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IT BUS
2017 Ohio Schedule IT BUS Instructions Rev. 8/17
Ohio Schedule IT BUS is solely for use in determining taxable business income and business income tax liability for purposes
of completing the Ohio IT 1040 individual income tax return. See Ohio Revised Code sections (R.C.) 5747.01(A)(31), 5747.01(B)
and 5747.01(HH).
This schedule and instructions apply to all individual taxpayers Line 1 – Schedule B, Interest and Ordinary Dividends
who have business income. This schedule is used for recording all Enter on this line only taxable interest and ordinary dividends
business income that is reported on IRS schedules B, C, D, E and reported on the federal Schedule B that qualify as business in-
F as well as any other items of business income and gain sepa- come. Generally, interest and dividend income can only qualify
rately stated on the federal Schedule K-1 and the federal 4797, as business income if it is generated from the regular course of
and miscellaneous federal income tax adjustments, if any. trade or business (i.e., the primary business purpose is invest-
ing) or if it is generated from working capital and reinvested into
Enter on this schedule the combined business income amounts the business.
from all sources. List the separate business entities on Part 4 on
the back of the schedule. Example: John reports $1,500 of interest income on his federal
Schedule B. $200 of this interest is reported to him on the Ohio
Submit the IT BUS with the paper-filed Ohio IT 1040. If you are K-1 from a pass-through entity in which he has an ownership
filing electronically, the IT BUS will be included in your software interest. This entity’s primary business purpose is generating
package. income through investments. The remainder of John’s interest
income is from personal, nonbusiness sources. John may only
ThisscheduleisonlyusedforindividualtaxpayersfilingtheOhioIT
report $200 on the Ohio IT BUS, line 1.
1040. Pass-through entities and trusts should not use this schedule.
Line 2 – Schedule C, Profit or Loss from Business
Definitions
Enter on this line the amount on your federal 1040, line 12. If the
Business Income and Nonbusiness Income amount entered is negative, place a “-“ in the box provided.
“Business income” means income, including gain or loss, aris-
ing from transactions, activities and sources in the regular Example: Sam has a sole proprietorship that reports a net loss of
-$15,000 on federal Schedule C. Sam’s wife Suzy has a sole pro-
course of a trade or business and includes income from real,
prietorshipthatreportsanetprofitof$10,000onfederalSchedule
tangible and intangible property if the acquisition, rental, man-
C. The net Schedule C income reported on Sam and Suzy’s fed-
agement and disposition of the property constitute integral parts
eral 1040, line 12 is -$5,000. Sam and Suzy must report -$5,000
of the regular course of a trade or business operation (R.C.
on the Ohio IT BUS, line 2.
5747.01(B)).
Business income can be determined by using either two tests: Line 3 – Schedule D, Capital Gains and Losses
Enter on this line only capital gains or losses reported on the fed-
Transactional Test: Looks to the nature, frequency and regularity eral Schedule D that qualify as business income. Gains or losses
of the transaction. reported on this line must be those that are generated in the or-
dinary course of business, from assets integral to the taxpayer’s
FunctionalTest:Wasthepropertyanintegralpartofthebusiness? business operation, or from working capital and reinvested into the
Didthepropertycontributetobusinessincomeinthepast? business. Gains or losses, from a partial or complete liquidation of
a business, including, but not limited to, gain or loss from the sale
See Kemppel v. Zaino, 91 Ohio St.3d 420 (2001). or other disposition of goodwill should also be included on this line.
Also, “business income” consists of income, including gain or If the amount entered is negative, place a “-“ in the box provided.
loss, from a partial or complete liquidation of a business, includ- Example: A farmer sells a tractor used in his wheat farming operation
ing, but not limited to, gain or loss from the sale or other disposi- that generates a capital gain. The wheat cannot be harvested without
tion of goodwill. the use of the tractor. Since the tractor was integral to the taxpayer’s
In general, income, deductions, gains and losses recognized by a business operations, the capital gain can be reported on this line.
sole proprietorship or a pass-through entity are items of business Example: Paul reports $8,000 of capital gain income on his federal
income. Schedule D. $2,000 of this income is reported to him on the Ohio K-1
“Nonbusiness income” means all income other than business in- from a pass-through entity in which he has an ownership interest.
come and may include, but is not limited to, compensation, rents This entity’s primary business purpose is generating income through
and royalties from real or tangible personal property, capital investments. The entity reports capital gains when selling its interest
gains, interest, dividends, distributions, patent or copyright royal- in an investment. The remainder of John’s capital gain income is from
ties, and lottery winnings, prizes and awards (R.C. 5747.01(C)). personal, nonbusiness sources. John may only report $2,000 on the
Nonbusinessincomeshouldbeexcludedfromthefiguresreport- Ohio IT BUS, line 3.
ed on this schedule. Line 4 – Schedule E, Supplemental Income and Loss
Enter on this line your net business income or loss reported on the
Business Income From IRS Schedules (Part 1)
federal Schedule E.
Important: Include on all lines only those items of business in-
come that are included in the calculation of federal adjusted gross If your net amount from the federal Schedule E includes guaran-
income.Forexample,lossesthatmustbecarriedforwardtofuture teed payments from a pass-through entity in which you have less
years due to federal rules should not be included on this schedule than a 20% direct or indirect ownership interest, those payments
for the current year. A taxpayer cannot simply list the amounts must be deducted from the amount entered on this line.
on these federal schedules on Ohio IT BUS.
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