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i. Any amount payable for the use or possession of real and
<br />tangible personal property or any part drereof, whether
<br />designated as a Cxed sum of money or as a percentage of
<br />sales profits of otherwise.
<br />u. Any amount payable as additional rent or in lieu of rent
<br />such as interest, taxes, insurance, repairs or other amounts
<br />required to be paid by the terms of a ]ease or other
<br />aaagement.
<br />2. Step 2 -Ascertain the percentage which the total wages, salaries
<br />commissions and other compensation of employees within this municiuality
<br />is of the total wages, salaries, commissions and other compensation of all
<br />the taxpayers employees within and without this municipality riming the
<br />period covered by the return.
<br />a. Wages, salaies and other wmpensatlon may be computed on the
<br />cash or accrual basis. The basis does not have to be in
<br />accordance with the method of accounting used in the
<br />computation of the entire net income of the taxpayer.
<br />b. Tn the case of an employee who~perFomis services bolt witltm and
<br />without this municipality, the amount treated as compensation for
<br />services performed within this municipality shall be deemed to be:
<br />i In the case of an employee whose compensation depends
<br />directly on the volume of business secured by him, such as
<br />a salesman on a commission basis, the amount received
<br />by him for the business attributable to his efforts widfvr
<br />this municipality.
<br />a Tn the case of an employee whose compensation depends
<br />on other than the volume of business transacted, the
<br />proportion of the total amount received by him wMch is
<br />his working time within this municinaliry of his total
<br />working time.
<br />c. For the purpose of the computation, wages should include a
<br />reasonable amount attributable to the services of owners or
<br />padners (see Section 3:02.B.2.6 hereof) for the amount seated as
<br />compensaton for services performed within this municipality.
<br />3. Step 3 -Ascertain the percentage which the gross receipts of the taxpayer
<br />u
<br />which orders are accepted or conhacts legally consrunmated shall
<br />be immaterial. Solicitations of customers outside of Otis
<br />municipality by mail or telephone from an office or place of
<br />business within this municipality shall not be considered a
<br />solicitation of sales outside this municipalitw
<br />3:03
<br />3:04
<br />4. Step 4 -Add the peroentages detemrined N accordance with Steps 1, 2
<br />and 3, or such of the aforesaid percentages as maybe applicable [o the
<br />particulaz taxpayer's business, and divide the [opal so obtained by the
<br />number of percentages used in ascertahdng said total. The result so
<br />obtained is the business allocation percentage. In detemtining the average
<br />percentage, a factor shall not be ezcluded from the computation merely
<br />because said factor is found to be allocable entirely outside this
<br />municipality A facmr is excluded only when it does not exist anywhere.
<br />5. Step 5 -The business allocation percentage detemvned vt Step 4 above
<br />shall be applied to the enfve taxable net profits of the taxpayer wherever
<br />derived to detemwre the net profits allocable to this miaricioahtV.
<br />Substiute Method
<br />A In the even[ a just and equitable result cannot be obtained ands the formula the
<br />Administrator, upon his own initiative or upon application of the taxpayer, may
<br />substrate other factors in [he formula orprescnbe other methods of allocating net
<br />income calculated to effect a fair and proper allocation.
<br />Application by the taxpayer to the Administrator to substtute other factors in the
<br />fonmila or to use a different methal to allocate net profits must be made, in writing
<br />not less than sixty (60) days before the due date of the am»al rattan without regard
<br />to extension and shall state the specific grounds on which the substitution of
<br />factom or use of a different method is requested and the relief sough[ to be
<br />obtained No specific form need be followed in malting such application If,
<br />pursuant to a taxpayefs request, a substitute method of allocafion is audtorized by
<br />the Administrator, a statement should be attached to the annual return for the year
<br />of cbange describing such substiNte method of allocation and setting forth the date
<br />such substrate method was authorized by the Administrator.
<br />Chan¢e of Method
<br />A A change in a method of allocation should be described in a statement attached to
<br />the return for the yeaz of change (also see Secton 3:03 hereof).
<br />dedvedfrom sales made and services rendered in this municioalityis of the
<br />total gross receipts wherever delved during the period covered by [he
<br />relnltl.
<br />a. The following shall be considered sales made within d
<br />municipality
<br />i. All sales made through retail stops located within this
<br />municipality to purchasers within or without this
<br />municipality except so much of said sales [o purchasers
<br />outside this municipality that are directly attributable to
<br />regular solicitations made outside this mtudcioahty
<br />personally by taxpayers employees.
<br />a All sales of tangible personal property delivered to
<br />purchasers within this murdcioaliN if shipped or delivered
<br />from an office, store, warehouse, factory or place of
<br />storage located within this municioaliN.
<br />ui All sales of tangble personal property delivered to
<br />purchasers within this rnurticioality, ~ even ~ though '
<br />transported from a point outside this municipality, if the
<br />taxpayer is regularly engaged through its own employees
<br />in the solicitation or promotion of sales within this
<br />municipality and the sale is directly or indirectly the result
<br />of such solicitation
<br />iv. All sales of tangnble personal property shipped from an
<br />office, store, warehouse, factory or place of storage
<br />within this municipality to purchasers outside this
<br />municipality if the taxpayer is no[, through its own
<br />employees, regularly engaged in the solicitation or
<br />promotion of sales at the place of delivery.
<br />v. Charges for work done or services perfomred incident to
<br />a sale, whether or not included in the price of the
<br />property, shall be considered gross receipts from such
<br />sale.
<br />b. In the application of the foregoing sales determination Factors, a
<br />carrier shall be considered the agent of the seller regardless of
<br />the FOB point or other conditions of the sale and the place at
<br />z2
<br />A. Rentals received by the taxpayer are to be included in the computafion of net
<br />profits from business activities only if, and to the extent that, the rental, ownership,
<br />management or operation of the real estate from which such rentals are derived
<br />(whether so rented, managed or operated by the taxpayer individually or through
<br />agents or other representatives) consfimtes a business activity of the taxpayer in
<br />whole or m pan.
<br />Where the gross monthly rental of any real properties, regardless of number and
<br />value, aggregate in excess of the rental rate of this mwticioality, i[ shall be prima
<br />facie evidence that the rental, ownership, management or operation of such
<br />properties is a business zc[ivity of such taxpayer and the net income of such rental
<br />properties shall be subject [o tax; provided that in the case of commercial property,
<br />the owners shall be considered engaged in a business actvity when the rental is
<br />based on a Fixed or fluctuating percentage of gross or net sales, receipts or profits
<br />of the lessce, whether or not such rental exceeds the rental rate of this municipality,
<br />provided further that in the case of Feat property, the owner shall be considered
<br />engaged in a business activity when he shams in the crops or when the rental is
<br />based on a percentage of the gross or net receipts derived from the fans, whether
<br />or no[ the gross income exceeds the rental rate of this municipality: and provided
<br />Fudtter that the person who operates a licensed rooming house shall be
<br />considered in business whether or not the gross income exceeds the rental rate of
<br />this municioalitJ.
<br />C. In detemtining the amowt of gross montly rental of any real property, periods
<br />during which rents are not received shall not be taken into consideration by the
<br />taxpayer.
<br />Example: Property located ut Shaker Heights rents for $275.00 per month
<br />(Shaker Heights has a $250.00 gross rental test). In 1995, the property was
<br />rented far ten months, hence, the average monthly rental would be $229.16.
<br />The relevant test is the amount of the grass monthly rent while the property is being
<br />rented, which, in this case, is $275.00.
<br />D. Rental income received by a taxpayer engaged in the business of buying or selling
<br />real estate shall always be considered as pan of business inwme.
<br />E fn detemtining the taxable income from rentals, the deductible expernses stall b
<br />the same nature, extent and amount as are allowed by the internal Revenue Ser
<br />for federal income tax purposes.
<br />3:05 Rentals From Real Prooertv F. Owners of rental property who are non-residents of this municipality whether
<br />individuals or business entlfies, are subject to tax only on the income from real
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