(1) On all compensation and on net profits from the operation of a business earned during the effective period of this Chapter by a resident.
(2) On all compensation earned or received by a nonresident for work done or services performed or rendered in the City, subject to the limitations provided in Ohio Revised Code Section 718.011, including any amendments or successor provisions thereto, and on net profits earned or received by a nonresident from the operation or conduct of business in the City. Where a nonresident is employed at a place of business in the City, the compensation of such nonresident for the performance of employee services will be treated as earned outside the City only for those services which of necessity, as distinguished from convenience, obligate such nonresident to duties outside the City in the service of the nonresident’s employer.
(3) On the portion attributable to the City of the net profits earned during the effective period of this Chapter of a pass-through entity derived from business conducted in the City, whether or not such pass-through entity has an office or place of business in the City. The tax imposed by this Section 181.03(a)(3) on the net profits of pass-through entities is imposed upon the pass-through entities rather than their owners.
(4) On the portion attributable to the City of the net profits earned during the effective period of this Chapter of a corporation derived from business conducted in the City, whether or not such corporation has an office or place of business in the City. The tax imposed by this Section 181.03(a)(4) on the net profits of an electric company, combined company, or telephone company shall be subject to, and shall accord with, Ohio Revised Code Chapter 5745, including any amendments or successor provisions thereto.
(5) On all income derived anywhere from prizes, awards, gaming, wagering, lotteries, or schemes of chance by a resident, and on all income derived from prizes, awards, gaming, wagering, lotteries, or schemes of chance by a nonresident when such income is won or received from sources within the City.
(b) The portion of the net profits attributable to the City of a taxpayer conducting business both within and without the boundaries of the City shall be determined as provided in Ohio Revised Code Section 718.02, including any amendments or successor provisions thereto, and in accordance with rules and regulations adopted by the Administrator pursuant to this Chapter.
(c) Net Operating Loss.
(1) The City does not allow a net operating loss carryback or carryforward to any taxable year other than the taxable year in which the taxpayer incurs the net operating loss.
(2) Losses from other sources, including net operating losses and passive activity losses reported for federal income tax purposes, may not be combined with or otherwise offset compensation.
(d) Filing of Consolidated Returns.
(1) The Administrator shall accept for filing a consolidated return from an affiliated group of corporations subject to the tax imposed by this Chapter if the affiliated group filed for the same taxable year a consolidated return for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code. Only corporations subject to the tax imposed by this Chapter may be included in such consolidated return filed for the City. If an affiliated group of corporations subject to the tax imposed by this Chapter properly files a consolidated return in accordance with this Section 181.03(d)(1) for any taxable year, the affiliated group must file a consolidated return for each succeeding taxable year in which it files a consolidated return for federal income tax purposes unless, on or before the due date (taking into account extensions of time properly granted) of the return for a taxable year, the affiliated group obtains the permission of the Administrator to cease filing a consolidated return for that year.
(2) In the case of a corporation or other entity that carries on transactions with its stockholders or owners or with other corporations or entities related by stock ownership or other ownership, interlocking directorates or some other method, or in case any person operates a division, branch, factory, office, laboratory or activity within the City constituting only a portion of its total business, the Administrator shall require such additional information as the Administrator deems necessary to ascertain whether net profits are properly allocated to the City. If the Administrator finds that the net profits of such corporation, other entity or person are not properly allocated to the City by reason of transactions (i) with stockholders or other owners or (ii) with other corporations or entities related by stock or other ownership, interlocking directorates or some other method or (iii) with a division, branch, factory, office, laboratory or activity, the Administrator shall make an allocation of net profits to the City in such manner as the Administrator deems fair and reasonable. If necessary, the Administrator may require the filing of a City income tax return on a consolidated or unitary basis.
(e) Exemptions. The City income tax shall not be levied on the following:
(1) Military pay or allowance of members of the armed forces of the United States and of members of their reserve components, including the Ohio National Guard.
(2) The income of religious, fraternal, charitable, scientific, literary or educational institutions to the extent that such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property or tax- exempt activities.
(3) Personal earnings of any natural person under eighteen years of age.
(4) Intangible income, including interest, dividends, gains and other revenue from intangible property, as described in Ohio Revised Code Section 718.01(A)(5), including any amendments or successor provisions thereto.
(5) Compensation paid to a nonresident individual to the extent prohibited under Ohio Revised Code Section 718.011, including any amendments or successor provisions thereto.
(6) Items excluded from federal gross income pursuant to Section 107 of the Internal Revenue Code.
(7) An S corporation shareholder’s distributive share of net profits or losses of the S corporation, except to the extent that the distributive share of net profits represents wages as defined in Section 3121(a) of the Internal Revenue Code or net earnings from self-employment as defined in Section 1402(a) of the Internal Revenue Code.
(8) Employee compensation that is not qualifying wages.
(9) Compensation, net profits and other items of income the taxation of which is prohibited by the United States Constitution or any act of Congress limiting the power of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce.
(10) Compensation, net profits and other items of income the taxation of which is prohibited by the Constitution of the State of Ohio or any other act of the Ohio General Assembly limiting the power of a municipality to impose net income taxes.
(11) Generally, the above noted items in this Section 181.03(e) are the only forms of income not subject to the tax imposed by this Chapter. Any other income, economic benefit or other form of compensation earned or received by a taxpayer shall be subject to the tax imposed by this Chapter.
(f) Deductions of Employee Business Expenses. The only expenses that can be deducted against compensation are those employee business expenses deductible for federal income tax purposes in determining adjusted gross income, unless otherwise allowed on a uniform and consistent basis by the Administrator. The total of such expenses cannot exceed the employee’s related W-2 wage income from the same employer. Notwithstanding anything to the contrary in this Section 181.03(f), if a taxpayer’s taxable income for a taxable year includes income against which the taxpayer has taken a deduction for federal income tax purposes reported on Form2106 attached to the taxpayer’s federal income tax return filed for that taxable year, the taxpayer shall determine his or her taxable income to the City by deducting the same amount deducted for federal income tax purposes and reported on the taxpayer’s Form2106 for that taxable year and shall attach a copy of Form2106 and Schedule A filed with the taxpayer’s federal income tax return to the taxpayer’s City return for that taxable year.
(Ord. 147(04-05). Passed 2-17-05.)