Respondent Department of Treasury challenges a decision of the Tax Tribunal allowing the *719 full amount of petitioners’ net operating loss (NOL) 1 deductions for tax years 1987 (petitioners Harold and Barbara Beznos) and 1988 and 1989 (petitioner Norman Beznos). We affirm.
i
The underlying facts are not in dispute. For the tax years in question, petitioners reported NOLs on their Michigan tax returns. Respondent disallowed petitioners’ NOL deductions and assessed deficiencies against petitioner Norman Beznos in the amount of $22,596.73 and petitioners Harold and Barbara Beznos in the amount of $5,579.52.
Petitioners filed a petition challenging respondent’s determination with the Tax Tribunal, which issued an opinion and judgment in favor of petitioners. Respondent appealed as of right and this Court peremptorily affirmed in an unpublished order entered October 27, 1995 (Docket No. 170524). Our Supreme Court, in lieu of granting leave to appeal, vacated that order and remanded the case to us for plenary consideration.
n
At issue here is the application of MCL 206.30(l)(o) and (p); MSA 7.557(130)(l)(o) and (p), which, at all times relevant, 2 provided as follows:
*720 (1) “Taxable income,” for a person other than a corporation, estate, or trust, means adjusted gross income as defined in the internal revenue code subject to the following adjustments:
(o) Add to the extent deducted in determining federal adjusted gross income the net operating loss deduction under section 172 of the internal revenue code.
(p) Deduct a net operating loss deduction for the taxable year as defined in section 172 of the internal revenue code subject to the modifications under section 172(b)(2) of the internal revenue code and subject to the allocation and apportionment provisions of chapter 3 of this act for the taxable year in which the loss was incurred.
The primary rule of statutory construction is to determine and give effect to the intent of the Legislature through reasonable construction, considering the purpose of the statute and the objective sought to be accomplished.
Sun Valley Foods Co v Ward (After Remand),
m
Respondent contends that the reference in § 30(l)(o) and (p) to §§ 172 and 172(b)(2) of the Internal Revenue Code (IRC), 26 USC 172, demonstrates that the Legislature intended to limit the amount of the Michigan nol deduction to either the federal nol deduction amount or to the federal modified taxable income. We disagree.
IRC § 172 deals with the computations for nols and carrybacks and carryovers, and does not limit a specific state’s NOL deductions. Moreover, this Court has determined that a taxpayer may be entitled to a Michigan NOL deduction for losses solely attributable to Michigan business activities even though the taxpayer did not have a federal nol deduction.
Preston v Dep’t of Treasury,
We find no reason why the holding in Preston should not be extended to preclude a limitation on the amount of an NOL to the federal modified taxable income. Neither § 30(l)(o) and (p) of the Michigan Income Tax Act nor IRC § 172 contain any such limitation, and it is not for this Court to impose one in the absence of such legislative action.
*722 rv
Respondent also argues that MCL 206.510(1); MSA 7.557(1510)(1), dealing with the homestead credit, should be read in pari materia with § 30(1) to preclude Michigan taxpayers from deducting an nol on Michigan income taxes that exceeds the federal modified taxable income. Section 510(1) defines “income,” for purposes of the homestead tax credit, and provides that “a deduction for a carryback or carryover of a net operating loss shall not exceed federal modified taxable income as defined in section 172(b)(2) of the internal revenue code.” Again, we disagree with respondent’s proposed interpretation.
Statutes are in pari materia when they relate to the same subject or share a common purpose.
Ansell v Dep’t of Commerce (On Remand),
*723 v
The Tax Tribunal’s judgment, and its interpretation of § 30(1) (o) and (p) of the Michigan Income Tax Act, are affirmed. No taxable costs pursuant to MCR 7.219, a question of public policy being involved.
Notes
A net operating loss is the excess of allowable deductions over gross income, subject to certain adjustments, resulting in a negative adjusted gross income. Nols are available deductions on both federal and Michigan income tax returns, with the Michigan nois limited to those losses incurred in Michigan. A taxpayer may carry back (for up to three tax years) or carry forward (for up to fifteen tax years) the losses as a form of income averaging.
The language in MCL 206.30(1); MSA 7.557(130)(1) has subsequently been amended as follows:
*720 “Taxable income” means, for a person other than a corporation, estate, or trust, adjusted gross income as defined in the internal revenue code subject to the following adjustments and the adjustments provided in subsections (2) to (4):
These minor grammatical changes do not change the meaning of the statute or our analysis.
Nor are we persuaded by respondent’s assertion that our holding will result in a windfall to Michigan taxpayers with nols because they would be permitted to include federal itemized deductions when calculating their Michigan nol. As noted by petitioners, such a result is avoided insofar as the federal nol carryover must be computed without the federal itemized deductions allowable in the loss year. Irc § 172.