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the amount by which interest from federal funds sold and

and the end of the taxpayer’s taxable year for the following assets:

securities purchased under resale agreements exceeds

(1) buildings and other depreciable assets, (2) land, (3) credit card

interest expense on federal funds purchased and securities

receivables, (4) loans to subsidiaries and (5) loans other than loans

sold under repurchase agreements by a fraction whose

to subsidiaries.

numerator is the gross income from such funds and such

Line 18 – Real property and tangible personal property owned,

securities which are properly assigned to a regular place

of business of the taxpayer within Ohio and whose

Line 19 – Real property and tangible personal property rented

denominator is the gross income from all such funds and

x 8, and

such securities.

(iii) The amount of interest, dividends, gains and other income

Line 20 – Loans and credit card receivables.

from trading assets and activities but excluding amounts

The property factor is a fraction whose numerator is the sum of the

described in C(i) and C(ii) above, included in the numerator

following: (1) the average value of the taxpayer’s real property

is determined by multiplying the amount described in A(ii) by

owned and tangible personal property owned and physically

a fraction whose numerator is the gross income from such

located or used in Ohio during the taxable year, (2) the average value

trading assets and activities which are properly assigned to

of real property and tangible personal property that the taxpayer has

a regular place of business of the taxpayer within Ohio

rented from another and that is physically located or used in Ohio

and whose denominator is the gross income from all such

during the taxable year and (3) the average value of the taxpayer’s

assets and activities.

loans and credit card receivables that are located within Ohio

(iv) Dividends and interest received from subsidiaries – amount

during the taxable year. The denominator of the property factor is

included in numerator. The amount of dividends received on

the average value of all such property located or used both within

the capital stock of, and the amount of interest received from

and without Ohio during the taxable year.

loans and advances to, subsidiary corporations at least 51%

The value of the taxpayer’s real property owned and tangible

of whose common stock is owned by the taxpayer included

personal property owned is the original cost or other basis of

in the numerator of the factor is determined by multiplying

such property for federal income tax purposes without regard to

such dividends and interest by a fraction whose numerator

is the sum of the net book value of the payer’s real property

depreciation, depletion or amortization.

owned in Ohio and the payer’s tangible personal property

The value of loans and credit card receivables is the outstanding

owned in Ohio and whose denominator is the sum of the

principal balance of such accounts without regard to any reserve for

net book value of the payer’s real property owned wherever

bad debts. However, if a loan or credit card receivable is charged-

located and the payer’s tangible personal property owned

off in whole or in part for federal income tax purposes, the portion

wherever located. For purposes of determining this fraction,

of the loan or credit card receivable charged-off is not outstanding.

the taxpayer must determine net book value in accordance

Furthermore, a speciﬁ cally allocated reserve that is established

with generally accepted accounting principles.

pursuant to generally accepted accounting principals and treated

D. If the taxpayer elects or is required by the tax commissioner to

as charged-off for federal income tax purposes will be treated as

charged-off for purposes of determining the property factor.

use the method set forth in C above, the taxpayer must use this

method on all subsequent reports unless the taxpayer receives

The average value of owned property (including loans and credit

prior permission from the tax commissioner to use a different

card receivables) is one-half the sum of the value of the property

method or the tax commissioner requires a different method.

on the ﬁ rst day of the taxable year and the value on the last day

E. The taxpayer has the burden of proving that an investment asset

of the taxable year. However, the tax commissioner may require

or the taxpayer may elect to average on a more frequent basis.

or activity or trading asset or activity was properly assigned to

a regular place of business outside of Ohio by demonstrating

When averaging on a more frequent basis is required by the tax

commissioner or elected by the taxpayer, the same method of

that the day-to-day decisions regarding the asset or activity

valuation must be used consistently by the taxpayer with respect

occurred at a regular place of business outside Ohio. Where the

day-to-day decisions regarding an investment asset or activity or

to property within and without Ohio, and the same method must be

used on all subsequent reports unless the taxpayer receives prior

trading asset or activity occur at more than one regular place of

permission from the tax commissioner or the tax commissioner

business and one such regular place of business is in Ohio and

one such regular place of business is outside Ohio, then such

requires a different method of determining value. The average value

of rented property is determined by multiplying gross rents payable

asset or activity is considered to be located at the taxpayer’s

regular place of business where the investment or trading

during the taxable year by eight.

policies or guidelines with respect to the asset or activity are

A motor vehicle is deemed to be used wholly in the state in which

established. Unless the taxpayer demonstrates to the contrary,

it is registered. All other transportation property is included in the

such policies or guidelines shall be presumed to be established

numerator of the property factor to the extent that the property is

at the commercial domicile of the taxpayer.

used in Ohio. The extent that an aircraft is deemed to be used in

Line 16 – All other receipts. The numerator of the factor includes

Ohio and the amount of value that is to be included in the numerator

of the property factor is determined by multiplying the average

all other receipts if either the income-producing activity is performed

value of the aircraft by a fraction whose numerator is the number of

entirely in Ohio or the income-producing activity is performed both

within and without Ohio and a greater proportion of the income-

landings of the aircraft in Ohio and whose denominator is the total

number of landings of the aircraft everywhere. If the extent of use

producing activity is performed within Ohio than in any other state,

within Ohio of any transportation property cannot be determined,

based on costs of performance.

then the property is deemed to be used wholly in the state in which

Property Factor

the property has its principal base of operations.

Note: If the property factor, as determined below, is less than

A credit card receivable or a loan, other than a loan to a subsidiary

1.00, please attach to the report a schedule that separately lists

corporation at least 51% of whose common stock is owned by the

the taxpayer’s Ohio and everywhere cost values at the beginning

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Form Ft 1120fi - Ohio Corporation Franchise Tax Instructions For Financial Institutions - 2013 Page 13

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