HB 138 Summary

• Amends Ohio tax code section 5747.01 to classify guaranteed payments from pass-through entities as business income, regardless of the investor's ownership percentage in the entity.

• Requires three conditions for the classification: the entity must be engaged in a trade or business, the guaranteed payment must be treated as net self-employment earnings under federal tax code section 1402, and the individual must report it as self-employment income for federal purposes.

• Defines "guaranteed payments" by reference to section 707(c) of the Internal Revenue Code and related federal treasury regulations.

• Applies retroactively as a remedial clarification to pending reassessment petitions, refund applications, and audits by the Ohio Department of Taxation.