Section 4. Allocation to the city

(a)  General.  If net earnings from
  self-employment are derived from services performed,  or  from  sources,
  within and without the city, there shall be allocated to the city a fair
  and equitable portion of such earnings.
    (b)  Allocation  of  net  earnings  from self-employment. (1) Place of
  business. If a taxpayer has no regular place  of  business  outside  the
  city  all of his net earnings from self-employment shall be allocated to
  the city.
    (2) Allocation by taxpayer's books. The portion of net  earnings  from
  self-employment  allocable  to the city may be determined from the books
  and records of a taxpayer's trade or business, if the  methods  used  in
  keeping  such  books  and the accuracy thereof are approved by the state
  tax commission as fairly and  equitably  reflecting  net  earnings  from
  self-employment within the city.
    (3)  Allocation  by  formula. If paragraph two of this subsection does
  not  apply  to  the  taxpayer,  the  portion  of   net   earnings   from
  self-employment allocable to the city shall be determined by multiplying
  (A)  net  earnings  from self-employment within and without the city, by
  (B) the average of the following three percentages:
    (i) Property percentage. The percentage computed by dividing  (I)  the
  average  of  the value, at the beginning and end of the taxable year, of
  real and tangible personal property connected with the net earnings from
  self-employment and located within the city, by (II) the average of  the
  value,  at  the  beginning  and end of the taxable year, of all real and
  tangible  personal  property  connected  with  the  net  earnings   from
  self-employment  and  located both within and without the city. For this
  purpose, real property shall include real  property,  whether  owned  or
  rented.
    (ii)  Payroll  percentage. The percentage computed by dividing (I) the
  total wages, salaries and other personal service  compensation  paid  or
  incurred during the taxable year to employees in connection with the net
  earnings  from  self-employment derived from a trade or business carried
  on within the city, by (II) the total of all wages, salaries  and  other
  personal  service  compensation paid or incurred during the taxable year
  to employees in connection with the net  earnings  from  self-employment
  derived  from a trade or business carried on both within and without the
  city.
    (iii) Gross income percentage. The percentage computed by dividing (I)
  the gross sales or charges for  services  performed  by  or  through  an
  agency  located within the city, by (II) 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 or other
  agencies of the trade or business from which a taxpayer is deriving  net
  earnings from self-employment, situated within the city.

    (c)  Other  allocation  methods.  The  portion  of  net  earnings from
  self-employment allocable to the city shall be determined in  accordance
  with  rules  and  regulations  of  the  state tax commission if it shall
  appear to the tax commission that the net earnings from  self-employment
  are   not  fairly  and  equitably  reflected  under  the  provisions  of
  subsection (b) of this section.
    (d) 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  subsection (b) or (c) of this section, but shall be considered as
  entirely derived from or connected with the place in which such property
  is located.