Municipal Income Tax 2009 Net Profit Forms Instruction Booklet

SCHEDULE INSTRUCTIONS

Adjustments to Income per Federal Tax Return as reported on Line 1 of this Form

SCHEDULE X

This Schedule is used to determine how much of the income per your attached federal

tax return is subject to the municipal net proﬁts tax. The state of Ohio preempts cities from taxing intan-

gible income (see ORC 718.01 (A) (5) for deﬁnition of intangible income). In addition to an add-back

of all taxes based on income deducted on your attached federal return, if your Ohio Franchise Tax is

paid on the net income basis this amount must also be included on line C. Depreciation recapture on

tangible personal property and/or real property is taxable in accordance with sections 1245 and 1250

of the Internal Revenue Code. For purposes of determining Adjusted Federal Taxable income for non-

C Corporations, the following adjustments shall also apply and be included in the amount reported on

Schedule X, line E.

1. IRC Sec. 291 recapture upon the sale or exchange of IRC Sec. 1250 property as applicable to a

C Corporation.

2. Any limitations on IRC Sec. 179 depreciation expenses and/or charitable contributions as

applicable to a C Corporation.

Loss on the sale, exchange or other disposition of depreciable property or real estate used in your

business is not an allowable deduction for city net proﬁt purposes. See ORC 718.01 for more informa-

tion.

Meals and entertainment are limited to 50% in keeping with Federal Regulations. Do not show the

other 50% as an item not taxable.

Business Allocation Formula

SCHEDULE Y

Taxpayers doing business in more than one community must use Schedule Y to al-

locate their net proﬁts. See ORC 718.02 for more information.

Determine the ratio of each community’s portion of the following:

(1) Average original cost of real and tangible property used in the taxpayer’s trade or

business, and owned, rented or leased by the taxpayer. To determine the value of rented or

leased property, multiply gross annual rental and/or lease payments by 8.

(2) Total wages, tips and other employee and/or owner compensation deducted on the attached

federal tax return.

(3) Gross receipts from sales made and sevices performed, regardless of where made or performed.

Add the ratios obtained and divide by the number of ratios used to obtain the business

allocation percentage for each community listed.The business allocation percentage is applied

against Adjusted Federal Taxable Income as calculated on Page 1, Line 3A of this form for

each community listed.

Special note: Sales and gross receipts in CCA municipalities (Step 3) are based on the following criteria:

a. All sales of tangible personal property made by a manufacturer’s representative, not an

employee of the taxpayer, have a situs of the point of shipment regardless of where title passes

or place of delivery.

b. All sales of tangible personal property made by an employee of the taxpayer have a situs

based on where the sale is consummated.

c. All sales of tangible personal property initiated by a customer of the taxpayer have a situs of

the point of shipment regardless of where title passes or place of delivery.

d. Solicitation of customers outside taxing community by mail or phone from an ofﬁce or place of

business within a taxing community shall be considered a solicitation of sales within the taxing

community.

Municipal Income Tax 2009 Net Profit Forms Instruction Booklet - State Of Ohio Page 4

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