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 are some examples of business income vs. nonbusiness income?

The determination as to whether an item of income is business income is a very fact intensive analysis. As such, it is not always possible to provide a quick and easy determination regarding business income. The following examples are meant to provide a general guide in determining what is and is not business income. Additionally, see the “Ohio Definitions and Examples of Business Income and Nonbusiness Income” section of the individual income tax instructions for more examples.

Example A: Jamaal manages a portfolio of mineral rights for various properties in Ohio. He routinely, through the course of business transactions, trades and manages this portfolio. In this case, the income from these mineral rights could be considered business income, eligible for the Business Income Deduction, under Ohio law.

Example B: Christine lives on a golf course that hosts a yearly local tournament. In years when she’s not in town, she rents out her house during the tournament. Since she irregularly and temporarily rents her primary residence, she is not conducting a business, and thus the rents are not business income.

Example C: Victoria and her sister Cathy wish to earn some extra money. They pool their funds to invest in the stock market. They make the investment through a pass-through entity, VC Ventures, which they set up for this purpose. After their initial investment, they spend minimal time researching, managing or trading the stocks. Despite their inactivity, the stock does well and generates a capital gain of $1,000,000 for each of them.

The capital gain is nonbusiness income. Victoria and Cathy’s minimal actions are not enough to demonstrate that they are engaged in a trade or business. Additionally, although they set up VC Ventures, the mere presence of a pass-through entity also does not create a trade or business.

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