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CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS - page 44 / 59

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  • d)

    Dividends. Dividends are business income where the stock with respect to which the dividends are received arises out of or was acquired in the regular course of the taxpayer's trade or business operations or where the purpose for acquiring and holding the stock is related to or incidental to such trade or business operations.

  • (e)

    Patent, trademark, and copyright royalties. Patent, trademark and copyright royalties are business income where the patent or trademark or copyright with respect to which the royalties were received arises out of or was created in the regular course of the taxpayer's trade or business operations or where the purpose for acquiring and holding the patent or trademark or copyright is related to or incidental to such trade or business operations.

SECTION 406. ALLOCATION OF NONBUSINESS INCOME.

(1)

Nonbusiness income (or loss) shall be allocated within or without Philadelphia according to the following rules. Allocable nonbusiness income (or loss) does not include any receipts, net income, gains or losses taken as an adjustment to net income (or loss) under subsections 404(2)(a), 404(2)(e)(i) and 404(2)(f), and does not include receipts or the net income, gains or losses attributable thereto, which are included in the numerator of the fraction used in computing the adjustment under subsection 404(2)(e)(ii).

(a)

(i)

Net rents and royalties from real property located in Philadelphia are allocable to Philadelphia.

(ii)

Net rents and royalties from tangible personal property are allocable to Philadelphia if, and to the extent that, the property is utilized in Philadelphia.

(.1)

The extent of utilization of tangible personal property in Philadelphia is determined by multiplying the rents and royalties by a fraction, the numerator of which is the number of days of the physical location of the property in Philadelphia during the rental or royalty period in the income year and the denominator of which is the number of days of the physical location of the property everywhere during all rental or royalty periods in the income year. If the physical location of the property during the rental or royalty period is unknown or unascertainable by the taxpayer, the tangible personal property is deemed to be utilized at the situs in which the property was located at the time the rental or royalty payor obtained possession of the property.

(b)

(i)

Capital gains and losses from sales of real property located in Philadelphia are allocable to Philadelphia.

(ii)

Capital gains and losses from sales of tangible personal property are allocable to Philadelphia if the property had a situs in Philadelphia at the time of the sale.

(iii)

Capital gains and losses from sales of intangible personal property are allocable to Philadelphia if the taxpayer's commercial domicile is in Philadelphia.

(c)

Interest and dividends are allocable to Philadelphia if the taxpayer's commercial domicile is in Philadelphia.

42

(Rev. 08/01)

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