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CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS - page 50 / 59

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Example: The monthly value of the taxpayer's property was as follows:

January

$ 2,000

February

2,000

March

3,000

April

3,500

May

4,500

June

10,000

July

15,000

August

17,000

September

23,000

October

25,000

November

13,000

December

2,000

Total

$120,000

values if such method of averaging is required to properly reflect the average value of the taxpayer's property for the income period. Averaging by monthly values will generally be applied if there is substantial fluctuation in the value of the property during the income period or where property is acquired after the beginning of the income period or disposed of before the end of the income period.

The average value of the taxpayer's property includible in the property factor for the income year is determined as follows:

$120,000/12 = $10,000

Averaging with respect to rented property is achieved automatically by the method of determining the net annual rental rate of such property as set forth in subsection (1) (d)

      • (ii)

        .

  • (2)

    Payroll Factor.

    • (a)

      General. The payroll factor of the apportionment formula shall include the total amount paid by the taxpayer in the regular course of its trade or business for compensation during the tax period except that to the extent that compensation is paid to employees in connection with the production of receipts, net income, gains or losses taken as an adjustment to net income (or loss), such compensation shall be excluded from the payroll factor. The payroll factor shall not include compensation paid to employees in connection with the production of nonbusiness income. Compensation paid to employees working both in the regular course of taxpayer's trade or business and in the production of nonbusiness income shall be included in the factor only to the extent the compensation is paid for work performed in the regular course of taxpayer's trade or business. Example (1): The taxpayer uses some of its employees in the construction of a storage building which, upon completion, is used in the regular course of

48

(Rev. 08/01)

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