Lancaster Colony Corp. v. Limbach

I

Independent Contractor as “Employee”

The franchise tax is levied on a corporation’s exercise of its franchise privileges in Ohio. R.C. 5733.01(A). The tax is the greater of the amounts calculated under either the net income method or the net worth method. R.C. 5733.06 and 5733.05(A) and (B).

R.C. 5733.05(B) provides for the net income computation. Income that cannot be allocated to Ohio under R.C. 5733.051 is apportioned under R.C. *1995733.05(B)(2). This is done by applying a three-factor formula designed to represent the extent of a taxpayer’s business activity in Ohio. The formula consists…