What is business income?
ORC 5747.01(B): “Business Income” means income, including gain/loss…
- Arising from transactions, activities, & sources in the regular course of a trade or business operation (“Transactional Test”).
- From real, tangible, and intangible property if the acquisition, rental, management, and disposition of the property constitute integral parts of the regular course of a trade or business operation (“Functional Test”).
- From a partial or complete liquidation of a business, including gain or loss from the sale or other disposition of goodwill.
Business income could include the following…
- Distributive or proportionate shares of income from a pass-through entity (including a partnership, S Corporation, or LLC)
- Income from a sole proprietorship
- Compensation or guaranteed payments made by a pass-through entity to a 20% investor under ORC 5733.40(A)(7)
Business income could also include the following if received in the ordinary course of a trade or business operation:
Royalties from real or tangible property
Rents from real or tangible property
Dividends and distributions
Patent, copyright royalties