Skip to main content
A Better Partnership
August 01, 2012

COA Opinion: Flow-through income derived by individual taxpayer from related unitary business entities, that included as foreign operation, can be combined and apportioned as a whole under the income

The Court of Appeals has published its per curiam opinion in Wheeler v. Department of Treasury, No. 302251. In this case, the Court was confronted with the question of how to properly apportion the multi-state income of a taxpayer under the Michigan Income Tax Act. In this case, the taxpayer derived his income from an S corpoation, which in turn included income from a foreign operating entity. Pursuant to the Court of Appeals' previous decisions in the Preston and Malpass cases, this Court concluded that the unitary business prinicpal does allow an individual to combine the income from multiple unitary business entities for the purpose of applying the statutory apportionment factors, and that such apportionment is proper where, as in this case, the entities are organized in a "parent-subsidiary" relationship (but is not permitted where the entities are legally separate and distinct). The Court also concluded that the fact that one of the entities was foreign-based was irrelevant for apportionment purposes and, under the facts of this case, the foreign entity and the taxpayer's S corporation consituted a unitary business.

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.



+ -