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Part 1: Current Year Amounts annualized member figures (when applicable) to get the group’s
total annualized figure.
Use Part 1 to determine the amount of loss adjustment
necessary to qualify for the SBAC. Line 5: Form 4575 should always be calculated initially using
$160,000. This calculation will establish taxpayer eligibility
If the taxpayer is not eligible for the credit because the ABI
without the need to reduce the SBAC. However, if the total
exceeds $1,609,400 ($180,000 for individuals), complete lines 1
loss available for the current year on line 13 does not equal or
through 3.
exceed the loss adjustment required on line 9, the taxpayer may
If the taxpayer is not eligible because a shareholder’s still calculate alesser loss adjustment to claim areduced credit.
allocated income exceeds $180,000, or a partner’s distributive
income exceeds $180,000, complete lines 4 through 9 for the Line 5 Eligible % of Credit
shareholder(s) or partner(s) creating the disqualifier. The loss $ 160,000 100% - no reduction
adjustment required is the largest amount needed to eliminate $164,999 80%
all allocated income disqualifiers. $169,999 60%
Partnerships: Form 4575 is formatted for Corporations. To use $174,999 40%
it for a Partnership, make these changes: $180,000 20%
• Enter on line 6 any guaranteed payments made to the
Line 7: If a negative number is reached, some reduction of
partner creating a $180,000 disqualifier.
credit is necessary. Return to line 5 and enter the higher
• On line 8, divide by the percentage of ownership from disqualifier amount from the chart. Continue this process
column C of the MBT Schedule of Partners (Form 4578). until line 7 is greater than or equal to zero. This calculation
Reduced SBAC: A reduction of the SBAC is required if establishes the maximum allowable SBAC.
an Individual, a partner in a Partnership, a shareholder of
a Corporation, or an officer of a C Corporation has allocated Part 2: Available Loss
income after loss adjustment of more than $160,000. This Use Part 2to determine the loss available from the five preceding
reduction is based on the Individual/partner/officer/shareholder periods. Do not enter anegative sign in front of the loss amount.
with the largest allocated income.
Complete lines 11 through 16, one column at a time. For
Complete lines 4 through 9 for the shareholder or partner those lines, complete only columns for years that reported a
creating the need to reduce the SBAC. loss (either generated or used) and received an SBAC. If the
taxpayer did not report a loss or did not receive an SBAC for a
Form 4575 should always be calculated initially using $160,000
tax year, leave that column, lines 11 through 16, blank.
on line 5. This calculation will establish taxpayer eligibility
without the need to reduce the SBAC. However, if the total Line 10: Enter the five most recent tax years, beginning with
loss available for the current year on line 13 does not equal or the oldest year in the left column, including years in which
exceed the loss adjustment required on line 9, the taxpayer may there was no loss or no SBAC credit taken. Then complete lines
still calculate alesser loss adjustment to claim areduced credit. 11 through 16, one column at at time, for each year in which a
loss was generated or used and an SBAC was claimed.
Try the calculation more than once. Substitute the numbers
shown on the chart in the instructions for line 5, in order to Line 11: Enter (as a positive number) the negative ABI from
maximize the claimed SBAC. If a negative number is reached Form 4571, line 8, for tax years where an SBAC was received.
on line 7, a greater disqualifier amount is needed from the When completing a member’s form (see “Special
UBGs:
disqualifier chart here on line 5. for UBGs” so circumstances in which a member
Instrutions
Tax Year Less Than 12 Months: Business income and form is needed), this line is calculated using member specific
shareholder disqualifiers must be calculated on an annualized (pro forma) data. Note, however, the member cannot enter an
basis. Enter annualized numbers on lines 1, 4, and 6. Part-year ABI amount for a tax year that it was part of the UBG and the
shareholders also must annualize compensation and report that UBG did not receive the SBAC. The member may, however,
figure on line 6. enter an ABI amount for atax year that it was not a member of
the UBG and it received the SBAC, regardless of whether the
Annualizing UBG received the credit in that same year.
To annualize, multiply each applicable amount, ABI, or completing the Group Copy for ABI, enter the sum of the
When
shareholder compensation, by 12 and divide the result by the 1) UBG’s negative ABI for tax years it received the
following:
number of months the business operated. Generally, a business plus, 2) a member’s negative ABI for a tax year when it
SBAC,
is considered in business for one month if the business operated received the SBAC and was not part of the UBG. These member
for more than half the days of the month. are calculated initially at the member level but used and
amounts
NOTE: If the business was in operation for less than amonth it maintained for use in future years on the Group Copy for ABI.
is considered to have been in business for 1month. Line 12: Enter the amount of loss entered on line 11 that was
UBGs: For UBG members reporting a period of less than 12 used as an adjustment in a prior period.
months with the group return, annualization is done using the
member’s number of months in the group’s tax year. Sum the
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