Title
Amending Chapter 19-2600 of The Philadelphia Code, entitled "Business Privilege Taxes," by amending the definition of "Net Income" to determine the net income of unincorporated businesses by allowing deductions of payments to certain proprietors or partners.
Body
THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
SECTION 1. Chapter 19-2600 of the Philadelphia Code is hereby amended to read as follows:
CHAPTER 19-2600. BUSINESS PRIVILEGE TAXES.
ยง 19-2601. Definitions.
In addition to the definitions provided in the Act of May 30, 1984, P.L. 345, No. 69, known as the First Class City Business Tax Reform Act, and Chapter 19-500 of this Title, the following definitions shall apply:
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Net Income.
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(a) "Net income" shall, at the option of the taxpayer, which option shall not be revocable by the taxpayer after it has been exercised as provided for by the collector, be either:
(1) The net gain from the operation of a business, after provision for all allowable costs and expenses actually incurred in the conduct thereof, either paid or accrued in accordance with the accounting system used, without deduction of taxes based on income, except as provided for by the following:
(i) Commencing with returns the due date of which are on or after January 1, 2005, a deduction of qualified payments to principals of an unincorporated business who materially participate in the operation thereof, subject to the terms and conditions set forth in subsection (2)(vi).
(ii) Phase-in of Deduction: The amount of any deduction claimed under subparagraph (i) shall not exceed the following percentage of total qualified payments:
Taxable Year Deduction
2005 25%
2006 30%
2007 35%
2008 40%
2009 45%
2010 50%
2011 60%
2012 70%
2013 80%
2014 90%
2015 and thereafter 100%
(2) The taxable income from any business activity as returne...
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