May 17, 2016, Introduced by Rep. Forlini and referred to the Committee on Financial Services.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 655 (MCL 206.655), as added by 2011 PA 38.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
655. (1) For a financial institution, tax base means the
financial
institution's net capital. Net capital means equity
capital
as computed in accordance with generally accepted
accounting
principles less the average daily book value of United
States
obligations and Michigan obligations. If the financial
institution
does not maintain its books and records in accordance
with
generally accepted accounting principles, net capital shall be
computed
in accordance with the books and records used by the
financial
institution, so long as the method fairly reflects the
financial
institution's net capital for purposes of the tax levied
by
this chapter. Net capital does not include up to 125% of the
minimum
regulatory capitalization requirements of a person subject
to
the tax imposed under chapter 12. the tax base is the total
equity capital of the financial institution or top-tiered parent
entity, in the case of a unitary business group of financial
institutions, subject to the following adjustments before
allocation or apportionment:
(a) Deduct the average daily book value of United States
obligations owned by members of the unitary business group.
(b) Deduct the average daily book value of Michigan
obligations owned by members of the unitary business group.
(c) Subject to the limitation provided in this subdivision,
deduct the equity capital of a person that is subject to the tax
imposed under chapter 12, not to exceed 125% of the minimum
regulatory capitalization requirements of the member. For purposes
of this subdivision, "equity capital" is the equity capital amount
calculated in accordance with generally accepted accounting
principles.
(d) Deduct $20,000,000.00.
(2)
Net capital The tax base shall be determined by adding the
financial
institution's net capital as of the
close of the current
tax
year. and preceding 4 tax years and dividing the
resulting sum
by
5. If a financial institution has not been in existence for a
period
of 5 tax years, net capital shall be determined by adding
together
the financial institution's net capital for the number of
tax
years the financial institution has been in existence and
dividing
the resulting sum by the number of years the financial
institution
has been in existence. For purposes of this section, a
partial
year shall be treated as a full year.
(3)
For a unitary business group of financial institutions,
net
capital calculated under this section does not include the
investment
of 1 member of the unitary business group in another
member
of that unitary business group.
(3) (4)
For purposes of this section, each
of the following
applies:
(a) A change in identity, form, or place of organization of 1
financial institution shall be treated as if a single financial
institution had been in existence for the entire tax year in which
the change occurred and each tax year after the change.
(b) The combination of 2 or more financial institutions into 1
shall be treated as if the constituent financial institutions had
been a single financial institution in existence for the entire tax
year in which the combination occurred and each tax year after the
combination,
and the book values and deductions adjustments for
United States obligations and Michigan obligations of the
constituent institutions shall be combined. A combination shall
include any acquisition required to be accounted for by the
surviving financial institution in accordance with generally
accepted accounting principles or a statutory merger or
consolidation.
Enacting section 1. This amendatory act is effective for tax
years beginning after December 31, 2017.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. 234 of the 98th Legislature is enacted into
law.