It depends. The 100% allocation" is referring to the entire amount of gains or losses associated with the transaction being allocated to you, regardless of any other factors. It also indicates the total amount is allocated to you, but there are adjustments that cause the taxable amount to be zero (for example, offsetting losses, basis adjustments, etc. In this case, the gain is out of state thus will offset the 100% allocation. The 100% allocation appears but is not applied in your return.
Meanwhile, the sale of outside property is not taxable in Michigan and is not subject to Michigan state income tax according to this State of Michigan link.
From looking at your return, it appears that the return was prepared correctly. Your gain was subtracted in schedule 1. Also your business loss is added back to your Michigan income. This is because of the business activity occurs entirely outside of Michigan. Losses from business activity that occurs entirely outside of Michigan cannot reduce Michigan taxable income and must be added back to AGI. If you compare your Michigan AGI with your federal AGI, the amounts are different due to the addition of the suspended losses.
Please review the following link and look under How is Michigan business income or loss determined in the link provided below.
Michigan Business income
Edited 01/27/24|5:45 pm PST]
@annieland
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