As used in this chapter, the following words shall have the meanings ascribed to them in this section, except if the context clearly indicates or requires a different meaning. The singular shall include the plural, and the masculine shall include the feminine and the neuter.
(a) “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, adjusted 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 the production of income.
(2) Add an amount equal to five percent (5%) of intangible income deducted under subsection (a)(1) hereof, but excluding that portion of intangible income directly related to the sale, exchange, or other disposition of property described in Section 1221 of the Internal Revenue 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 Section 1231 of the Internal Revenue Code;
(4) A. Except as provided in subsection (a)(4)B. hereof, 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 Section 1231 of the Internal Revenue Code;
B. Subsection (a)(4)A. hereof does not apply to the extent the income or gain is income or gain described in Section 1245 or Section 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) In the case of a real estate investment trust and 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 the computation of federal taxable income;
(7) 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:
A. 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; and
B. Amounts paid or accrued to a qualified self-employed retirement plan with respect to an owner or owner-employee of the taxpayer, amounts paid or accrued to or for health insurance for an owner or owner-employee, and amounts paid or accrued to or for life insurance for an owner or owner-employee shall not be allowed as a deduction.
Nothing in subsection (a) hereof shall be construed as allowing the taxpayer to add or deduct any amount more than once or shall be construed as allowing any taxpayer to deduct any amount paid to or accrued for purposes of federal self-employment tax.
(b) "Association" means a partnership, limited partnership or any other form of unincorporated enterprise, owned by two or more persons.
(c) "Board of Review" means the Board created by and constituted as provided in Section 181.13.
(d) "Business" means an enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, copartnership, association, corporation or any other entity.
(e) "Business allocation" means the portion of net profits to be allocated to Canton as having been made therein pursuant to Section 181.03.
(f) "City" means the City of Canton.
(g) "Corporation" means a corporation or joint stock association organized under the laws of the United States, the State of Ohio or any other state, territory or foreign country or dependency.
(h) "Employee" means one who works for wages, salary, commission or other type of compensation in the service of an employer. Any person upon whom an employer is required to withhold for either Federal income tax or social security or on whose account payments are made under the Workers’ Compensation Law shall prima facie be an employee.
(i) "Employer" means an individual, copartnership, association, corporation, governmental body, unit or agency, or any other entity, whether or not organized for profit, who or that employs one or more persons on a salary, wage, commission or other compensation basis.
(j) "Fiscal year" means an accounting period of twelve months ending on any day other than December 31.
(k) "Income Tax Director" means the Income Tax Director of the Income Tax Division of the City, or the person executing the duties of the aforesaid Director.
(l) "Net profit" for a taxpayer other than an individual means adjusted federal taxable income and “net profit” for a taxpayer who is an individual means the individual’s profit, other than amounts described in Section 181.03(d), required to be reported on the federal schedule C, schedule E, or schedule F.
(m) "Nonresident" means an individual who is not a resident.
(n) "Other entity" means any person or unincorporated body not previously named or defined and includes inter alia fiduciaries.
(o) "Person" means every natural person, copartnership, fiduciary, association or corporation and other entity; whenever used in any clause prescribing and imposing a penalty, the term "person", as applied to associations, shall mean the partners or members thereof, and as applied to a corporation, the officers thereof.
(p) “Qualifying wages” means wages, as defined in Section 3121(a) of the Internal Revenue Code, without regard to any wage limitations, adjusted as follows:
(1) Deduct any amount included in wages if the amount constitutes compensation attributable to a plan or program described in Section 125 of the Internal Revenue Code.
(2) Add the following amounts:
A. Any amount not included in wages solely because the employee was employed by the employer prior to April 1, 1986.
B. Any amount not included in wages because the amount arises from the sale, exchange, or other disposition of a stock option, the exercise of a stock option, or the sale, exchange, or other disposition of stock purchased under a stock option. This applies only to those amounts constituting ordinary income.
C. Any amount not included in wages if the amount is an amount described in Section 401(k) or Section 457 of the Internal Revenue Code. This applies only to employee contributions and employee deferrals.
D. Any amount that is supplemental unemployment compensation benefits described in Section 3402(o)(2) of the Internal Revenue Code and not included in wages.
(q) "Resident" means:
(1) A person, whether an individual, association, corporation, or other entity, domiciled in the City; or
(2) An individual who lives in and maintains a permanent place of abode in the City, and who does not maintain a permanent place of abode elsewhere, unless such individual in the aggregate lives more than 335 days of the taxable year outside the City.
(r) “S corporation” means a corporation that has made an election under subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code for its taxable year.
(s) "Taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net profits are to be computed under this chapter and, in the case of a return for a fractional part of a year, the period for which such return is made. Unless approved by the Income Tax Director, the taxable year of an individual shall be a calendar year.
(t) “Taxpayer” means an association, business, corporation, employer, person or other entity required by this chapter to file a return on earnings or net profits or to pay a tax thereon.
(1) “Taxpayer” does not include any person that is a disregarded entity or a qualifying subchapter S subsidiary for federal income tax purposes, but “taxpayer” includes any other person who owns the disregarded entity or qualifying subchapter S subsidiary.
(2) A taxpayer who is married as of December 31 of the taxable year may file a joint City income tax return with his or her spouse subject to the provisions of this Code.
(u) “Passive” activities mean activities or ownership interests of a taxpayer in activities involving the conduct of any trade or business in which the taxpayer does not “materially participate” or involving the rental of tangible property regardless of the level of participation. This definition is further subject to specific rules for general and limited partnerships, personal service and S corporations, closely held corporations, portfolio income, oil and gas activities and rental activities.
(v) “Nonpassive” activities mean activities other than “passive” activities as defined herein.
(Ord. 275-2003. Passed 12-15-03.)
(Ord. 275-2003. Passed 12-15-03.)