“Unitary business group” defined; MCL 208.1117(6); 26 USC § 957; Revenue Admin Bull 2010-1; Attribution rules under 26 USC § 318 of the Internal Revenue Code & § 117 of the Michigan Business Tax Act (MBTA) (MCL 208.1101 et seq.); Statutory construction; United States Fid. Ins. & Guar. Co. v. Michigan Catastrophic Claims Ass’n; Michigan Bell Tel. Co. v. Department of Treasury; Detroit Edison Co. v. Department of Treasury; “Ownership or control” defined; Determining the meaning of terms that are not defined under the MBTA; Town & Country Dodge, Inc. v. Department of Treasury; Consumers Power Co. v. Department of Treasury; Stock ownership; 26 USC § 958; Federal regulations directing that constructive ownership rules are to be applied to determine indirect ownership; 26 CFR §§ 1.382-2T(f)(15) & 1.704-1(b)(2)(iii)(d)(6); Federal regulations directing that constructive ownership rules are used to determine whether “stock is owned (directly or indirectly under the provisions of section 544)”; §§ 1.856-1(d)(5) & 1.861-8T(c)(2)(ii); Delineation between indirect & constructive ownership; § 1.871-14 (g)(2)(iii)(A); § 1.1291-1T(a)(8)(i); § 1.902-1(a)(4)(ii); “Owned indirectly” defined in the context of consolidated returns; § 1.1503(d)-1(b)(19); “Tiering”; In re Air Crash Disaster Near Roselawn (7th Cir.)

Holding that no unitary business group existed where none of the involved entities – plaintiff-LaBelle Management, The Pixie, Inc. (Pixie) and LaBelle Limited Partnership – owned, through an intermediary or otherwise, more than 50% of any other entity, the court reversed the trial court’s grant of summary disposition for the defendant-Department of Treasury and remanded for entry of summary disposition in favor of plaintiff in this tax dispute. Plaintiff was originally a subsidiary of Pixie, but was sold to brothers Barton and Douglas LaBelle who formed LaBelle Limited Partnership. After the sale, plaintiff reported its business tax as a separate company. Defendant later audited plaintiff and found that plaintiff, Pixie, and LaBelle Limited Partnership should be treated, together, as a “unitary business group.” Plaintiff paid its tax bill under protest and then filed its suit. The trial court granted summary disposition for defendant. On appeal, the court agreed with plaintiff that the trial court erred in using the federal income tax definition of “constructive” ownership when defining Michigan’s “indirect” ownership requirement in MCL 208.1117(6). It noted that “at the point the trial court acknowledged that the federal tax laws do not address a ‘comparable context,’ under Michigan law, it should have used the ordinary rules of statutory construction. Mere similarity between the language used in Revenue Admin Bull 2010-1 and that of 26 USC 318(a)—which does not provide the ‘meaning’ of the term at issue—is not a reason to ignore the lack of comparable context or to overlook the distinction in 26 USC 958 between ‘direct and indirect ownership’ and ‘constructive ownership.’” It then found that “indirect ownership in MCL 208.1117(6) means ownership through an intermediary, not ownership by operation of legal fiction” and concluded that no unitary business group existed.