§ 68-384. Allocation of net profits of business.

(a)

The net profits subject to tax of any business conducted in whole or in part by nonresidents of the city in any case in which the work done, services performed or rendered, and business or other activities conducted are done, performed, rendered or conducted both within and outside the city, shall be determined by:

(1)

Formula method. The portion of the entire net profits of such taxpayer subject to tax shall be determined by multiplying the entire net profits by an allocation percentage which shall be determined as follows:

a.

Property factor. The property factor shall be a fraction, the numerator of which is equal to the original cost of such taxpayer's real and tangible personal property, including leasehold improvements, owned and used or rented and used in the business and situated within the city during the period covered by the return, and the denominator of which is the original cost of all its real and tangible personal property, including leasehold improvements, owned and used or rented and used in the business wherever situated during such period covered by the return. The original cost shall be determined in accordance with an accounting method allowable for federal income tax purposes. If the denominator of this factor is zero, the factor shall not be considered as part of the allocation percentage.

b.

Payroll factor. The payroll factor shall be a fraction, the numerator of which is equal to the value of the earnings during the period covered by the return of the taxpayer's employees within the city, and the denominator of which is equal to the total earnings during such period of all such taxpayer's employees within and outside the city. If the denominator of this factor is zero, the factor shall not be considered as part of the allocation percentage.

c.

Gross receipts factor. The gross receipts factor shall be a fraction, the numerator of which is equal to the gross receipts of such taxpayer derived from business within the city during the period covered by its return, and the denominator of which is equal to the total of such gross receipts wherever derived. Gross receipts derived from the business within the city shall be the amount of gross receipts from:

1.

Rental or royalties. Taxable rentals or royalties from property situated or from use of patents within the city.

2.

Sales.

i.

Sales of tangible personal property are in the city if:

(a) The property is delivered or shipped to a purchaser, other than the United States government, within this city, regardless of the f.o.b. point or other conditions of the sale; or

(b) The property is shipped from an office, store, warehouse, factory or other place of storage in the city and the purchaser is the United States government.

ii.

Sales, other than sales of tangible personal property, are in the city if:

(a) The income-producing activity is performed in the city; or

(b) The income-producing activity is performed both in and outside the city and a greater proportion of the income-producing activity is performed in the city than outside the city, based on costs of performance.

If the denominator of this factor is zero, the factor shall not be considered as part of the allocation percentage.

d.

Allocation percentage. The allocation percentage is equal to the sum of the percentages determined in accordance with subsections (a)(1)a, b and c of this section divided by the number of factors used in obtaining the sum of the factors.

(2)

Other methods. If any taxpayer believes that the method of allocation set forth in subsection (a)(1) of this section is inapplicable or inequitable due to special circumstances, the taxpayer may file with the director a statement of his objections and of such alternative method of allocation or apportionment as would be proper under the circumstances and in such manner and with such detail and proof and within such time as the director may reasonably prescribe.

(b)

If the director shall conclude that the methods of allocation or apportionment provided in subsection (a) of this section are in fact inapplicable or inequitable, the director shall determine the profits subject to tax by such other method of allocation or apportionment as seems best calculated to assign to the city for taxation the portion of the profits attributable to work done, services performed or rendered, and business or other activities conducted in the city, not exceeding, however, the amount which would be arrived at by the application of the methods of allocation or apportionment set forth in subsection (a) of this section.

(Code of Gen. Ords. 1967, § 32.143; Ord. No. 931336, 12-9-93)