REVENUE ADMINISTRATIVE BULLETIN 2010-2 Approved: February 24, 2010
MICHIGAN BUSINESS TAX - UNITARY BUSINESS GROUP RELATIONSHIP TEST
In RAB 2010-2, the Department cites United States Supreme Court cases that described a unitary business as a functionally integrated enterprise whose parts are mutually interdependent such that there is a flow of value between them. There must exist some sharing or exchange of value not capable of precise identification or measurement beyond the mere flow of funds arising out of a passive investment. In determining whether a flow of value exists, a relevant question in the inquiry is whether contributions to income resulted from "functional integration," "centralization of management," and "economies of scale." No one fact is determinative of whether functional integration, centralization of management or economies of scale exist. Rather, the statute requires that the totality of facts and circumstances surrounding the business activities and operations be weighed and examined for cumulative effect.
Following is an outline of items covered in the RAB.
-Unitary Business Group Defined
-Two Alternative Relationship Tests
-Flow of Value Test
-Economies of Scale
-Special Application Considerations
-Links in a Chain
-Factors Demonstrating a Flow of Value or Dependency