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Ohio Business Income

Technical topics regarding tax preparation.
20-Jan-2016 2:31pm
Ohio taxpayers are eligible for a $250K business income deduction for married taxpayers. Ohio business income would include income from real, tangible, and intangible property if the acquisition, rental, management, and disposition of the property constitute integral parts of the regular course of a trade or business operation. However, rents are generally included in nonbusiness income, therefore not qualified to obtain the business deduction.

Question - Taxpayer has 12 rental properties, which consists of single family homes, multi family units, and triple NNN leases of retail motor outlets. He is also a partner in a couple of LLC's that owns interest in real estate in multiple states. Based on the number of properties and activities, is this sufficient to establish the Transactional Test to qualify these as businesses for the purpose of business income deduction in Ohio? Drake tax automatically classifies all of these activities as business on the Ohio tax return. All of these activities with the exception of the triple NNN leases qualified as trade or business under S199A as well.

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