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CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS - page 13 / 59

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13 / 59

b.

activity; however, income received prior to cessation of normal operations must be included in the measure of the tax for any business which continues into the following tax year.

When a business is terminated during a tax year, the tax for that year shall be computed as follows;

1)

If the taxpayer was engaged in business in Philadelphia more than one full year preceding the tax year, the tax base shall be computed by multiplying the taxable receipts and taxable net income of the preceding year by a fraction, the numerator of which shall be the number of days engaged in business in Philadelphia in the tax year, and the denominator of which shall be the number of days in the tax year.

Example:

"A" terminated business on February 28, 1985. His taxable gross receipts during 1984 amounted to $150,000. His taxable receipts for the 1985 tax return would be computed as follows:

$150,000 x 59 days/ 365 days = $24,247

Example:

"B" terminated business on June 30, 1985. His net income after adjustments, allocation and apportionment for the fiscal year ended September 30, 1984, amounted to $15,000. His taxable net income for the 1985 tax return would be computed as follows:

$15,000 x 181 days/ 365 days = $7,438

2)

Taxpayers Who Commenced Engaging in Business in Philadelphia During the Calendar Year Preceding the Tax Year.

(a)

The gross receipts tax base for businesses which were engaged in business for at least 365 days before terminating, is computed by multiplying the taxable receipts of the first 365 days by a fraction, the numerator of which shall be the number of days engaged in business in Philadelphia in the final tax year and the denominator of which shall be 365 days.

Example:

"A" commenced business on April 1, 1984, and terminated business on June 30, 1985. His taxable gross receipts for the first 365 days of business amounted to $150,000. His taxable receipts for the 1985 tax return would be computed as follows:

$150,000 x 181 days/ 365 days = $74,384

(b)

The gross receipts tax base for businesses which commenced in the calendar year prior to the tax year, but terminated business before completion of a full 365 day period, is computed by multiplying the taxable receipts for the full period engaged in business by a fraction, the numerator of which shall be the number of days in business in the final tax year, and the denominator of which shall be the total number of days engaged in business in Philadelphia during the final tax year and the preceding year.

Example:

"B" commenced business on July 1, 1984, and terminated business on April 30, 1985. His taxable gross receipts during 1984 and 1985

11

(Rev. 08/01)

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