(a) Method of Determination.
(1) In the taxation of income which is subject to Municipal income taxes, if the books and records of a taxpayer conducting a business or profession both within and without the boundaries of the Municipality disclose with reasonable accuracy what portion of its net profit is attributable to that part of the business or profession conducted within the boundaries of the Municipality, then only such portion shall be considered as having a taxable situs in the Municipality for the purposes of Municipal income taxation. The portion of the entire net profits of a taxpayer to be allocated as having been derived from within the Municipality, in the absence of actual records thereof, shall be determined as follows:
Multiply the entire net profits by a business allocation percentage to be determined by a three-factor formula of property, payroll and sales, each of which shall be given equal weight as follows:
A. The average net book value of the real and tangible property owned or used by the taxpayer in the business or profession in the Municipality during the taxable period to the average net book value of all the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
As used in this subsection “real property” means property rented or leased by the taxpayer. The value of such property shall be determined by multiplying the annual rental thereof by eight.
B. Wages, salaries and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the Municipality to wages, salaries and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed.
C. Gross receipts of the business or profession from sales made and services performed during the taxable period in the Municipality to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
(2) In the event that the foregoing allocation formula does not produce an equitable result, another basis may, under uniform regulations, be substituted so as to produce such results.
(b) Sales Made in the Municipality. As used in subsection (a)(1)C. “sales made in the Municipality” means:
(1) All sales of tangible personal property which is delivered within the Municipality regardless of where title passes if shipped or delivered from a stock of goods within the Municipality.
(2) All sales of tangible personal property which is delivered within the Municipality regardless of where title passes even though transported from a point outside the Municipality, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Municipality, and the sales result from such solicitation or promotion.
(3) All sales of tangible personal property which is shipped from a place within the Municipality to purchasers outside of the Municipality regardless of where title passes if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(4) The net profits from all sales of real property located within the Municipality by persons not residing in the property sold and sold in the ordinary course of a business or occupation.
(Ord. 97-60. Passed 11-17-97.)
(c) Total Allocation. Add together the percentages determined in accordance with subsection (b) hereof or such of the aforesaid as are applicable to the particular taxpayer and divide the total so obtained by the number of percentages used in deriving the total in order to obtain the business allocation percentage referred to in Section 171.03(a).
Only those factors which exist within the Village of Lexington for the taxpayer shall be applied. (Ord. 06-06. Passed 1-17-06.)
(d) Rentals.
(1) Rental income received by a taxpayer shall be included in the computation of net profits from business activities under subsection (a), only if and to the extent that the rental, ownership, management or operations of the real estate from which such rentals are derived, whether so rented, managed, or operated by a taxpayer individually or through agents or other representatives, constitutes a business activity of the taxpayer in whole or in part. Operation of a boarding or rooming house or a bed and breakfast shall be considered a business.
(2) Every person, corporation, or other legal entity who owns property which is rented or leased as a residential dwelling unit within this Municipality shall furnish to the Administrator by no later than January 31, the following information:
A. Name of each tenant.
B. Address of property rented or leased.
C. Dates of occupancy.
D. Forwarding address when no longer a tenant.
(Ord. 97-60. Passed 11-17-97.)