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CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS - page 55 / 59

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SECTION 409. RECOMPUTATION OF TAXABLE NET INCOME OR LOSS BY PERSONS REGISTERED UNDER THE PENNSYLVANIA SECURITIES ACT OF 1972, WHO ELECT TO REPORT TAXABLE NET INCOME UNDER METHOD II (SECTION 404).

  • 1.

    In addition to the computation of taxable net income, as adjusted, allocated and apportioned in accordance with Sections 404, 405, 406, 407 and 408, each person registered under the Pennsylvania Securities Act of 1972 who elects to report taxable net income under Method II (Section 404), must recompute taxable net income (or loss) pursuant to the minimum tax provisions in the following manner:

    • (a)

      Adjusted net income (or loss) as computed pursuant to Section 404, shall be increased or decreased by the amount of the adjustment made pursuant to subsection 404(2)(f) as follows:

      • (i)

        If the amount of the adjustment made pursuant to subsection 404(2)(f) is less than zero, the taxpayer shall deduct that amount from adjusted net income (decrease net income), or shall add that amount to the adjusted net loss (increase the net loss), as the case may be.

      • (ii)

        If the amount of the adjustment made pursuant to subsection 404(2)(f) is more than zero, the taxpayer shall add that amount to adjusted net income (increase net income) or add that amount to the adjusted net loss (decrease net loss), as the case may be.

    • (b)

      The revised adjusted net income as computed in accordance with subsection (a) shall be increased or decreased by the amount of nonbusiness income, as provided in Sections 405, 406 and 407(l).

    • (c)

      The revised net income after adjustments and allocation shall be apportioned to Philadelphia in accordance with the provisions of Section 408, except that the denominator of the receipts factor shall include those receipts referred to in subsection 302(17).

    • (d)

      After apportionment of net income to Philadelphia, nonbusiness or losses allocable to Philadelphia shall be added to or subtracted from apportioned net income or losses in accordance with whichever one of the following rules is applicable:

        • (i)

          Nonbusiness income shall be added to apportioned net income.

        • (ii)

          Nonbusiness income shall be added to apportioned net losses so as to reduce the net loss.

        • (iii)

          Nonbusiness losses shall be deducted from apportioned net income.

        • (iv)

          Nonbusiness losses shall be added to apportioned net losses so as to increase the net loss.

53

(Rev. 08/01)

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