Interpretation & application of the Income Tax Act (ITA), the Single Business Tax Act (SBTA), the Michigan Business Tax Act (MBTA), & the Corporate Income Tax Act (CITA); Calculating a business’s corporate tax base; Taxable income; Depreciation deductions; MCL 208.9(4)(c); Cook v Department of Treasury; Lear Corp v Department of Treasury; The tax-benefit rule; Sturrus v Department of Treasury; Double taxation; Ameritech Publ’g, Inc v Department of Treasury

The court held that the Court of Claims did not err by denying plaintiff-telecommunications company’s motion for summary disposition and granting defendant-Department of Treasury’s motion for summary disposition. Plaintiff purchased telecommunications machines and equipment during the years the SBTA was in effect, and later sold the assets during the years the MBTA and CITA were in effect. It later sued on the issue of whether it could adjust its tax base to add back the federal depreciation deductions. The Court of Claims granted summary disposition for defendant. On appeal, the court rejected plaintiff’s argument that the Court of Claims miscalculated plaintiff’s corporate tax base. “The uncomfortable result on which this issue lands was ultimately created by the SBTA. There, the Legislature clearly decided to not grant Michigan taxpayers depreciation deductions.” It could have “balanced the situation by creating an avenue for relief in the MBTA or CITA, as it did with other aspects in those regimes, but it declined to do so. Plaintiff’s reading of the federal taxable-income directive is strained.” Cook and Lear “support the opposite reading.” Ultimately, the “Court of Claims did not err by interpreting the MBTA and CITA as disallowing a reconfiguration of gains on sales of assets, on the bases of those assets.” The court also rejected plaintiff’s claim that the Court of Claims erred by finding the tax-benefit rule did not justify a reduction in its tax base. “[P]laintiff’s intuition that the rule exists to ensure fairness and prevent double taxation for certain situations is correct. But its terms and limitations must still be observed: it is not enough to have an analogous situation. The Legislature could enact a version of the tax-benefit rule designed to more seamlessly fit with the particulars of Michigan tax law, but without such a codification, taxpayers may invoke the rule only as it is defined in the pertinent federal statute and regulation. The tax-benefit rule does not apply to plaintiff’s situation.” Affirmed.