As used in this chapter, the following words shall have the meaning ascribed to them in this section, except as and if the context clearly indicates or requires a different meaning:
(a) "Adjusted federal taxable income," for a person required to file as a C corporation, or for a person that has elected to be taxed as a C corporation under subsection (j)(5), 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 per cent of intangible income deducted under division (a)(1) of this section, 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 1231 of the Internal Revenue Code.
(4) (A) Except as provided in division (a)(4)(B) of this section, 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 1231 of the Internal Revenue Code.
(B) Division (a)(4)(A) of this section does not apply to the extent the income or gain is income or gain described in section 1245 or 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 or 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) Deduct, to the extent not otherwise deducted or excluded in computing federal taxable income, any income derived from a transfer agreement or from the enterprise transferred under that agreement under section 4313.02 of the Revised Code;
(8) Deduct exempt income to the extent not otherwise deducted or excluded in computing adjusted federal taxable income.
(9) Deduct any net profit of a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer's federal taxable income unless an affiliated group of corporations includes that net profit in the group's federal taxable income in accordance with division (E)(3)(b) of section 718.06 of the Revised Code.
(10) Add any loss incurred by a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer's federal taxable income unless an affiliated group of corporations includes that loss in the group's federal taxable income in accordance with division (E)(3)(b) of section 718.06 of the Revised Code.
(11) If the taxpayer is not a C corporation, is not a disregarded entity that has made an election described in division (p)(2) of this section, is not a publicly traded partnership that has made the election described in division (j)(5) of this section, and is not an individual, the taxpayer shall compute adjusted federal taxable income under this section as if the taxpayer were a C corporation, except guaranteed payments and other similar amounts paid or accrued to a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deductible expense unless such payments are a pension or retirement benefit payment paid to a retired partner, retired shareholder, or retired member or are in consideration for the use of capital and treated as payment of interest under section 469 of the Internal Revenue Code or United States treasury regulations. Amounts paid or accrued to a qualified self-employed retirement plan with respect to a partner, former partner, shareholder, former shareholder, member, or former member of the taxpayer, amounts paid or accrued to or for health insurance for a partner, former partner, shareholder, former shareholder, member, or former member, and amounts paid or accrued to or for life insurance for a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deduction. "Disregarded entity" means a single member limited liability company, a qualifying subchapter S subsidiary, or another entity if the company, subsidiary, or entity is a disregarded entity for federal income tax purposes.
(12) Nothing in division (a) of this section 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) "Business" means an enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, limited partnership, corporation, association or any other entity.
(d) "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, foreign country or dependency.
(e) "Employee" means an individual who is an employee for federal income tax purposes.
(f) "Employer means a person that is an employer for federal income tax purposes.
(g) "Fiduciary" means a guardian, trustee, executor, administrator or any other person acting in any fiduciary capacity for any individual, trust, estate or business.
(h) "Income" means the following:
(1) For residents, all income, salaries, qualifying wages, commissions, and other compensation from whatever source earned or received by the resident, including the resident's distributive share of the net profit of pass-through entities owned directly or indirectly by the resident and any net profit of the resident, except as provided in subsection (j)(5) of this division.
(2) In the case of nonresidents, all income, salaries, qualifying wages, commissions, and other compensation from whatever source earned or received by the nonresident for work done, services performed or rendered, or activities conducted in the municipal corporation, including any net profit of the nonresident, but excluding the nonresident's distributive share of the net profit or loss of only pass-through entities owned directly or indirectly by the nonresident.
(3) For taxpayers that are not individuals, net profit of the taxpayer;
(4) Lottery, sweepstakes, gambling and sports winnings, winnings from games of chance, and prizes and awards. If the taxpayer is a professional gambler for federal income tax purposes, the taxpayer may deduct related wagering losses and expenses to the extent authorized under the Internal Revenue Code and claimed against such winnings.
(i) "Net operating loss" means a loss incurred by a person in the operation of a trade or business. "Net operating loss" does not include unutilized losses resulting from basis limitations, at-risk limitations, or passive activity loss limitations.
(j) (1) "Net profit" for a person who is an individual means the individual's net profit required to be reported on schedule C, schedule E, or schedule F reduced by any net operating loss carried forward. For the purposes of division (j)(2) of this section, the net operating loss carried forward shall be calculated and deducted in the same manner as provided in division (j)(3) of this section.
(2) "Net profit" for a person other than an individual means adjusted federal taxable income reduced by any net operating loss incurred by the person in a taxable year beginning on or after January 1, 2017, subject to the limitations of division (j)(3) of this section.
(3) (i) The amount of such operating loss shall be deducted from net profit to the extent necessary to reduce municipal taxable income to zero, with any remaining unused portion of the net operating loss carried forward to not more than five (5) consecutive taxable years following the taxable year in which the loss was incurred, but in no case for more years than necessary for the deduction to be fully utilized.
(ii) No person shall use the deduction allowed by this subsection to offset qualifying wages.
(iii) (a) For taxable years beginning in 2018, 2019, 2020, 2021, or 2022, a person may not deduct more than fifty percent (50%) of the amount of the deduction otherwise allowed by this subsection.
(b) For taxable years beginning in 2023 or thereafter, a person may deduct the full amount allowed by (j)(3)(iii)(a) of this section without regard to the limitation of this subsection.
(iv) Any pre-2017 net operating loss carryforward deduction that is available may be utilized before a taxpayer may deduct any amount pursuant to this subsection.
(v) Nothing in this subsection precludes a person from carrying forward, for use with respect to any return filed for a taxable year beginning after 2018, any amount of net operating loss that was not fully utilized by operation of this subsection. To the extent that an amount of net operating loss that was not fully utilized in one or more taxable years by operation of this subsection is carried forward for use with respect to a return filed for a taxable year beginning in 2019, 2020, 2021, or 2022, the limitation described in this subsection shall apply to the amount carried forward.
(4) For the purposes of this chapter, and notwithstanding the foregoing, net profit of a disregarded entity shall not be taxable as against that disregarded entity, but shall instead be included in the net profit of the owner of the disregarded entity.
(5) A publicly traded partnership that is treated as a partnership for federal income tax purposes, and that is subject to tax on its net profits by the Village of New London, may elect to be treated as a C corporation for the Village of New London, and shall not be treated as the net profit or income of any owner of the partnership. The election shall be made on the annual return for the Village of New London. The Village of New London will treat the publicly traded partnership as a C corporation if the election is so made.
(k) "Nonresident" means an individual that is not a resident.
(l) "Other entity" means any person or unincorporated body not previously named or defined and includes, inter alia, fiduciaries located within the Village.
(m) "Person" includes individuals, firms, companies, joint stock companies, business trusts, estates, trusts, partnerships, limited liability partnerships, limited liability companies, associations, C corporations, S corporations, governmental entities, and any other entity. Whenever used in any clause prescribing and imposing a penalty, the term "person" as applied to any association, shall mean the partners or members thereof, and as applied to corporation, the officers thereof.
(n) "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 the following amounts:
(A) 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.
(B) Any amount included in wages if the amount constitutes payment on account of a disability related to sickness or an accident paid by a party unrelated to the employer, agent of an employer, or other payer.
(C) Any amount included in wages that is exempt income.
(2) Add the following amounts:
(A) Any amount not included in wages solely because the employee was employed by the employer before 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 adopted before January 1, 2016. This paragraph 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), 403(b), or 457 of the Internal Revenue Code. Division (n)(2)(C) of this section 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.
(E) Any amount received that is treated as self-employment income for federal tax purposes in accordance with section 1402(a)(8) of the Internal Revenue Code.
(F) Any amount not included in wages if all of the following apply:
(i) For the taxpayer year the amount is employee compensation that is earned outside of the United States and that either is included in the taxpayer’s gross income for Federal income tax purposes or would have been included in the taxpayer’s gross income for such purposes if the taxpayer did not elect to exclude the income under Section 911 of the Internal Revenue Code;
(ii) For no preceding taxable year did the amount constitute wages as defined in section 3121(a) of the Internal Revenue Code;
(iii) For no succeeding taxable year will the amount constitute wages; and
(iv) For any taxable year the amount has not otherwise been added to wages pursuant to either division (n)(2) of this section or section 718.03 of the Revised Code, as that section existed before the effective date of H.B. 5 of the 130th general assembly, March 23,2015.
(o) "Resident" means an individual who is domiciled in the municipal corporation as determined under Section 181.011 of these Codified Ordinances.
(p) (1) "Taxpayer" means a person subject to a tax levied on income by the Village of New London in accordance with this Chapter. "Taxpayer" does not include a grantor trust or, except as provided in division (p)(2) of this section, a disregarded entity.
(2) A single member limited liability company that is a disregarded entity for federal tax purposes may be a separate taxpayer from its single member if it either filed as a separate taxpayer or did not file for its taxable year ending in 2003, if all of the following conditions are met:
(A) The limited liability company's single member is also a limited liability company.
(B) The limited liability company and its single member were formed and doing business in one or more Ohio municipal corporations for at least five years before January 1, 2004.
(C) Not later than December 31, 2004, the limited liability company and its single member each made an election to be treated as a separate taxpayer.
(D) The limited liability company was not formed for the purpose of evading or reducing Ohio municipal corporation income tax liability of the limited liability company or its single member.
(E) The Ohio municipal corporation that was the primary place of business of the sole member of the limited liability company consented to the election. For this purpose, a municipal corporation was the primary place of business of a limited liability company if, for the limited liability company's taxable year ending in 2003, its income tax liability was greater in that municipal corporation than in any other municipal corporation in Ohio, and that tax liability to that municipal corporation for its taxable year ending in 2003 was at least four hundred thousand dollars.
(q) "Village" means the Village of New London, Ohio.
(r) "Tax Administrator" means the individual charged with direct responsibility for administration of the income tax levied by the Village of New London in accordance with this chapter; and also includes the Income Tax Clerk, or the Fiscal Officer’s designee, as specified in accordance with this ordinance. “Tax Administrator” also includes the following:
(1) A municipal corporation acting as the agent of another municipal corporation;
(2) A person retained by a municipal corporation to administer a tax levied by the municipal corporation, but only if the municipal corporation does not compensate the person in whole or in part on a contingency basis;
(3) The Central Collection Agency or the Regional Income Tax Agency or their successors in interest, or another entity organized to perform functions similar to those performed by the Central Collection Agency and the Regional Income Tax Agency;
Provided, however, that a private individual or entity serving in any of the foregoing positions shall have no access to criminal history record information, Tax Administrator does not include the State Tax Commissioner.
(s) "Tax Commissioner" means the Tax Commissioner appointed under Section 121.03 of the Revised Code.
(t) “Pension” means a retirement benefit plan, regardless of whether the plan satisfies the qualifications described under Section 401(A) of the Internal Revenue Code, including amounts that are taxable under the “Federal Insurance Contributions Act,” Chapter 21 of the Internal Revenue Code, excluding employee contributions and elective deferrals, and regardless of whether such amounts are paid in the same taxable year in which the amounts are included in the employee’s wages, as defined by Section 3121(A) of the Internal Revenue Code.
(u) “Retirement Benefit Plan” means an arrangement whereby an entity provides benefits to individuals either on or after their termination of service because of retirement or disability. “Retirement Benefit Plan” does not include wage continuation payments, severance payments, or payments made for accrued personal or vacation time.
(v) “Limited liability company” means a limited liability company formed under Chapter 1705, or 1706, of the Ohio Revised Code or under the laws of another state. (Ord. 2022-23. Passed 7-11-22.)