"Adjusted Federal taxable income" means a C corporation's Federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code as adjusted to the requirements of this Title. This definition does not apply to any taxpayer required to file a return under Ohio R.C. 5745.03 or to the net profit from a sole proprietorship.
(a) Determine Federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Service Code and adjust as follows:
(1) Deduct intangible income to the extent included in Federal taxable income. The deduction shall be allowed regardless of whether the intangible income relates to assets used in a trade or business or assets held for production of income.
(2) Add an amount equal to five percent of intangible income deducted under division (a)(1) of this section, excluding any portion of intangible income related to the sale, exchange or other disposition of property described in Section 1221 of the IRS Code.
(3) Add any losses allowed as a deduction in the computation of Federal taxable income if the losses directly relate to the sale, exchange or other disposition of an asset described in Section 1221 or 1231 of the IRS Code.
(4) Deduct income and gain included in Federal taxable income to the extent the income and gain directly relate to the sale, exchange or other disposition of an asset described in Section 1221 or 1231 of the IRS Code. This section does not apply to the extent the income or gain is income or gain described in Section 1245 or 1250 of the Internal Revenue Code.
(5) Add taxes on or measured by net income allowed as a deduction in the computation of Federal taxable income.
(6) Add, to the extent not otherwise included, any amount received on a sale, exchange or other disposition of IRS Code Section 1245 or Section 1250 tangible personal property or real property used in business to the extent of depreciation allowable after January 1, 1967, limited by the reported capital gains. The balance shall be treated as capital gains.
(b) In the case of a real estate investment trust and/or regulated investment company, add all amounts with respect to dividends to, distributions to, or amounts set aside for or credited to the benefit of investors and allowed as a deduction in computation of Federal taxable income.
(c) If the taxpayer is not a C corporation and is not an individual, the taxpayer shall compute adjusted Federal taxable income as if the taxpayer were a C corporation except:
(1) Guaranteed payments and other similar amounts paid or accrued to a partner, former partner, member or former member shall not be allowed as a deductible expense.
(2) Amounts paid or accrued to a qualified self-employment retirement plan, amounts paid or accrued to or for health insurance and amounts paid or accrued to or for life insurance for an owner or owner-employee shall not be allowed as a deduction.
(d) Nothing in this section shall be construed as allowing the taxpayer to add or deduct any amount more than once or shall be construed as allowing the taxpayer to deduct any amount paid to or accrued for purposes of Federal self-employment tax.
(Ord. 9046-2003. Passed 12-16-03.)