HOUSE BILL No. 5118

 

August 21, 2007, Introduced by Rep. Bieda and referred to the Committee on Tax Policy.

 

     A bill to amend 2007 PA 36, entitled

 

"Michigan business tax act,"

 

by amending section 265 (MCL 208.1265).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 265. (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 goodwill arising from purchase

 

accounting adjustments for transactions that occurred on or after

 

July 1, 2007, and the 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 2A.

 

     (2) Net capital 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 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 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 takes effect January

 

1, 2008.