Presentation given at the MACPA small firm forum regarding Larger companies and the MBT

1. MBT Large and Small Some things to think about

5. An accountant goes into a pet shop to buy a parrot. The shop owner shows him three identical parrots on a perch and says, The parrot on the left costs $500 because it knows how to do complex audits. The middle parrot costs $1,000 because it can do everything the first one can do plus it knows how to prepare financial forecasts. The startled accountant asks about the third parrot. It costs $4,000. To be honest, I’ve never seen him do a darn thing, but the other two call him Senior Partner.

6. Base Case # 1 # 2 R/E

7. (000) 18,700 2,733 5,712 38,916 (20,614) 18,303 Liability Before Credits 3,371 493 1,030 7,015 (3,716) 3,299 Surcharge @ 21.99% 15,329 2,240 4,682 31,901 (16,898) 15,003 Total MBT Before Surcharge 8,539 (24,750) 3,193 14,076 (9,536) 4,539 Income Tax @ 4.95% 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Business Income Tax Base 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Apportioned Business Income 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 345,000 (500,000) 645,000 490,000 (340,000) 150,000 Business Income Tax Base 6,790 2,240 1,490 17,825 (6,800) 10,464 Modified Gross Receipts Tax 6,790 2,240 1,490 17,825 (6,800) 10,464 Tax @ .8% 848,750 280,000 186,200 2,228,169 (850,000) 1,308,013 Apportioned Gross Receipts 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 1,697,500 280,000 1,862,000 3,839,500 (1,700,000) 2,139,500 Modified Gross Receipts 1,700,000 2,500,000 1,900,000 6,100,000 (1,700,000) 4,400,000 Total Sales 850,000 2,500,000 190,000 3,540,000 (850,000) 2,690,000 Michigan Sales 1040 1065 1120-s R/E Holding Operating 2 Operating 1 Sub-Total Elim UBG Michigan Business Tax

9. (000) 18,700 2,733 5,712 38,916 (20,614) 18,303 Liability Before Credits 3,371 493 1,030 7,015 (3,716) 3,299 Surcharge @ 21.99% 15,329 2,240 4,682 31,901 (16,898) 15,003 Total MBT Before Surcharge 8,539 (24,750) 3,193 14,076 (9,536) 4,539 Income Tax @ 4.95% 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Business Income Tax Base 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Apportioned Business Income 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 345,000 (500,000) 645,000 490,000 (340,000) 150,000 Business Income Tax Base 6,790 2,240 1,490 17,825 (6,800) 10,464 Modified Gross Receipts Tax 6,790 2,240 1,490 17,825 (6,800) 10,464 Tax @ .8% 848,750 280,000 186,200 2,228,169 (850,000) 1,308,013 Apportioned Gross Receipts 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 1,697,500 280,000 1,862,000 3,839,500 (1,700,000) 2,139,500 Modified Gross Receipts 1,700,000 2,500,000 1,900,000 6,100,000 (1,700,000) 4,400,000 Total Sales 850,000 2,500,000 190,000 3,540,000 (850,000) 2,690,000 Michigan Sales 1040 1065 1120-s R/E Holding Operating 2 Operating 1 Sub-Total Elim UBG Michigan Business Tax

11. OH Finnigan = One in ALL in 18,700 2,733 5,712 38,916 (20,614) 18,303 Liability Before Credits 3,371 493 1,030 7,015 (3,716) 3,299 Surcharge @ 21.99% 15,329 2,240 4,682 31,901 (16,898) 15,003 Total MBT Before Surcharge 8,539 (24,750) 3,193 14,076 (9,536) 4,539 Income Tax @ 4.95% 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Business Income Tax Base 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Apportioned Business Income 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 345,000 (500,000) 645,000 490,000 (340,000) 150,000 Business Income Tax Base 6,790 2,240 1,490 17,825 (6,800) 10,464 Modified Gross Receipts Tax 6,790 2,240 1,490 17,825 (6,800) 10,464 Tax @ .8% 848,750 280,000 186,200 2,228,169 (850,000) 1,308,013 Apportioned Gross Receipts 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 1,697,500 280,000 1,862,000 3,839,500 (1,700,000) 2,139,500 Modified Gross Receipts 1,700,000 2,500,000 1,900,000 6,100,000 (1,700,000) 4,400,000 Total Sales 850,000 2,500,000 190,000 3,540,000 (850,000) 2,690,000 Michigan Sales 1040 1065 1120-s R/E Holding Operating 2 Operating 1 Sub-Total Elim UBG Michigan Business Tax

16. Service Enterprise OH 18,700 2,733 5,712 38,916 (20,614) 18,303 Liability Before Credits 3,371 493 1,030 7,015 (3,716) 3,299 Surcharge @ 21.99% 15,329 2,240 4,682 31,901 (16,898) 15,003 Total MBT Before Surcharge 8,539 (24,750) 3,193 14,076 (9,536) 4,539 Income Tax @ 4.95% 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Business Income Tax Base 172,500 (500,000) 64,500 284,361 (192,656) 91,705 Apportioned Business Income 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 345,000 (500,000) 645,000 490,000 (340,000) 150,000 Business Income Tax Base 6,790 2,240 1,490 17,825 (6,800) 10,464 Modified Gross Receipts Tax 6,790 2,240 1,490 17,825 (6,800) 10,464 Tax @ .8% 848,750 280,000 186,200 2,228,169 (850,000) 1,308,013 Apportioned Gross Receipts 50.0000% 100.0000% 10.0000% 58.0328% 50.0000% 61.1364% Apportionment 1,697,500 280,000 1,862,000 3,839,500 (1,700,000) 2,139,500 Modified Gross Receipts 1,700,000 2,500,000 1,900,000 6,100,000 (1,700,000) 4,400,000 Total Sales 850,000 2,500,000 190,000 3,540,000 (850,000) 2,690,000 Michigan Sales 1040 1065 1120-s R/E Holding Operating 2 Operating 1 Sub-Total Elim UBG Michigan Business Tax