Court Opinion

ID: 9741746
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:01:17.605472+00
Date Added: 2024-06-11T07:24:25.860878
License: Public Domain

Blair Moody, Jr., J.
(concurring in part, dissenting in part). I concur with the result reached by Justice Fitzgerald in Detroit Edison. I dissent in the result reached in Production Credit and with the analysis used in both Production Credit and Detroit Edison.
The real underlying issue in both Production Credit and Detroit Edison is one of statutory construction, whether the Legislature in drafting § 2(3) of the Michigan Income Tax Act of 1967, MCL 206.1 et seq.; MSA 7.557(101) et seq., intended that the dollar amount of taxable income *325for state income tax purposes be identical with the dollar amount of taxable income for Federal income tax purposes. This is true whether the question is framed in terms of carry-back of net operating losses as in Production Credit or depreciation allowance as in Detroit Edison.
Section 2(3) of the Michigan Income Tax Act read:1
"It is the intention of this act that the income subject to tax be the same as taxable income as defined and applicable to the subject taxpayer in the internal revenue code, except as otherwise provided in this act.” MCL 206.2; MSA 7.557(102). (Emphasis added.)
Applying the general rule of statutory construction that plain meaning is to be given to the words of a statute, General Motors Corp v Erves, (On Rehearing), 399 Mich 241, 253; 249 NW2d 41 (1976), appellee would have us focus on the "same” language and interpret it to mean that a taypayer’s Michigan tax form would have to be identical with the taxpayer’s Federal tax form. Thus, the Michigan income tax would "piggy-back” on the Federal income tax.
Appellants, on the other hand, shift the focus from the "same” language and argue that plain meaning can be inferred from that part of § 2(3) which read: "except as otherwise provided in this act”. Explaining this provision, appellants refer to § 32 of the act which defined corporate taxable income in terms of "net profits”, MCL 206.32; MSA 7.557(132), and then to § 12(3) which defined net profits as follows:
*326" 'Net profits’ means the net gain from the operation of a business, profession or enterprise, after provision for all costs and expenses incurred in the conduct thereof, determined on either a cash or accrual method, on the same basis as provided for in the internal revenue code for federal income tax purposes, but without deduction of any taxes imposed on or measured by income including taxes imposed by this act and without deduction of net operating loss carry-over or capital loss carry-over sustained prior to January 1, 1968.” MCL 206.12; MSA 7.557(112). (Emphasis added.)
Because the statutory language defining net profits provides an allowance for all costs and expenses, which presumably include losses and depreciation, appellants argue that Michigan corporate taxable income cannot be identical with Federal taxable income as there could be no allowance for losses or depreciation.
Although the approach is arguably simplistic, we deduce from the plain meaning and commonsense interpretation of the statutory language that the Legislature intended to require the dollar amount of state taxable income be identical with the dollar amount of Federal taxable income. Thus, we must reject appellant’s claim in Production Credit for an income tax refund because, following Internal Revenue Code guidelines, it carried back post-January 1, 1968 net operating losses to years preceding the operational effect of the Michigan statute. Likewise, we must also reject appellant Detroit Edison’s depreciation allowance claim because the assets upon which appellant bases its claim had been fully amortized for Federal income tax purposes prior to January 1, 1968.
Appellants would have us rely on a recent Federal Court decision, In the Matter of Avien, Inc, 532 F2d 273 (CA 2, 1976). In Avien, the City of *327New York imposed a tax on corporate net income in accordance with the New York City Administrative Code. Section R46-2.0(8)(f) of the code read:
"A net operating loss deduction shall be allowed which shall be the same as the net operating loss deduction allowed under section one hundred seventy-two of the internal revenue code.”
The Avien court rejected the city’s argument that any loss carry-forward or carry-back of net operating loss deductions must be identical for a given year with that used for Federal income tax purposes.
Appellants in the instant case argue that Avien should be dispositive because of the relative similarity between the New York City code and the Michigan act. This argument fails precisely because of the dissimilarity between the two statutes.
The New York City code had affirmative provisions for the carry-forward and carry-back of net operating loss. No such provision existed in the Michigan act. The only provision in the Michigan act prior to 1970 regarding carry-overs was found in § 12(3) which forbade the "net operating loss carry-over * * * prior to January 1, 1968”. MCL 206.12; MSA 7.557(112). To infer from the negative language of the statute that such carry-over deductions were permitted for post-January 1, 1968 losses confounds logic.
Failing in that argument, appellants would have us focus on the Legislature’s adoption of 1970 PA 140 which amended §32 of the Michigan Income Tax Act. MCL 206.32; MSA 7.557(132). The 1970 amendment of § 32 clearly provided for operating loss carry-back and carry-forward. Appellants contend the legislative amendment was effected as a *328means of clarifying ambiguity in the earlier enactment and should thus apply retrospectively.
This position is totally unsupportable. As the circuit court noted in the case of Auto Owners Ins Co v Dep’t of Treasury, Ingham Circuit Court No. 14927-C (December 10, 1973), which opinion was adopted in its entirety by the Court of Appeals, Auto Owners Ins Co v Dep’t of Treasury, Docket No. 19376 (November 4, 1974):
"The 1970 amendment of section 32 contained in 1970 PA [140] is a complete departure from the definitions of corporate taxable income adopted by the Legislature in the 1967 Act and 1969 amendment.”
The amendment of § 32 was not merely intended as a clarifying amendment but as a radical departure from the prior enactment. Additionally, appellants’ argument that such amendment should apply retrospectively is contradicted by the very wording of the statute:
"This amendatory act shall be effective for all returns for the calendar year 1970 and any fiscal year beginning on or after February 1, 1970.” 1970 PA 140, § 3.
The amendment applies prospectively; had the Legislature intended otherwise it would have said so.
Because we read the provision of the Michigan Income Tax Act of 1967 to mandate that a taxpayer’s Michigan income tax form be identical with the taxpayer’s Federal tax form, we affirm the Court of Appeals decisions in both Production Credit and Detroit Edison.
Ryan, J., concurred with Blair Moody, Jr., J.

 We note that the Income Tax Act at issue, 1967 PA 281; MCL 206.1 et seq.; MSA 7.557(101) et seq., was repealed by 1975 PA 233. The corporate income tax was replaced by the single business tax, 1975 PA 228; MCL 208.1 et seq.; MSA 7.558(1) et seq.