The District of Columbia imposes a tax on the net income of unincorporated businesses with gross receipts more than $12,000. This is different from the federal rule that disregards a sole proprietorship as an entity for tax purposes. However, a 30 percent salary allowance for owners and a $5,000 exemption are deductible from net income to arrive at taxable income. Also, a business is exempt if more than 80 percent of gross income is derived from personal services rendered by the members of the entity and capital is not a material income-producing factor. A trade, business or professional organization that by law, customs or ethics cannot be incorporated is exempt.