Eaton v. Limbach

R.C. 5747.01(A), during the audit period, defined “adjusted gross income,” on which the Ohio income tax is levied (see R.C. 5747.02), as follows:

“ ‘Adjusted gross income’ means adjusted gross income as that term is defined and used in the Internal Revenue Code * * *, and excludes any amounts of income included in adjusted gross income by reason of Subchapter S, Chapter 1, Subtitle A, of the Internal Revenue Code, 26 U.S.C. 1371. *****

The Eatons argue that the statute allows them to deduct all Subchapter S income allocated to them and that this prevents double taxation of Subchapter S income.…