§ 23-10. Exclusions and deductions from total gross receipts.

(a)

General rule. Gross receipts for license tax and fee purposes shall include only those receipts derived from the exercise of a licensable privilege to engage in a business.

(b)

The following items shall be excluded from total gross receipts:

(1)

Amounts received and paid to the United States, the Commonwealth or any county, city or town for the Virginia retail sales or use tax, or for any local sales or excise tax, or any federal or state excise tax on motor fuels.

(2)

Any amount representing the liquidation of a debt or conversion of another asset to the extent that the amount is attributable to a transaction previously taxed (e.g., the factoring of accounts receivable created by sales which have been included in taxable receipts even though the creation of such debt and factoring are a regular part of the business).

(3)

Any amount representing returns and allowances granted by the licensee to its customer.

(4)

Receipts which are the proceeds of a loan transaction in which the licensee is the obligor.

(5)

Receipts representing the return of principal of a loan transaction in which the licensee is the creditor, or the return of principal or basis upon the sale of a capital asset.

(6)

Rebates and discounts taken or received on account of purchases by the licensee. A rebate or other incentive offered to induce the recipient to purchase certain goods or services from a person other than the offeror, and which the recipient assigns to the licensee in consideration of the sale of goods and services shall not be considered a rebate or discount to the licensee, but shall be included in the licensee's total gross receipts together with any handling or other fees related to the incentive.

(7)

Withdrawals from inventory for purposes other than sale or distribution for which no consideration is received, and the occasional sale or exchange of assets other than inventory, whether or not a gain or loss is recognized for federal income tax purposes.

(8)

Investment income not directly related to the privilege exercised by a licensable business not classified as rendering financial services. This exclusion shall apply to interest on bank accounts of the business, and to interest, dividends and other income derived from the investment of its own funds in securities and other types of investments unrelated to the licensed privilege. This exclusion shall not apply to interest, late fees and similar income attributable to an installment sale or other transaction that occurred in the regular course of business.

(9)

In computing license taxes and fees on an advertising agency business, the total gross receipts of the business shall exclude amounts paid by the licensee for any client or customer to the media for advertising. The advertising agency business will be permitted such exclusion, provided said amount is not converted to such agency's use in any way.

(c)

The following shall be deducted from total gross receipts or total gross purchases that would otherwise be taxable:

(1)

Any amount paid for computer hardware and software that is sold to a United States federal or state government agency provided that such property was purchased within two (2) years of the sale to said agency by the original purchaser who shall have been contractually obligated at the time of purchase to resell such property to a state or federal government agency. This deduction shall not occur until the time of resale and shall apply to only the original cost of the property and not to its resale price, and the deduction shall not apply to any of the tangible personal property which was the subject of the original resale contract if it is not resold to a state or federal government agency in accordance with the original contract obligation.

(2)

Any receipts attributable to business conducted in another state or foreign country in which the taxpayer is liable for an income or other tax based upon income.

(Ord. No. 4969-96, § 1)

(Ord. No. 4969-96, § 1)