Would a group of companies who have a flow of value between them but are owned by two unrelated persons, each owning 50%, be considered a unitary business group?
The following answer has been rescinded and replaced by U51. No. To meet the definition of a unitary business group in the Michigan Business Tax Act (MBTA) the U.S. persons, other than foreign operating entities, which cannot be included in the group, must pass a control test and 1 of 2 relationship tests. MCL 208.1117(6). The control test requires that one of the U.S. persons own or control, directly or indirectly, more than 50% of the ownership interests with voting rights or similar rights of the other U.S. persons. MCL 208.1117(6). For purposes of MBTA section 117(6), the Department will use as guidance attribution rules expressed in IRC 318 or analogous authority to determine indirect or constructive ownership and control. While IRC 318 specifically pertains to corporate stock ownership, the Department will apply its principles to all forms of entities subject to the MBT. As the subject persons are described as nonrelated and each owning 50% of the group, the control test in secti
