CITY OF HAMTRAMCK INCOME TAX

                      CORPORATION RETURN INSTRUCTIONS 

Corporations Required to File                                        Income or Loss from Activity in Hamtramck

Each corporation doing business in the city, whether or not          Formulary  apportionment  is  used  to  determine  taxable 
it has an office or place of business in the city, is required to    income  or  loss.  However,  a  taxpayer  may  petition  the 
file a City of Hamtramck Corporation Income Tax return,              Administrator  for  approval  to  use  a  separate  accounting 
Form H-1120.                                                         method (or an alternate method).

An amended Hamtramck return is required if a determination           A  petition  to  use  separate  accounting  (or  an  alternate 
is  made  by  the  Internal  Revenue  Service  that  affects  the    method) must be made in writing within 90 days following 
taxpayer’s  Hamtramck  income  tax  liability.  This  return         the beginning of the accounting period for which its use is 
is due within 90 days from the date of the service’s final           requested. If the petition is approved, a copy of the approval 
determination,                                                       letter  must  be  submitted  with  any  return  that  has  been 
                                                                     prepared using this method to determine taxable income or 
Organizations  that  have  an  Internal  Revenue  Service            loss, If the taxpayer’s petition is not approved, formulary 
exemption from taxation but have income from operations              apportionment must be used.
not  related  to  the  purpose  for  which  they  received  the 
exemption are subject to Hamtramck tax on the unrelated              Unless  a  separate  accounting  method  has  been  approved 
income.                                                              total income (including interest, dividends, and other non 
                                                                     operating  income)  shall  be  subject  to  the  apportionment 
A tax-option corporation must file a Hamtramck corporation           percentage.
return and pay the tax on its income.
                                                                     Generally, a corporation that is unitary in nature (i.e. has 
The election provided in the Internal Revenue Code for a             central management, purchasing, advertising. etc.) cannot 
qualifying Domestic International Sales Corporation is not           use separate accounting.
available in the Hamtramck Income tax Ordinance.
                                                                     Instructions for Page I
Hamtramck  may  require  a  parent  corporation  to  file  a 
consolidated  return  with  its  subsidiaries  if  the  business  is Line 1. Attach a copy of your federal return, Schedule 1120 
unitary and such filing would more accurately determine net          and reconcile the income on your schedule to your federal 
profits attributable to Hamtramck.                                   return.  Include  in  the  reconciliation  the  reinstatement  of 
                                                                     payroll  expense  not  allowable  on  the  federal  return  as  a 
The Hamtramck ordinance exempts financial institutions and           result of the targeted jobs credit provisions.
insurance  companies  from  taxation.  Financial  institutions 
are defined in Section 14, Ordinance 292, as amended.                Line 2. Add items deducted on your federal return but not 
                                                                     deductible  under  the  Hamtramck  ordinance.  Schedule  C, 
Filing Date                                                          column 1, (on page 2), is used to support line 2.

Taxpayers on a calendar year are required to file by April 30.       Schedule C. column 1, line 1, is used to adjust profit for the 
Those on a fiscal year must file by the last day of the fourth       non-deductible portion of losses from the sale or exchange of 
month following the end of the fiscal year. Returns shall be         property acquired prior to October 1. 1962. See instructions 
for the same calendar year, fiscal year, of other accounting         below for Schedule C, column 2, fine 5 for computing losses 
period as used for federal income tax filing,                        or gains on property acquired before October 1. 1962.

Extension                                                            Line 4. Deduct items not taxable by Hamtramck. Complete 
                                                                     Schedule C. column 2 to substantiate your deduction.
Upon written request from the taxpayer made on or before                     Schedule C, Column 2 -
the due date the Administrator may extend the time for filing 
up to six months. An application for extension of time is                    Line  1.  Interest  from  obligations  of  the  United 
available on request.                                                        States and its subordinate units is exempt from tax.

If  an  extension  longer  than  two  months  is  requested  a               Line 2.  If  you  reported  dividend  income,  enter 
tentative return must be filed and an estimated tax paid.                    on  this  line  the  amount  of  the  dividend-received 
                                                                             deduction allowed in the Internal Revenue Code.

       Line 3. Enter the amount of foreign “taxes deemed                 Line 3. Enter in column I the total gross revenue
       to  have  been  paid”  which  were  grossed-up  and               from all sales or services rendered during the year.
       included  in  your  Hamtramck  return  as  dividends              In column II show the amount of revenue derived
       received.                                                         from sales made or services rendered in the city.
       Line 4. If a foreign tax credit rather than a foreign             Rental income is to be considered as derived from 
       tax  deduction  was  taken  on  your  federal  return             services  rendered  and  is  to  be  included  in  gross 
       enter that portion of the credit reported on Internal             receipts.
       Revenue  Service  form  1118  as  “taxes  paid  or 
       accrued” for the taxable year.                                    Multistate Tax Compact
       Line 5.  Enter  here  the  nontaxable  portion  of  the           Taxable income for accounting periods after October 
       gains from the sale or exchange of property acquired              1. 1970 may be determined by the apportionment 
       prior to October 1, 1962.                                         provisions  of  Michigan  Act  343,  Public  Acts  of 
       Gain or loss on property purchased prior to October               1969, for those multi-state corporations that qualify 
       1. 1962 must be determined by one of the following                under  the  act.  Computation  of  the  tax  must  be 
       methods:                                                          supported by schedules.
       I.   The base may be the adjusted fair market value 
          of the property on October 1. 1962. (October           Line 8.   Enter  the  net  capital  loss  carryover  and  net 
          2nd closing price for traded securities), or;          operating loss carry over applicable to Hamtramck. Capital 
                                                                 losses and capital loss carryovers are deductible only to the 
       2.  Divide  the  number  of  months  the  property        extent of capital gains.
          was held prior September 30, 1962 by the total 
          number of months the property was held.                If  100%  of  a  corporation’s  activity  was  not  conducted 
          Apply  this  fraction  to  the  entire  gain  or  loss in the city in the year in which the loss was sustained the 
          reported for federal tax purposes.                     apportionment percentage in the loss year must be applied. 
                                                                 If Schedule D. “Income Apportionment Formula” was not 
Line 6. Total income must be apportioned if the corporation      prepared when the loss was claimed it must be completed 
had activity within and without the city, and permission to      and reported, so that the allowable loss carry over can be 
use  separate  accounting  (or  an  alternate  method)  has  not determined.
been granted. Complete Schedule D. page 2 to support the 
apportionment.                                                   Computation and Payment of Tax

       Schedule D                                                Tax due of one dollar ($1.00) or more must be paid with the 
                                                                 return. Make check or money order payable to
       Line 1. Enter in column I the average net book value      CITY OF HAMTRAMCK.
       of all real and tangible personal property owned by       If your payments and credits exceed the tax indicate if the 
       the business regardless of location, and in column        overpayment is to be refunded or credited to your estimated 
       II show the average net book value of the real and        tax. The city cannot refund an amount of less that one dollar
       tangible personal property owned and located in the       ($1.00).
       city.
                                                                 Declaration and Payment of Estimated Tax
       The  average  net  book  value  of  real  and  tangible 
       personal Property may be determined by adding the         Each corporation subject to tax must file a Declaration of 
       net book values at the beginning of the year and the      Estimated Income Tax (Form H-1040-ES) if the estimated 
       net book values at the end of the year and dividing       tax for the next calendar or fiscal year is more than TWO 
       the  sum  by  two.  If  this  method  will  not  properly HUNDRED FIFTY DOLLARS ($250.00).
       reflect  the  average  net  book  value  of  tangible 
       property owned during the year, any other method          ASSISTANCE 
       that will accurately reflect it will be permitted,
                                                                 If you have questions, or needed assistance, call (313) 870-
       Line 1a.  Enter  in  column  I  the  gross  annual  rent  9366, The Income Tax Unit.
       multiplied by 8 for all rented real property regardless 
       of location. In column 11 show the gross annual rent      The  Hamtramck  income  tax  is  imposed  under  Ordinance 
       multiplied by 8 for rented real property located in       292.  Enabling  legislation  was  provided  by  the  State  of 
       the city.                                                 Michigan. The Uniform City Income Tax Ordinance is set 
                                                                 forth in Chapter 2 of Act 284 of the Public Acts of 1964. 
       Gross annual rent should include money and other          These instructions are intended as an aid in the preparation 
       consideration given for the use of or possession of       of your Hamtramck return.
       real property rented or leased.

       Line 2. Enter in column I total compensation paid 
       to  all  employees  during  the  year.  In  column  II 
       show compensation paid to employees for work or 
       services performed within the city.