Income - Small Business Investor Deduction FAQs

I received income from an entity that has a fiscal year end of 3/31/13. Since this is a new deduction for 2013, can I claim all of the income even though most of it was earned in 2012, or do I need to pro-rate and only claim the entity income earned during the 3 months of 2013?

  • ORC 5747.01 (A)(31) states: “Ohio small business investor income” means the portion of a taxpayer’s adjusted gross income that is business income reduced by deductions from business income and apportioned or allocated to this state under sections 5747.21 and 5747.22 of the Revised Code, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year. 

Under 5747.01 (M), “Taxable year" means the calendar year or the taxpayer's fiscal year ending during the calendar year, or fractional part thereof, upon which the adjusted gross income is calculated. In this case, because the entity’s fiscal year ends in 2013, the taxpayer’s taxable year is also 2013. Therefore, the taxpayer can take the deduction using all the income reported from 4/1/12 – 3/31/13 for the entire fiscal year.