880.07 DETERMINING MUNICIPAL TAXABLE INCOME FOR INDIVIDUALS.

   (a)   Municipal taxable income for a resident of the City is calculated as follows:

      (1)   Income reduced by exempt income to the extent such exempt income is otherwise included in income, reduced by allowable employee business expense deduction as found in Section 880.06(c)(20)B., further reduced by any pre-2017 net operating loss carryforward equals Municipal taxable income.

         A.   Income is defined in Section 880.06(c)(14).

            1.   Qualifying wages is defined in Section 880.06(c)(34).

            2.   Net profit is included in income, and is defined in Section 880.06(c)(23). This section also provides that the net operating loss carryforward shall be calculated and deducted in the same manner as provided in Section 880.06(c)(1)H. Treatment of net profits received by an individual taxpayer from rental real estate is provided in Section 880.14(e).

            3.   Section 880.06(c)(14) provides the following: offsetting and net operating loss carryforward treatment in Section 880.06(c)(14)A.2.a.; resident's distributive share of net profit from pass through entity treatment in Section 880.06(c)(14)A.2.b.; treatment of S corporation distributive share of net profit in the hands of the shareholder in Section 880.06(c)(14)A.3.; restriction of amount of loss permitted to be carried forward for use by taxpayer in a subsequent taxable year in Section 880.06(c)(14)A.4.

            4.   Pass through entity is defined in Section 880.06(c)(27).

         B.   Exempt income is defined in Section 880.06(c)(11).

         C.   Allowable employee business expense deduction is described in Section 880.06(c)(20)B., and is subject to the limitations provided in that section.

         D.   Pre-2017 net operating loss carryforward is defined in Section 880.06(c)(32).

   (b)   Municipal taxable income for a nonresident of the City is calculated as follows:

      (1)   Income reduced by exempt income to the extent such exempt income is otherwise included in income, as applicable, apportioned or sitused to the City as provided in Section 880.14, reduced by allowable employee business expense deduction as found in Section 880.06(c)(20)B., further reduced by any pre-2017 net operating loss carryforward equals Municipal taxable income.

         A.   Income is defined in Section 880.06(c)(14).

            1.   Qualifying wages is defined in Section 880.06(c)(34).

            2.   Net profit is included in income, and is defined in Section 880.06(c)(23). This section also provides that the net operating loss carryforward shall be calculated and deducted in the same manner as provided in Section 880.06(c)(1)H. Net profit for a nonresident individual includes any net profit of the nonresident, but excludes the distributive share of net profit or loss of only pass through entity owned directly or indirectly by the nonresident.

            3.   Pass through entity is defined in Section 880.06(c)(27).

         B.   Exempt income is defined in Section 880.06(c)(11).

         C.   Apportioned or sitused to the City as provided in Section 880.14 includes the apportionment of net profit income attributable to work done or services performed in the City. Treatment of net profits received by an individual taxpayer from rental real estate is provided in Section 880.14(e).

         D.   Allowable employee business expense deduction as described in Section 880.06(c)(20)B., is subject to the limitations provided in that section. For a nonresident of the City, the deduction is limited to the extent the expenses are related to the performance of personal services by the nonresident in the City.

         E.   Pre-2017 net operating loss carryforward is defined in Section 880.06(c)(32).

(Ord. 2015-30. Passed 11-3-15.)