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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 9. TAXATION AND ASSESSMENTS |
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Chapter 9-1. INCOME AND FRANCHISE TAXES |
Section 9-117. TAX ON UNINCORPORATED BUSINESSES
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117.1The design of the unincorporated business tax under the law is to impose a tax upon all business income which would be subject to the corporation franchise tax (as though the business were incorporated), without regard to whether the business is carried on by an individual, a partnership, or some other unincorporated entity.
117.2The term "unincorporated entity" includes, but is not limited to, concurrent ownership in property.
117.3In the great majority of cases there will be no question whether an entity is conducting or engaging in a trade, business, or occupation which is subject to the tax.
117.4The terms of the statute are extremely broad and include all kinds of businesses, trades, and occupations.
117.5For purposes of the exclusion for ministers of religion, only authorized ministers of recognized religious sects and Christian Science practitioners are not engaging in an unincorporated business.
117.6If an individual or other entity carries on two (2) or more distinct businesses, all of the businesses shall be consolidated in one (1) return. The taxpayer cannot treat each distinct business separately.
117.7The net income of all non-exempt business carried on by an individual or other entity determines its unincorporated business franchise tax liability. An individual or other entity is entitled to only one (1) exemption of five thousand dollars ($ 5,000), rather than an exemption of that amount on each distinct business; Provided, that if an individual conducts one (1) business as sole owner and is a member of a partnership which conducts a distinct business, those businesses would be considered different entities, and each would be entitled to a five thousand dollars ($ 5,000) exemption.
117.8The operation of one (1) or more apartment house, hotel, dwelling, boarding house, or other building or part of a building is classed as an unincorporated business if conducted by an individual, partnership, or other unincorporated entity.
117.9Often the continuity, frequency, and regularity of activities, as distinguished from transactions of an isolated or incidental nature, will be the factors which will determine whether activities constitute the carrying on of an unincorporated business.
For example, an individual would not be deemed to be engaged in an unincorporated business solely by reason of the purchase and sale of real estate for his or her own account, but if he or she makes a business of buying and selling real estate, such activities would be subject to the unincorporated business tax. Similarly, if an individual devotes part of his or her time, energy, and thought to stock and commodity markets and trades in securities and commodities, he or she is not carrying on an unincorporated business, if those activities are of an isolated or incidental nature and are not conducted as a business.
117.10A person(s) conducting or operating a trade or business which such person(s) believes is exempt from the tax on unincorporated businesses may, in order to obtain the exemption, file with the Mayor a request for ruling thereon if:
(a) The trade or business renders personal services; and
(b) The trade or business is not specifically exempted by the Act or this chapter.
117.11The request for ruling provided for under § 117.10 shall be in writing and shall include the following information:
(a) The nature of the trade or business;
(b) The methods of operation of the trade or business; and
(c) The reasons which are believed to sustain the claim for exemption.
117.12The burden of establishing the exemption to the satisfaction of the Mayor shall be upon the person(s) conducting or operating the trade or business.
117.13Gain (other than ordinary gain resulting from the recapture of depreciation referred to in § 117.14) or loss from the sale or other disposition of property that results in the termination of an unincorporated business subject to the tax imposed under Title 8 of the Act shall be recognized and reported by the owners of the business rather than by the business entity.
117.14Gain or loss from the sale or other disposition of property that does not result in the termination of an unincorporated business subject to the tax imposed under title 8 of the Act shall be recognized and reported by the unincorporated business entity.
117.15Depreciation required to be recaptured in accordance with the Act (D.C. Code § 47-1801 et seq.), and corresponding federal provisions shall be recognized and reported by the unincorporated business entity in the same manner and to the same extent as a corporation is required to recapture depreciation under the Act and the Federal provisions.