§ 107. Allocation to the city. (a) General.--If an unincorporated
business is carried on both within and without the city, as determined
under regulations of the director of finance, there shall be allocated
to the city a fair and equitable portion of the excess of its
unincorporated business gross income over its unincorporated business
deductions. If the unincorporated business has no regular place of
business outside the city, all of such excess shall be allocated to the
city.

(b) Allocation by taxpayer's books.--The portion allocable to the city
may be determined from the books of the business if the methods used in
keeping such books are approved by the director of finance as fairly and
equitably reflecting the income from the city.

(c) Allocation by formula.--If subdivision (b) does not apply to the
taxpayer, the portion allocable to the city shall be determined by
multiplying (A) the excess of its unincorporated business gross income
over its unincorporated business deduction, by (B) the average of the
following three percentages:

(1) Property percentage.--The percentage computed by dividing (A) the
average of the value, at the beginning and end of the taxable year, of
real and tangible personal property connected with the unincorporated
business and located within the city, by (B) the average of the value,
at the beginning and end of the taxable year, of all real and tangible
personal property connected with the unincorporated business and located
both within and without the city. For this purpose, real property shall
include real property rented to the unincorporated business.

(2) Payroll percentage.--The percentage computed by dividing (A) the
total wages, salaries and other personal service compensation paid or
incurred during the taxable year to employees in connection with the
unincorporated business carried on within the city, by (B) the total of
all wages, salaries and other personal service compensation paid or
incurred during the taxable year to employees in connection with the
unincorporated business carried on both within and without the city.

(3) Gross income percentage.--The percentage computed by dividing (A)
the gross sales or charges for services performed by or through an
agency located within the city, by (B) the total of all gross sales or
charges for services performed within and without the city. The sales or
charges to be allocated to the city shall include all sales negotiated
or consummated, and charges for services performed, by an employee,
agent, agency or independent contractor chiefly situated at, connected
by contract or otherwise with, or sent out from, offices of the
unincorporated business, or other agencies, situated within the city.

(d) Other allocation methods.--The portion allocable to the city shall
be determined in accordance with rules and regulations of the director
of finance if it shall appear to the director of finance that the income
from the city is not fairly and equitably reflected under the provisions
of either subdivision (b) or subdivision (c).

(e) Special rules for real estate.--Income and deductions from the
rental of real property, and gain and loss from the sale, exchange or
other disposition of real property, shall not be subject to allocation
under subdivisions (b), (c), or (d), but shall be considered as entirely
derived from or connected with the state, other than this state, in
which such property is located or, if such property is located in this
state, the political subdivision thereof.