Form 4918 – Fill Out and Use This PDF

4. Street Address

City

State

ZIP/Postal Code

Country Code

5.Apportionment Percentage for C Corporations

a.Michigan sales.........................

b.Total sales................................

c.Apportionment percentage. Divide line 5a by line 5b...........

00

00

%

6.Apportionment Percentage for Individuals and Trusts

a. Michigan sales
(include throwback sales)	00
b. Total sales	00
c. Apportionment percentage.
Divide line 6a by line 6b	%

+ 9999 2012 50 01 27 6

Continue on Page 2

+ 9999 2012 50 02 27 4

Continue on Page 3

22.A.

Name

b.

Check

(X)if a Fiduciary

C.	D.
	Tentative Distributive
Social Security Number	Share of Taxable Income

e.

Amount of Withholding

to be distributed

from line 13b

Purpose

This form is used to calculate the amount of Flow-Through Withholding (FTW) due for the tax year, reconcile this amount

with the quarterly payments remitted to the state, and to distribute the entire amount of FTW to the low-through entity’s members.

through entity.

When completing Parts 3 and 4, include only those members that

have been withheld on and only if the low-through entity’s tax year ends with or within the tax year of that member.

General Instructions

Trusts: Even though Form 4918 lists trusts as members that are

to be withheld on, trusts are not considered to be members of a low-through entity or low-through entities for purposes of FTW.

Because of this, a trust is not required to be withheld on and is not required to withhold on its beneiciaries.

FTW on C Corporation and Intermediate Flow-Through

Entity Members: If the allocated or apportioned business income of the low-through entity is $200,000 or less for the low-through entity’s tax year, FTW is not required on members that are C Corporations or intermediate low-through entities. Further, if the low-through entity received an exemption certiicate from a C Corporation member for the tax year, FTW is not required on that member. Complete this form to claim a refund of the amounts paid on behalf of these members.

This form may not be amended: When iling this form, the low-through entity is required to use its “tentative business income” for the tax year. The Department recognizes that this

amount potentially will not be known with certainty at the time

this form is iled. When iling this form, the low-through entity

is required to use its best estimate of business income based on all

available information. If, after this form is iled, the low-through

entity determines that its best estimate of business income was incorrect, the low-through entity should report that difference to its members. The members, when iling their respective annual

returns, will correct the over- or under-withholding created by the over- or understatement of business income.

If the low-through entity is unitary with a CIT taxpayer, ill

out the Schedule of Unitary Apportionment for Flow-Through

Withholding (Form 4919), and enter the amount from line 5 of

Form 4919 on line 11A of this form. Leave lines 5a, 5b, 5c, and 10A blank. For more information on what constitutes a unitary relationship between a low-through entity and a CIT taxpayer, see

the instructions for Flow-Through Entities that are Unitary with the Taxpayer (Form 4900).

Parts 3 and 4 of this form distribute the FTW to the low-through entity’s members that has been paid by the low-through entity as

well as the FTW paid by source low-through entities in a tiered structure that distributed income and withholding to the low-

line-by-line Instructions

Lines not listed are explained on the form.

Line 1: If not a calendar-year low-through entity, enter the beginning and ending dates (MM-DD-YYYY) that correspond to the taxable period included in this return.

Tax year means the calendar year, or the iscal year ending during the calendar year, of which the withholding base of a low-through entity is computed. If a return is made for a part of a year, tax year means the period for which the return is made. Generally, a low- through entity’s tax year is for the same period as is covered by its federal income tax return. The 2012 form should be used for the 2012 calendar year or a iscal year beginning in 2012.

Fiscal Year Flow-Through Entities: For iscal years ending in 2012 your FTW tax year will be a short year and will begin January 1, 2012. The irst FTW Annual Reconciliation return will only cover business activity that occurs after December 31, 2011.

Line 2: Enter the low-through entity’s name.

Line 3: Enter the low-through entity’s Federal Employer Identiication Number (FEIN). Be sure to use the same account number on all forms.

NOTE: The low-through entity must register for FTW before iling this form. Flow-through entities are encouraged to register online at www.michigan.gov/businesstaxes. Flow-through entities that register with the State online receive their notiication of the registration within seven days.

NOTE: If the low-through entity does not have an FEIN, the low-through entity must obtain an FEIN before iling. Visit Treasury’s Business Taxes Web site for more information on obtaining an FEIN.

Returns received without a registered account number will not be processed until such time as a number is provided.

Line 4: Enter the low-through entity’s complete address, including the two-digit abbreviation for the country code. See

the list of country codes in the Corporate Income Tax Forms and Instructions for Standard Taxpayers (Form 4890).

NOTE: Any refund and/or correspondence regarding the return iled and/or refund will be sent to the address listed here. The

low-through entity’s primary address in Treasury records, identiied as the legal address and used for all purposes other than refund and correspondence on a speciic FTW return, will not change unless the low-through entity iles a Notice of Change or

Discontinuance (Form 163).

PART 1: APPoRTIoNMeNT PeRCeNTAGeS FoR INCoMe FRoM FloW-THRouGH eNTITIeS

The low-through entity must only withhold on business activity that is allocated or apportioned to Michigan. A low-through entity that

has not established nexus with one other state or a foreign country at

the member level, as explained below, is subject to FTW on its entire business activity. If the low-through entity is able to apportion its business income, it will be apportioned to Michigan based on sales. For a Michigan-based low-through entity, all sales are Michigan sales unless the low-through entity’s business activity causes its members to be subject to tax in another state or foreign country.

A low-through entity will cause its C Corporation and

intermediate low-through entity members to be subject to a tax at the member level in another state or foreign country if the entity’s

business activity is subject to a business privilege tax, a net income tax, a franchise tax measured by net income, a franchise tax for the

privilege of doing business, a corporate stock tax; or if the state or foreign country has jurisdiction to subject the low-through entity’s

business activity to one or more of the above listed taxes at the member level, regardless of whether the tax is imposed.

A low-through entity will cause its nonresident individual

members to be subject to a tax at the member level in another

state or foreign country if the entity’s business activity is subject

to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate

stock tax; or if that state or foreign country has jurisdiction to subject the low-through entity’s business activity to a net income

tax at the member level, regardless of whether, in fact, the state does or does not.

Line 5: When calculating the sales factor to use for members that are C Corporations or intermediate low-through entities, sale or sales means the amounts received by the low-through entity as

consideration from the following:

•The transfer of title to, or possession of, property that is stock in

trade or other property of a kind which would properly be included in the inventory of the low-through entity if on hand at the close of the tax period, or property held by the low-through entity

primarily for sale to customers in the ordinary course of its trade or business. For intangible property, the amounts received will be limited to any gain received from the disposition of that property.

•Performance of services which constitute business activities.

•The rental, leasing, licensing, or use of tangible or intangible property, including interest, that constitutes business activity.

•Any combination of business activities described above.

•For low-through entities not engaged in any other business activities, sales include interest, dividends, and other income

from investment assets and activities and from trading assets and activities.

Complete the Apportionment Calculation using amounts for the low-through entity’s business activity only.

Use the information in the “Sourcing of Sales to Michigan” section in Form 4890 to determine Michigan sales for members that are C Corporations or intermediate low-through entities.

Entities Unitary with one or more C corporation members: Leave lines 5a through 5c blank and continue to line 7.

Tiered Structures: If the iling low-through entity

(intermediate) earns income as a distributive share from another low-through entity (source) that is not unitary with the intermediate and a C corporation member, each source of

business activity must be apportioned according to the source

entity’s sales factor. The iler of this form will combine the

factors in an income-weighted formula, which is different than a unitary apportionment factor calculation. Leave lines 5a and 5b blank. Enter the percentage calculated for column A on line

5c. Use the CIT Non-Unitary Relationships with Flow-Through Entities (Form 4898) to compute the distributive shares lowing

to members from each source entity and use an additional schedule to calculate the income-weighted factor. Do not attach Form 4898 to your FTW forms. Retain a copy of it and the calculation for your records. If apportionment for column A

of Form 4918 is different than apportionment for column B, a

separate income-weighted percentage must be computed for each column.

While Form 4898 instructions state the form may be used by a

CIT taxpayer or a Unitary Business Group only, for purposes of FTW, the form may be used to assist a low-through entity in computing both CIT and individual income tax apportionment. Further note that any references to Unitary Business Groups within the instructions for Form 4898 apply only to the CIT.

The iler should include its own direct income and apportionment percentage on the irst line of the schedule. Additionally, list all low-through entities from which the iler either directly or indirectly receives a distributive share. Exclude any low-through entity that distributed withholding directly to the iler’s members

on an Annual Flow-Through Withholding Reconciliation Return

(Form 4918) rather than distributing to the low-through entity iling this return.

Complete columns A through D for each entity and leave column E blank. Disregard any instructions to carry amounts to CIT Annual Return (Form 4891). On a separate schedule, multiply each percentage in column D by a fraction, the numerator of which is the corresponding amount in column C, and the denominator of which is the sum of all amounts in column C. Carry the sum of the income-weighted percentage calculated for C corporations to line 5c.

Do not attach Form 4898 to your FTW forms. Retain a copy of it and the calculation for your records.

Line 5a: Enter the Michigan sales, as deined for members that are C Corporations or intermediate low-through entities, that are attributable to the low-through entity.

Transportation services that source sales based on revenue miles: Enter on this line the low-through entity’s total sales, as deined for members that are C Corporations or intermediate low-through entities, multiplied by the ratio of Michigan

revenue miles over revenue miles everywhere as provided in the

“Sourcing of Sales to Michigan” chart in Form 4890 for that type of transportation service. Revenue mile means the transportation

for consideration of one net ton in weight or one passenger the distance of one mile.

Line 5b: Enter the total sales, as deined for members that are C Corporations or intermediate low-through entities, that are directly attributable to the low-through entity.

Transportation services that source sales based on revenue miles: Enter on this line the total sales, as deined for members that are C Corporations or intermediate low-through entities, that are directly attributable to the low-through entity.

Line 6: When calculating the sales factor to use for members that

are individuals, “sale or sales” means all gross receipts of the taxpayer not allocated under IIT sections MCL 206.110 through MCL 206.114. Sale or sales includes gross receipts from sales of

tangible property, rental of property, and providing of services that constitute business activity. Exclude all receipts from nonbusiness income.

NOTE: Throwback sales for individual income tax follow federal

P.L. 86-272 standards. The business must have physical presence

in the other state or activity beyond solicitation of sales in order to exclude sales into another state or country from the numerator. The Michigan income tax act deinition of “state” includes a foreign country. Therefore, foreign sales are considered Michigan sales unless the business entity is taxable in the foreign country.

Sales of tangible personal property are in this state if:

•The property is shipped or delivered to a purchaser (other than

the United States government) within Michigan regardless of the free on board (F.O.B.) point or other conditions of the sale, or

•The property is shipped from an ofice, store, warehouse, factory or other place of storage in Michigan and the purchaser is

the United States government or the taxpayer is not taxable in the state of the purchaser.

Sales other than of tangible personal property are in Michigan if:

•The business activity is performed in Michigan, or

•The business activity is performed both in Michigan and

in another state(s), but based on cost of performance, a greater

proportion of the business activity is performed in Michigan.

Tiered Structures: If the iling low-through entity (intermediate) earns income as a distributive share from another low-through

entity (source) that is not unitary with the intermediate and the

C corporation member, each source of business activity must

be apportioned according to the source entity’s sales factor. The iler of this form will combine the factors in an income-weighted

formula, which is different than a unitary apportionment factor calculation. Leave lines 6a and 6b blank. Enter the percentage calculated for column B on line 6c.

Use the CIT Non-Unitary Relationships with Flow-Through Entities (Form 4898) to compute the distributive shares lowing to

members from each source entity and use an additional schedule to calculate the income-weighted factor. Do not attach Form 4898 to your FTW forms. Retain a copy of it and the calculation for your records. If apportionment for column A of Form 4918 is

different than apportionment for column B, a separate income- weighted percentage must be computed for each column.

While Form 4898 instructions state the form may be used by a

CIT taxpayer or a Unitary Business Group only, for purposes of FTW, the form may be used to assist a low-through entity in computing both CIT and individual income tax apportionment. Further note that any references to Unitary Business Groups within the instructions for Form 4898 apply only to the CIT.

The iler should include its own direct income and apportionment percentage on the irst line of the schedule. Additionally, list all low-through entities from which the iler either directly or

indirectly receives a distributive share. Exclude any low-through entity that distributed withholding directly to the iler’s members

on an Annual Flow-Through Withholding Reconciliation Return

(Form 4918) rather than distributing to the low-through entity iling this return.

Complete columns A through D for each entity and leave column E blank. Disregard any instructions to carry amounts to CIT Annual Return (Form 4891). On a separate schedule, multiply each percentage in column D by a fraction, the numerator of which is

the corresponding amount in column C, and the denominator of which is the sum of all amounts in column C. Carry the sum of the income-weighted percentage calculated for individuals to line 6c. Do not attach Form 4898 to your FTW forms. Retain a copy of it and the calculation for your records.

Line 6a: Enter the Michigan sales, as deined for members that are individuals, that are attributable to the low-through entity. Include on this line any “throwback sales” of the low-through entity.

Transportation services that source sales based on revenue miles: Enter on this line the low-through entity’s total sales, as deined for members that are individuals, multiplied by the ratio

of Michigan revenue miles over revenue miles everywhere as provided in the “Sourcing of Sales to Michigan” chart in Form 4890 for that type of transportation service. Revenue mile means

the transportation for consideration of one net ton in weight or one passenger the distance of one mile.

Line 6b: Enter the total sales, as deined for members that are individuals, that are directly attributable to the low-through entity.

Transportation services that source sales based on revenue miles: Enter on this line the total sales, as deined for members that are individuals, that are directly attributable to the low- through entity.

PART 2: TeNTATIve DISTRIbuTIve INCoMe

Line 7: Because this reconciliation return is required to be iled before the low-through entity’s federal form, Treasury recognizes that this amount will be “tentative.” When completing this form,

use the best available information to come up with the most

reasonable estimate for business income at the time this form is iled. If it is later determined that the distributive income is different than what was reported on line 7A or 7B, report this difference to the members that have been withheld on. The members can then account for this change when iling the CIT Annual Return (Form 4891) if the member is a C Corporation or the Michigan Individual Income Tax Return (Form 1040) if the member is an individual. The low-through entity will not be able to amend this reconciliation return.

Use the Tentative Distributive Income Worksheet below to calculate the low-through entity’s tentative distributive income. Retain a copy of this worksheet for your iles.

Exclude from the worksheet and line 7 the income of a source entity that distributed withholding directly to the iler’s members

on an Annual Flow-Through Withholding Reconciliation Return

(Form 4918) rather than distributing to the low-through entity.

Distributive Income Worksheet

Column A is the list of amounts that are added together to total tentative distributive income for C Corporation members that is reported on line 7A of Form 4918. Column B is the list of amounts that are added together to total tentative distributive income for individual members that is reported on line

7B of Form 4918. If the low-through entity is a partnership or an entity that iles federally as a partnership, this information can be found on U.S. Form 1065, Schedule K. If the low-through entity is an S Corporation or an entity that iles federally as an S Corporation, these amounts can be found on U.S. Form

1120S, Schedule K. Enter in column A only the amounts that are attributable

to members that are intermediate low-through entities that have been withheld

on or C Corporations (including C Corporations that have opted out of FTW) as reported on the Schedule K-1 that has been issued to each member. Do not

report amounts in column A if the low-through entity had less than $200,000 in

annual business income after allocation or apportionment to Michigan and did

not withhold on members that are C corporations or other low-through entities.

Enter in Column B only the amounts that are attributable to members that are individuals — this includes resident and nonresident individuals — as reported on the Schedule K-1 that has been issued to each member.

	A	b
	Tentative	Tentative
	Distributive	Distributive
	Income for C	Income for
Distributive Income Categories	Corporations	Individuals
Ordinary income (loss) from trade or
business activity
Net income (loss) from rental real estate
activity
Net income (loss) from other rental
activity
Portfolio income (loss):
Interest income
Dividend income
Royalty income
Net short-term capital gain (loss)
Net long-term capital gain (loss)
Guaranteed payments *		XXXXXXXX
Net gain (loss) under section 1231
Other income (loss)
ToTAl DISTRIbuTIve INCoMe
Add all amounts in Column A and carry
to Form 4918, line 7A. Add all amounts
in Column B and carry to Form 4918,
line 7B.

ColuMN A

Business income means federal taxable income. For CIT purposes, federal

taxable income means taxable income as deined in IRC § 63, except that federal

taxable income shall be calculated as if section 168(k) (bonus depreciation for

qualiied property) and section 199 (qualiied production activities deduction)

were not in effect. For a tax-exempt taxpayer, business income means only that part of federal taxable income (as deined for CIT purposes) derived from

unrelated business activity.

ColuMN b

*Guaranteed payment as deined under the Internal Revenue Code of 1986

Section 707(c) is determined to be compensation for services rendered or for the

use of capital and is not considered to be a distributive share of the partnership’s proits. The payment, to the extent included in federal adjusted gross income,

is characterized as compensation or interest on the individual’s return. A nonresident partner is taxed on a guaranteed payment to the extent the payment is includable in federal adjusted gross income and is for compensation received for personal services performed in this State. A guaranteed payment for the use of capital is allocated to the nonresident partner’s state of domicile.

Taxpayers and tax professionals are expected to be familiar with uncommon situations within their experience, which produce

income not identiied by speciic lines on the above worksheet, and report that amount on line 7A or 7B, as applicable. Treasury may adjust the igure resulting from the worksheet to account properly for such uncommon situations.

Line 7A: Enter on this line the low-through entity’s tentative

distributive income that is attributable to members that are

intermediate low-through entities that have been withheld on or C Corporations, including C Corporations that have opted out of FTW. Leave line 7a blank if the low-through entity had less than $200,000 in annual business income after allocation or

apportionment to Michigan and did not withhold on members that are C corporations or other low-through entities.

Line 7B: Enter on this line the low-through entity’s tentative

distributive income that is attributable to members that are individuals, including individuals that are residents of Michigan.

Line 8A: If the low-through entity received an exemption certiicate from one or more C Corporation members, enter on this line the sum of the amounts listed in column C of the Flow- Through Withholding Opt-Out Schedule (Form 4920). Attach to this iling a completed Form 4920. Retain the exemption certiicates received by the low-through entity for your records.

Leave this line blank if the low-through entity did not receive an exemption certiicate from a member.

Line 8B: Enter on this line the amount of the distributive income reported on line 7B that is allocated to members that are both individuals and Michigan residents.

Line 9A: Subtract line 8A from line 7A.

Line 9B: Subtract line 8B from line 7B.

Line 10A: If unitary with a CIT taxpayer, leave line 10A blank.

Line 11A: If the low-through entity is unitary with a CIT taxpayer, the low-through entity must complete the Schedule of

Unitary Apportionment for Flow-Through Withholding (Form

4919). Enter on this line the amount entered on line 5 of Form 4919. Include a completed Form 4919 with this Annual Reconciliation.

If the low-through entity is unitary with a CIT taxpayer, leave line 10A blank. If the low-through entity is not unitary with a CIT taxpayer, leave line 11A blank.

For a further explanation of what constitutes a unitary

relationship, see the instructions to Form 4900.

Line 12B: A low-through entity with a calendar tax year ending in 2012 will use the tax rate of 4.33 percent. A low-through entity with a iscal tax year ending in 2013 will use the tax rate of 4.25 percent.

Line 13A: If the low-through entity is not unitary with a CIT taxpayer, multiply line 12A by line 10A. If the low-through entity is unitary with a CIT taxpayer, multiply line 12A by line 11A. If less than zero, enter zero.

NOTE: The sum of all of the amounts entered on line 21B may not be greater than the amount entered on this line.

Line 13B: Multiply line 12B by line 10B. If less than zero, enter zero.

NOTE: The sum of all of the amounts entered on line 22E may not be greater than the amount entered on this line.

Line 15: Enter the total FTW paid with the FTW Quarterly Tax Return (Form 4917) or the amount paid through Electronic Funds

Transfer. Include all payments made that apply to the tax year included in this return. For example, calendar year ilers include

money paid with the above listed returns for the period of January

1, 2012, through December 31, 2012.

If the low-through entity iling this return is an intermediate member of a source low-through entity and has been withheld on by that source low-through entity, then also enter on this line amounts that have been withheld on this low-through entity by its source low-through entity. See the FTW General Instructions for more information on withholding on intermediate low-through entities.

Intermediate Flow-Through Entities: If the low-through entity completing the Annual Reconciliation is an intermediate

member in a tiered structure that has been withheld on by its source low-through entity, then the intermediate low-

through entity must call the Department at (517) 636-6925 before iling its Annual Reconciliation. This phone call must be made to allow the intermediate low-through entity

to properly claim the amounts that have been withheld on its behalf and to allow it to properly distribute those amounts to its

members.

Line 16: If the amount entered on Line 15 is less than the amount entered on Line 14, enter the difference on this line. If the amount on Line 15 is greater than the amount entered on Line 14, leave this line blank and skip to Line 20.

Line 17: Enter the overdue withholding penalty. Use the following “Overdue Withholding Penalty” worksheet. Refer to the “Computing Penalty and Interest” section in the Flow-Through Withholding Reconciliation Return booklet general instructions to determine the appropriate penalty percentage.

WoRKSHeeT – oveRDue WITHHolDING PeNAlTy

A. Withholding due from
Form 4918, line 16	00
B. Late or insuficient payment
penalty percentage	%
C. Multiply line A by line B	00
Carry amount from line C to Form 4918, line 17.

Line 18: Enter the overdue withholding interest. Use the following “Overdue Withholding Interest” worksheet. Refer to the “Computing Penalty and Interest” section in the Flow-Through Withholding Reconciliation Return booklet general instructions to determine the appropriate penalty percentage.

WoRKSHeeT – oveRDue WITHHolDING INTeReST

A. Withholding due from
Form 4918, line 16	00
B. Applicable daily interest percentage	%
C. Number of days return was past due
D. Multiply line B by line C	%
E. Multiply line A by line D	00
Carry amount from line E to Form 4918, line 18.

NOTE: If the late period spans more than one interest rate period, divide the late period into the number of days in each of

the interest rate periods identiied in the “Computing Penalty and Interest” section in Form 4890, and apply the calculations in the “Overdue Withholding Interest” worksheet separately to each portion of the late period. Combine these interest subtotals and carry the total to line 18.

Line 20: If line 15 is greater than Line 14, subtract Line 14 from Line 15 and enter that amount on this line.

NOTE: If an overpayment exists on Line 20, that amount must be refunded to the low-through entity. The overpayment may not be carried forward to the low-through entity’s next tax period and may not be distributed to the members of the low-through entity.

Reminder: The low-through entity must sign and date returns. Preparers must provide a Preparer Taxpayer Identiication Number (PTIN), FEIN or Social Security number (SSN), as well as a business name, business address and phone number.

PART 3: FloW-THRouGH WITHHolDING

FoR C CoRPoRATIoNS

Line 21A: Enter the name, FEIN, address, and tax year end of each C Corporation or intermediate low-through entity that the low-through entity has withheld on during the iling period listed on this return. Also enter on this line the distributive share of tentative business income allocated to the C Corporation or intermediate low-through entity, before allocation and apportionment, during the iling period listed on this return. The

total amount of distributive income entered in this column must equal the amount entered on line 9A.

If the low-through entity is unitary with a CIT taxpayer, enter that CIT taxpayer irst in this part.

Line 21B: Enter on this line the amount withheld and reported to this C Corporation or intermediate low-through entity. The total

amount of withholding entered in this column must equal the amount entered on line 13A.

PART 4: FloW-THRouGH WITHHolDING FoR NoNReSIDeNT INDIvIDuAlS

Line 22A: Enter the name of each nonresident individual that was withheld on during the iling period listed on this return.

Line 22B: Trusts are not required to be withheld on under FTW. However, if a trust was withheld on, enter an “X” on this line for each trust that was withheld on.

Line 22C: Enter the social security number of this nonresident individual. If a trust was withheld on, enter the FEIN of the trust.

Line 22D: Enter on this line the distributive share of taxable

income allocated to this nonresident individual, before allocation and apportionment, during the iling period listed on this return.

The total amount of taxable income entered in this column must equal the amount entered on line 9B.

Line 22E: Enter on this line the amount withheld and reported to this nonresident individual. The total amount of withholding entered on this column must equal the amount entered on line 13B.