Frequently Asked Questions

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

What is business income?

O.R.C 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
  • Income from farming
  • Compensation or guaranteed payments made by a pass-through entity to a 20% investor under O.R.C. 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
  • Capital gains
  • Interest
  • Dividends and distributions
  • Patent, copyright royalties