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(A) Except as provided in subsection (F) of this section, net profit shall be apportioned as follows:
(1) For business entities with both payroll and sales revenue in more than one tax district, by multiplying the net profit by a fraction, the numerator of which is the payroll factor, described in subsection (B) of this section, plus the sales factor, described in subsection (C) of this section, and the denominator of which is two; and
(2) For business entities with sales revenue in more than one tax district, by multiplying the net profits by the sales factor as set forth in subsection (C) of this section.
(B) The payroll factor is a fraction, the numerator of which is the total amount paid or payable in the tax district during the tax period by the business entity for compensation, and the denominator of which is the total compensation paid or payable by the business entity everywhere during the tax period. Compensation is paid or payable in the tax district based on the time the individual’s service is performed within the tax district. Wages made by third party payors and/or for leased employees must be included in the wage apportionment of the person who has control of the actions and the work product of the employees.
(C) The sales factor is a fraction, the numerator of which is the total sales revenue of the business entity in the tax district during the tax period, and the denominator of which is the total sales revenue of the business entity everywhere during the tax period.
(1) The sale, lease, or rental of tangible personal property is in the tax district if:
(a) The property is delivered or shipped to a purchaser, other than the United States government, or to the designee of the purchaser within the tax district regardless of the f.o.b. point or other conditions of the sale; or
(b) The property is shipped from an office, store, warehouse, factory, or other place of storage in the tax district and the purchaser is the United States government.
(2) Sales revenues, other than revenue from the sale, lease, or rental of tangible personal property or the lease or rental of real property, are apportioned to the tax district based upon a fraction, the numerator of which is the time spent in performing such income-producing activity within the tax district and the denominator of which is the total time spent performing that income producing activity.
(3) Sales revenue from the lease or rental of real property is allocated to the tax district where the property is located.
(D) If either the payroll factor or sales factor under this subsection is absent, then the apportionment percentage shall be equal to the remaining percentage determined under subsections (B) or (C) of this section. A factor is not deemed to be absent merely because none of the business entity’s sales revenue arose inside the Louisville Metro area or because none of the wages or compensation paid by the business entity were for services performed or rendered inside the Louisville Metro area.
(E) The apportionment provisions provided above, shall be presumed to determine fairly and correctly the business entity’s net profits from activities conducted in Louisville Metro.
(F) If the apportionment provisions of this section do not fairly represent the extent of the business entity’s activity in Louisville Metro, the business entity may petition for or the Commission may require, in respect to all or any part of the business entity’s business activity, if reasonable:
(1) The exclusion of any one or more of the factors;
(2) The inclusion of one or more additional factors which will fairly represent the business entity’s business activity in the tax district; or
(3) The employment of any other method to effectuate an equitable allocation and apportionment of net profits.
(4) Separate accounting.
(G) If an alternate method of apportionment is approved by the Commission, the business entity must continue to file under the alternate method until given permission to change by the Commission.
(Lou. Metro Ord. No. 110-2008, approved 6-3-2008)