The terms, phrases, words and their derivatives used in this chapter shall have the following meanings:
(a) “Adjusted federal taxable income”.
(1) If the taxpayer is a C corporation: the C corporation’s federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code, adjusted as follows:
A. 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.
B. Add an amount equal to five percent of intangible income deducted under division (a)(1)A. of this section, but excluding that portion of intangible income directly related to the sale, exchange, or other disposition of property described in § 1221 of the Internal Revenue Code.
C. 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 §§ 1221 or 1231 of the Internal Revenue Code.
D. 1. Except as provided in division D.2. below, 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 § s 1221 or 1231 of the Internal Revenue Code;
2. Subsection D.1. does not apply to the extent the income or gain is income or gain described in § s 1245 or 1250 of the Internal Revenue Code.
E. Add taxes on or measured by net income allowed as a deduction in the computation of federal taxable income.
F. 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. For purposes of determining if business is conducted within the city, “any direct and/or indirect ownership of an interest in an association, pass-through entity or unincorporated business entity that conducts business within the City” is considered included.
(2) 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 or for 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 herein 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) "Administrator" or "Tax Administrator" means the following:
(1) The Finance Director of the Municipality who is hereby designated to act in such capacity for all purposes of this chapter; and
(2) The Central Collection Agency, any successor in interest, or other entity organized to perform functions similar to those performed by the Central Collection Agency.
(Ord. 1169. Passed 6-9-88.)
(c) "Administrative Rulings" mean the rulings issued by the Tax Administrator, upon the request of a taxpayer or employer, interpreting this chapter and the Rules and Regulations. Administrative Rulings shall be binding and effective upon issuance as to the taxpayer or employer requesting the ruling.
(d) "Association" means any partnership, limited partnership, limited liability company, limited liability partnership, Subchapter S corporation ("S corporation") as defined in the Internal Revenue Code, or any other form of unincorporated business or enterprise taxed on a pass- through basis under the Internal Revenue Code. The terms "association," "pass-through entity," and "unincorporated business entity" are synonymous for purposes of this Chapter and the Rules and Regulations.
(e) "Board of Review" means the Board created by and constituted in § 151.37.
(f) "Business" means an enterprise, activity, profession or undertaking of any nature either conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation or any other entity, including but not limited to the renting or leasing of property, real, personal or mixed; excluding however, all nonprofit corporations which are exempt from the payment of Federal Income Tax. For purposes of determining "business is conducted within the city," any direct and/or indirect ownership of an interest in an association, pass-through entity or unincorporated business entity that conducts business within the City is considered included.
(g) "Corporation" means a corporation or joint stock association organized under the laws of the United States, the State or any other state, territory or foreign country or dependency, or any unincorporated entity treated as a corporation for federal income tax purposes.
(h) "Employee" means one who works for wages, salary, commission or other type of compensation in the service of an employer.
(i) "Employer" means an individual, partnership, association, corporation, government body, unit or agency or any other entity, whether or not organized for profit, who or that employs one or more persons and pays them wages, salary, commission, or other compensation.
(j) "Fiscal year" means an accounting period of twelve months or less ending on any day other than December 31.
(k) "Form 2106" means Internal Revenue Service form 2106 filed by a taxpayer pursuant to the Internal Revenue Code.
(l) "Gross receipts" means the total income from any source whatever.
(m) “Intangible income” means income of any of the following types: income yield, interest, capital gains, dividends, or other income arising from the ownership, sale, exchange, or other disposition of intangible property including, but not limited to, investments, deposits, money, or credits as those terms are defined in R.C. Chapter 5701; patents, copyrights, trademarks and trade names; investments in real estate investment trusts and investments in regulated investment companies; and appreciation on deferred compensation. “Intangible income” does not include prizes, awards, or other income associated with any lottery winnings or other similar games of chance.
(n) “Internal Revenue Code” or “IRC” means the Internal Revenue Code of 1986, 100 Stat. 2085, 26 U.S.C. 1, as amended.
(o) "Net profits" means a net gain from the operation of a business, profession, enterprise or other activity after provision for all ordinary and necessary expenses either paid or accrued in accordance with the accounting system used by the taxpayer for Federal income tax purposes, but subject to adjustment in accordance with the regulations and rules adopted by the Administrator and without deduction of taxes imposed by this chapter, Federal, state and other taxes based on income, and in the case of an association, without deduction of salaries paid to partners and other owners.
(p) “Net profit from a business or profession” means, for a taxpayer who is an individual, the individual’s profit other than exempt income described in § 151.08 required to be reported on schedule C, schedule E, or schedule F.
(q) "Nonresident" means an individual domiciled outside the Municipality.
(r) "Nonresident Owner" means an individual domiciled outside the City who has a direct or indirect ownership interest in an association, pass-through entity or unincorporated business entity that conducts business in the city; or a corporation that has a direct or indirect ownership interest in an association, pass-through entity or unincorporated business entity that conducts business in the City.
(s) "Nonresident unincorporated business entity" means an unincorporated business entity not having an office or place of business within the Municipality.
(t) "Other payer" means any person, other than an individual's employer or the employer's agent, that pays an individual any amount included in the qualifying wages of the individual.
(u) "Owner" means an individual, partner, member, or any other person having an ownership interest in an association, pass-through entity, or unincorporated business entity.
(v) "Person" means an individual, firm, partnership of any kind, fiduciary, trust, estate, association, business trust, corporation, limited liability company, governmental or any other entity or other payer. With respect to provisions of this Chapter that impose or prescribe a penalty, "person" means the owners of an association, pass-through entity and unincorporated business entity, and the officers of a corporation.
(w) "Place of business" means any bona fide office (other than a mere statutory office), factory, warehouse or other space which is occupied and used by the taxpayer to conduct business activity individually or through one or more employees regularly in attendance.
(x) “Qualifying wages” means wages, as defined in § 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 § 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 and the municipal corporation has not, by resolution or ordinance, exempted the amount from withholding and tax. The amount to be added hereunder applies only to those amounts constituting ordinary income.
C. Any amount not included in wages if the amount is an amount described in § 401(k) or 457 of the Internal Revenue Code. The amount to be added hereunder applies only to employee contributions and employee deferrals.
D. Any amount that is supplemental unemployment compensation benefits described in § 3402(o)(2) of the Internal Revenue Code and not included in wages.
(3) Deduct any amount included in wages attributable to a nonqualified deferred compensation plan or program described in § 3121(v)(2)(C) of the Internal Revenue Code if the compensation is included in wages and has, by resolution or ordinance, been exempted from taxation by the municipal corporation.
(4) Deduct any amount included in wages if 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 and the municipal corporation has, by resolution or ordinance, exempted the amount from withholding and tax.
(y) "Resident" means an individual domiciled in the Municipality.
(z) "Resident owner" means an individual domiciled in the City who has an interest in an association, pass-through entity or unincorporated business entity.
(aa) "Resident unincorporated business entity" means an unincorporated business entity having an office or place of business within the Municipality.
(bb) "Rules and Regulations" mean the Rules and Regulations promulgated by the Tax Administrator and approved by the Board of Review.
(cc) "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.
(dd) "Schedule C" means Internal Revenue Service schedule C filed by a taxpayer pursuant to the Internal Revenue Code.
(ee) "Schedule E" means Internal Revenue Service schedule E filed by a taxpayer pursuant to the Internal Revenue Code.
(ff) "Schedule F" means Internal Revenue Service schedule F filed by a taxpayer pursuant to the Internal Revenue Code.
(gg) "Taxable income" means wages, salary and other compensation paid by an employer to employees before any deduction, net profits of an individual, adjusted federal taxable income and intangible income, adjusted in accordance with the provisions of this chapter.
(hh) "Taxable year" means the corresponding tax reporting period (for example, calendar year or fiscal year) as prescribed for the taxpayer under the Internal Revenue Code.
(ii) "Taxpayer" means a person subject to the tax on income levied by the City of Chardon. “Taxpayer” does not include any “pass-through entity” as defined in § 151.051(a)(2) but “taxpayer” includes any other person who owns or holds an equity interest in the "pass- through entity."
(Ord. 512. Passed 12-15-69; Am. Ord. 2187. Passed 2-12-04; Am. Ord. 2345. Passed 6-8-06.)