Form MI-1040H, Schedule of Apportionment

Business income from business activity that is taxable both within and outside Michigan is apportioned to Michigan by multiplying the income by a fraction determined as follows: Property Factor + Payroll Factor + Sales Factor divided by 3

Use the factors of the business entity having the multistate activity. A separate MI-1040H must be completed for each taxable entity or sole proprietorship with multistate business activity. The Michigan income tax statute uses the standards prescribed by federal Public Law (PL) 86-272 to determine if a taxpayer is taxable in another state.

A taxpayer's income is taxable in another state if:

In that state the taxpayer is subject to a net income tax; a franchise tax measured by net income; a franchise tax for the privilege of doing business; a corporate stock tax, or
That state has jurisdiction to subject the taxpayer to a net income tax regardless of whether the state does or does not.

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