CEO 74-42 -- November 1, 1974
GROSS INCOME DEFINED -- PRIVILEGE DIFFERENTIATED FROM LICENSE -- AVAILABILITY OF BUSINESS RECORDS FOR INCOME DISCLOSURE
To: Warren O. Tiller, County Attorney, Volusia County, DeLand
Prepared by: Patricia Butler
As explained in CEO 74-38, the term "gross income" as used in part III, Ch. 112, F. S., as amended by Ch. 74- 177, Laws of Florida, should be interpreted as for the purposes of federal income taxation. See Internal Revenue Code at 26 U.S.C.A. s. 61(a) and ss. 101-123; exclusions of certain items from gross income by the Florida Legislature are noted in s. 112.3145(1)(a), 106.08, and 111.011, F. S. The phrase "person or business entities provided a grant of privilege to operate" as defined in s. 112.312(6), F. S., does not include a business which merely receives an occupational license. Any person required to make disclosure under Ch. 74-177, supra, has legal right to examine the books and records of a partnership in which he or she owns an interest. Cf. ss. 620.65 and 620.655, F. S. Further, stockholders of a corporation have been recognized by Florida courts as having common-law right to examine books and records of a corporation for proper purposes; statutory duty such as financial disclosure should be proper purpose. Thus, public officers required to make financial disclosure under s. 112.3145, supra, have legal access to such information.
1. What income is included within the meaning of the term "gross income" as used in part III, Ch. 112, F. S., as amended by Ch. 74-177, Laws of Florida?
2. Does the phrase "business entity which is granted a privilege to operate," as used in s. 112.313(3), F. S., include a business which merely receives an occupational license?
3. In circumstances where a person making disclosure under Ch. 74-177, supra, is required to report the sources of certain income of a business in which he has an interest, how can he do so if he owns only a minority interest in the business and the owners of the majority interest refuse to provide him with the necessary information?
We have concluded in a previous opinion, CEO 74-39, that the term "gross income" as used in part III, Ch. 112, supra, should be given the same interpretation as is given to such term for purposes of Federal income taxation. A copy of that opinion is enclosed and will, we believe, answer your inquiry. You should note that the act specifically addresses "gross income" of a business entity in certain places within the act and in other places asks that one ascertain "gross income" of the public officer.
Question 2 is answered in the negative.
The phrase "[p]erson or business entities provided a grant of privilege to operate" is defined in s. 112.312(6), F. S., to include,
. . . state and federal chartered banks, state and federal savings and loan associations, cemetery companies, insurance companies, mortgage companies, credit unions, small loan companies, alcoholic and spirituous liquor businesses, whether retail or wholesale, pari-mutuel wagering companies, utility companies, and any entity controlled by the public service commission or granted a franchise to operate by either a city or county government. This definition shall not apply to persons or entities so categorized merely for purposes of public notice or to certify the . . . [quality] of professional or occupational services.
As thus defined, a "business entity which is granted a privilege to operate" would not include a business which merely receives an occupational license.
As to your third question, we cannot imagine that the problem you pose would occur with any frequency with respect to persons who own 10 percent or more of a business, but in any event it is clear that in this state such a person has a legal right to examine the books and records of the business in which he owns an interest. With respect to the books of a partnership, s. 620.65, F. S., provides that "every partner shall have access to and may inspect and copy any of them at all times." Further, s. 620.655, F. S., provides:
On demand partners shall render true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or partner under legal disability.
With respect to stockholders of a corporation, the Florida courts have recognized and given effect to the common-law right of a stockholder to examine the books and records of a corporation for proper purposes. See State ex rel. Fussell v. McLendon, 109 So.2d 783 (3 D.C.A. 1959); Florida Tel. Corp. v. State, 111 So.2d 677 (1 D.C.A. 1959). An examination of such books and records in order to comply with a statutory duty would certainly appear to be a proper purpose within the common-law doctrine permitting such examination.