456).	Do not enter the percent symbol (%).
For	 FTEs	 whose	 distributive	 income	 (loss)	 is	 exempt	 under	
2013 PA 233,	leave	column	D	blank.
Column E:	 Enter	 the	 non-unitary	 flow-through	 distributive	
income	 after	 apportionment	 by	 multiplying	 the	 amount	 in	
column	 C	 by	 the	 apportionment	 percentage	 in	 column	 D	 for	

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each	FTE	included	on	this	form.
For	 FTEs	 whose	 distributive	 income	 (loss)	 is	 exempt	 under	
2013 PA 233,	leave	column	E	blank.
NOTE:	 The	 sum	 of	 column	 E	 (in	 the	 case	 of	 a	 UBG,	 the	 sum	
of	 column	 E	 for	 all	 UBG	 members)	 should	 equal	 the	 amount	
reported	on	Form	4891,	line	34.
Include completed Form 4898 as part of the tax return filing.