(a) In the taxation of income which is subject to the Municipal income tax, if the books and records of a taxpayer conducting a business or profession both within and without the boundaries of the Municipality shall disclose with reasonable accuracy what portion of its net profit is attributable to that part of the business or profession conducted within the boundaries of the Municipality, then only that portion shall be considered as having a taxable situs in the Municipality for the purposes of Municipal income taxation, The portion of the entire net profits of a taxpayer to be allocated as having been derived from within the Municipality, in the absence of actual records thereof, shall be determined as follows: Multiply the entire net profits by a business allocation percentage to be determined by a three-factor formula of property, payroll, and sales, each of which shall be given equal weight, as follows:
(1) The average net book value of the real and tangible personal property owned or used by the taxpayer in the business or profession in the Municipal limits during the taxable period to the average net book value of all the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated. As used in this subsection, real property shall include property rented or leased by the taxpayer, and the value of the property shall be determined by multiplying the annual rental thereon by eight.
(2) Wages, salaries and other compensations paid during the taxable period to persons employed in the business or profession for services performed in the Municipal limits to wages, salaries, and other compensation paid during the same period to persons employed in the business or profession wherever their services are performed.
(3) Gross receipts of the business or profession from sales made and services performed during the taxable period in the Municipality to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
(b) In the event that the foregoing allocation formula does not produce an equitable result, another basis may, under uniform regulations, be substituted so as to produce the result.
(c) As used in subsection (a) (3) hereof, "sales made in the Municipality" means:
(1) All sales of tangible personal property which is delivered within the Municipal limits, regardless of where title passes, if shipped or delivered from a stock of goods within the Municipality.
(2) All sales of tangible personal property which is delivered within the Municipality, regardless of where title passes, even though transported from a point outside the Municipality, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Municipality, and the sales result from such solicitation or promotion.
(3) All sales of tangible personal property which is shipped from a place within the Municipality to purchasers outside of the Municipality, regardless of where title passes, if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(d) (1) Add togther the percentage determined in accordance with subsection (a)(1), (2) and (3), or such of the aforesaid percentages as are applicable to the particular taxpayer, and divide the total so obtained by the number of percentages used in deriving the total, in order to obtain the business allocation percentage referred to above.
(2) A factor is applicable even though it may be allocable entirely in or outside the Municipal limits.
(Ord. 1967-02. Passed 5-17-67.)
(e) (1) Rental income received by a taxpayer shall be included in the computation of net profits from business activities under Section 181.01 (c), (d) and (e), only if and to the extent that the rental ownership, management, or operations of real estate from which the rentals are derived, whether so rented, managed or operated by a taxpayer individually or through agents or other representatives, constitutes a business activity of the taxpayer in whole or in part.
(2) Where the gross monthly rental of any and all real properties, regardless of number and value, aggregates in excess of one hundred twenty-five dollars ($125.00) per month, it shall be prima facie evidence that the rental, ownership, management, or operation of the properties is a business activity of the taxpayer, and the net income of the rental property shall be subject to tax. However, in the case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts, or profits of the lessee, whether or not the rental exceeds one hundred twenty-five dollars ($125.00) per month. In the case of farm property, the owner shall be considered engaged in a business activity when he shares in crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds the one hundred twenty-five dollars ($125.00) per month. A person who operates a licensed rooming house shall be considered in business whether or not the gross income exceeds one hundred twenty-five dollars ($125.00) per month.
(3) Property owners who are considered to have a business activity under the provisions of this section shall submit or cause to be submitted to the administrator a list of names and addresses of all persons, firms, corporations, or other entities occupying, leasing, or renting any premises belonging to the property owner within this Municipality. The required list shall be prepared as of December 31, of each year and submitted on or before January 31, of the following year.
(Ord. 1972-25. Passed 5-17-72.)
(f) (1) The portion of a net operating loss sustained in any taxable year subsequent to January 1, 1967, allocable to the Municipality may be applied against the portion of the profit of succeeding tax years allocable to the Municipality until exhausted, but in no event for more than five taxable years immediately following the year in which the loss occurred. No portion of a net operating loss shall be carried back against net profits of any prior year.
(2) The portion of net operating loss sustained shall be allocated to the Municipality in the same manner as provided herein for allocating net profits to the Municipality.
(3) The administrator shall provide by rules and regulations the manner in which the net operating-loss carry-forward shall be determined.
(Ord. 1967-02. Passed 5-17-67.)
(g) (1) Royalty income. Income earned by a taxpayer from a royalty interest in the production of an oil or gas well whether managed, extracted or operated by the taxpayer individually or through an agent or other representative, shall be included in the computation of net profits from a business activity to the extent that such royalty interest constitutes a business activity of the taxpayer. Where the gross income received by a taxpayer from a royalty interest in the production of an oil or gas well in a taxable year exceeds three thousand dollars ($3,000), it shall be prima- facie evidence that the income was derived from a business activity of such taxpayer and the net income from such royalty interest shall be subject to tax.
(2) Employer's income. The employer's income derived from finance and carrying charges associated with his customers’ accounts receivable shall also be included in the computation of net profits.
(h) (1) The portion of a net operating loss sustained in any taxable year subsequent to January l, 1967, allocable to the Municipality may be applied against the portion of the profit of succeeding tax years allocable to the Municipality until exhausted, but in no event for more than five taxable years immediately following the year in which the loss occurred. No portion of a net operating loss shall be carried back against net profits of any prior year.
(2) The portion of net operating loss sustained shall be allocated to the Municipality in the same manner as provided herein for allocating net profits to the Municipality.
(3) The administrator shall provide by rules and regulations the manner in which the net operating-loss carry-forward shall be determined.
(Ord. 1990-40. Passed 5-16-90.)