181.04 APPORTIONMENT OF NET PROFITS.

   (a)    Business Both Inside and Outside the Municipal Boundaries. This section does not apply to taxpayers that are subject to and required to file reports under Chapter 5745 of the Ohio Revised Code. Except as otherwise provided in division (c) of this section, net profit from a business or profession conducted both inside and outside the boundaries of a municipal corporation shall be considered as having a taxable situs in such municipal corporation for purposes of municipal income taxation in the same proportion as the average ratio of the following:

   Multiply the entire net profits of the business by a business apportionment percentage to be determined by:

      (1)    The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in such municipal corporation during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated. For purposes of this determination, real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;

      (2)    Wages, salaries, and other compensation paid during the taxable period to persons employed in the business or profession for services performed in such municipal corporation to wages, salaries, and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed, excluding compensation that is not taxable by the municipal corporation under Section 718.011 of the Ohio Revised Code;

      (3)    Gross receipts of the business or profession from sales made and services performed during the taxable period in such municipal corporation to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.

      (4)    Adding together the percentages determined, in accordance with subsections (a)(1), (2) and (3) hereof, or such of the aforesaid percentages as are applicable to the particular taxpayer and dividing the total so obtained by the number of percentages used in deriving such total.

         A.    A factor is applicable even though it may be apportioned entirely in or outside the Municipality.

         B.    Provided, however, that in the event a just and equitable result cannot be obtained under the formula provided for herein, the Tax Administrator, upon application of the taxpayer, shall have the authority to substitute other factors or methods calculated to effect a fair and proper apportionment.

   (b)    As used in division (a) of this section, "sales made in a municipal corporation" shall be the same as defined in Section 181.02 (uu).

   (c)    Except as otherwise provided in division (d) of this section, net profit from rental activity not constituting a business or profession shall be subject to tax only by the municipal corporation in which the property generating the net profit is located.

   (d)    This section does not apply to individuals who are residents of the Municipality and, except as otherwise provided in Section 718.01, of the Ohio Revised Code, the Municipality may impose a tax on all income earned by resident of the Municipality to the extent allowed by the United States Constitution.

   (e)    Net Operating Loss (NOL).

      (1)    The net loss from an unincorporated business activity may not be used to offset salaries, wages, and commissions to the extent that they are reported on form W-2 or other compensation. However, if a taxpayer is engaged in two or more taxable business activities to be included in the same return, the net loss of one unincorporated business activity (except any portion of a loss reportable for municipal income tax purposes to another municipality) may be used to offset the profits of another for purposes of arriving at overall net profits.

      (2)    The Municipality does not allow a net operating loss carry back or carry forward.

   (f)    Consolidated Returns.

      (1)    A consolidated return may be filed by a group of corporations who are affiliated through stock ownership if that affiliated group filed for the same tax period a consolidated return for federal income tax purposes pursuant to section 1501 of the Internal Revenue Code. A consolidated return must include all companies that are so affiliated.

      (2)    Once a consolidated return has been filed for any taxable year, consolidated returns shall continue to be filed in subsequent years unless the applicable requirements of the rules and regulations for discontinuing the filing of consolidated returns have been met.

         (Ord. 73-05. Passed 12-6-05.)