North Carolina Administrative Code

SECTION .0500 – COMBINED RETURNS 17 NCAC 05F .0501 METHODOLOGY WHEN COMBINed ReTURN REQUIRED OR PERMITTED When the Secretary requires or allows a corporate taxpayer to submit a combined return, the following methodology applies: (1) The starting point is the federal taxable incom…

17 NCAC 05F .0502 PROCEDURES FOR FILING A COMBINED INCOME TAX RETURN (a) The principal member shall file Form CD-405, The North Carolina C Corporation Tax Return, and all required schedules. The combined tax return replaces the separate entity corporate income tax returns filed b…

17 NCAC 05F .0503 COMBINED RETURN TAX CREDITS (a) Any member of the combined group that has activities that qualify for a North Carolina income tax credit shall provide all required information to determine and support the amount of the credit on a separate company basis. This in…

SECTION .0600 – FRANCHISE TAX RETURN 17 NCAC 05F .0601 PROCEDURES FOR FILING A FRANCHISE TAX RETURN (a) The provisions of this Rule apply unless the Secretary authorizes a combined group to file a combined franchise tax return under G.S. 105-122. Each corporation that is doing bu…

SUBCHAPTER 05G – MARKET-BASED SOURCING FOR APPORTIONMENT OF INCOME SECTION .0100 – GENERAL RULES 17 NCAC 05G .0101 scope The rules in this Subchapter shall not apply to receipts from the sale of tangible personal property. Other receipts are in North Carolina when the taxpayer's …

17 NCAC 05G .0102 DEFINITIONS In addition to the definitions in G.S. 105-130.4, as used in this Subchapter, the following definitions shall apply: (1) "Billing address" means the location stated in the books and records of the taxpayer as the primary mailing address relating to a…

Section .0200 – general principles of application 17 NCAC 05g .0201 assignment of receipts from sales of other than tangible personal property A taxpayer's assignment of receipts from sales other than of tangible personal property shall comply with the following: (1) A taxpayer s…

section .0300 – rules of reasonable approximation 17 NCAC 05g .0301 In general The rules of this Subchapter set forth the process of reasonable approximation that apply if the state or states of assignment cannot be determined. In some instances, the reasonable approximation shal…

17 NCAC 05g .0302 approximation based upon known sales When, by applying the rules set forth in Sections .0900 through .1000 of this Subchapter, a taxpayer can ascertain the state or states of assignment of a substantial portion of its receipts from sales of substantially similar…

17 NCAC 05g .0303 related entity transactions Where a taxpayer has receipts subject to this Subchapter from transactions with a related entity customer, information that the customer has regarding the sourcing of receipts from these transactions shall be imputed to the taxpayer. …

section .0400 – exclusion of receipts from the sales factor 17 NCAC 05g .0401 Allocated Gross receipts The sales factor includes only gross receipts of the taxpayer that are not allocated under G.S. 105-130.4, and are received from transactions and activity in the regular course …

17 NCAC 05g .0402 Unassignable gross receipts When a taxpayer is unable to ascertain the state or states where receipts of a sale are to be assigned pursuant to the rules set forth in this Subchapter using a reasonable amount of effort undertaken in good faith, the receipts shall…

section .0500 - changes in methodology 17 NCAC 05G .0501 Alternative Apportionment Nothing in this Subchapter limits the application of G.S. 105-122(c1)(2) or G.S. 105-130.4(t1). If the application of this Subchapter results in the assignment of receipts to the taxpayer's sales f…

17 NCAC 05G .0502 original returns When a taxpayer files an original return for a taxable year where it properly assigns its receipts using a method of assignment, including a method of reasonable approximation, in accordance with the rules in this Subchapter, the application of …

17 NCAC 05G .0503 Secretary's authority to adjust a taxpayer's return The Secretary's ability to review and adjust a taxpayer's assignment of receipts on a return to assign receipts consistent with the rules of this Subchapter, includes each of the following potential actions: (1…

17 NCAC 05G .0504 taxpayer authority to change a method of assignment on a prospective basis A taxpayer that seeks to change its method of assigning its receipts shall disclose, in the original return filed for the year of the change, the fact that the taxpayer has made the chang…

17 NCAC 05G .0505 Secretary authority to change a method of assignment on a prospective basis The Secretary may direct a taxpayer to change its method of assigning its receipts in tax returns that have not yet been filed, including changing the taxpayer's method of approximation,…

section .0600 - further guidance 17 NCAC 05G .0601 examples (a) The Secretary shall publish on the Department's website examples demonstrating the application of rules set forth in this Subchapter. The document shall be available at www.ncdor.gov. (b) The Secretary may issue furt…

SECTION .0700 – SALE OF A SERVICE 17 NCAC 05g .0701 IN GENERAL (a) The receipts from a sale of a service shall be in North Carolina to the extent that the service is delivered to a location in North Carolina. The term "delivered to a location" refers to the location of the taxpay…

section .0800 – sale of in-person services 17 NCAC 05g .0801 in general (a) Except as otherwise provided in this Section, "in-person services" are services that are physically provided in person by the taxpayer, where the customer or the customer's real or tangible property upon …

17 NCAC 05g .0802 assignment of receipts from sale of in-person services Receipts from a sale of in-person services shall be assigned to North Carolina to the extent the customer received the service in North Carolina. The taxpayer shall determine the location where a service is …

17 NCAC 05g .0803 reasonable approximation When the taxpayer cannot determine the state or states where a service was received pursuant to Rule .0802 of this Section, but the taxpayer has information regarding the location of receipt from which the taxpayer can reasonably approxi…

section .0900 - services delivered to a customer or on behalf of the customer, or delivered electronically through the customer 17 NCAC 05g .0901 in general (a) If the service provided by the taxpayer is not an in-person service as defined in Rule .0801 of this Subchapter or a pr…

17 NCAC 05g .0902 assignment of receipts from sales of services delivered to the customer or on behalf of the customer, or delivered electronically through the customer (a) The assignment of receipts to a state or states when a sale of a service is delivered to the customer or on…

17 NCAC 05g .0903 delivery to or on behalf of a customer by physical means, whether to an individual or business customer (a) Services delivered to a customer or on behalf of a customer through a physical means include: (1) product delivery services where property is delivered to…

17 NCAC 05g .0904 delivery to customer by electronic transmission (a) Services delivered by electronic transmission include services that are transmitted through the means of wire, lines, cable, fiber optics, electronic signals, satellite transmission, audio or radio waves, or ot…

17 NCAC 05g .0905 services delivered electronically through or on behalf of an individual or business customer When a service is delivered electronically "on behalf of" or "through" a customer as defined in Rule .0901 of this Subchapter, the methodology provided under this Rule a…

section .1000 - PROFESSIONAL SERVICES 17 NCAC 05g .1001 in general (a) Except as otherwise provided in this Subchapter, "professional services" are services that require specialized knowledge and may require a professional certification, license, or degree. These services include…

17 NCAC 05g .1002 Overlap with Other Categories of Services (a) Certain services that fall within the definition of "professional services" set forth in this Section shall be treated as "in-person services" within the meaning of Section .0800 of this Subchapter, and shall be assi…

17 NCAC 05G .1003 Assignment of Receipts The location of delivery of professional services shall not be determined by a general rule of determination, but shall be reasonably approximated. The assignment of receipts from a sale of a professional service depends on whether the cus…

17 NCAC 05g .1004 professional services other than architectural or engineering services Receipts from sales of professional services other than those services described in Rules .1005 - .1006 of this Section, shall be assigned as follows: (1) Professional Services Delivered to I…

17 NCAC 05g .1005 architectural or engineering services with respect to Real or Tangible Personal Property (a) Architectural and engineering services with respect to real or tangible personal property shall be professional services within the meaning of this Section. The receipts…

17 NCAC 05G .1006 Related entity transactions When the professional service is sold to a related entity, rather than applying the rule for professional services delivered to business customers in Rule .1004(2) of this Section, the state or states where the service is assigned is …

section .1100 – license or lease of intangible property 17 NCAC 05g .1101 In General (a) The receipts from the license of intangible property shall be assigned to North Carolina to the extent the intangible is used in North Carolina. The term "use" shall refer to the location of …

17 NCAC 05G .1102 License of a Marketing intangible (a) If a license is granted for the right to use intangible property in connection with the sale, lease, license, or other marketing of goods, services, or other items, such as a marketing intangible, to a consumer, the royaltie…

17 NCAC 05g .1103 License of a production Intangible (a) Where a license is granted for the right to use intangible property, other than in connection with the sale, lease, license, or other marketing of goods, services, or other items, and the license will be used in a productio…

17 NCAC 05g .1104 License of a mixed Intangible Where a license of intangible property includes both a license of a marketing intangible and a license of a production intangible (a "mixed intangible") and the fees to be paid in each instance are separately and reasonably stated i…

17 NCAC 05g .1105 License of Intangible property when substance of the transaction resembles a sale of goods or services (a) When the license of intangible property resembles the sale of an electronically-delivered good or service, rather than the license of a marketing intangibl…

section .1200 – sale of intangible property 17 NCAC 05g .1201 assignment of receipts The assignment of receipts to a state or states in the instance of a sale or exchange of intangible property depends upon the nature of the intangible property sold. For purposes of this Section,…

section .1300 – special rules 17 NCAC 05g .1301 software transactions (a) A license or sale of pre-written software for purposes other than commercial reproduction, or other exploitation of the intellectual property rights, transferred on a tangible medium shall be treated as the…

17 NCAC 05g .1302 sales oR licenses oF digital goods and services The receipts from the sale or license of digital goods or services, including the sale of video, audio, and software products or similar transactions, shall be assigned by applying the same provisions set forth in …

17 NCAC 05g .1303 telecommunications companies (a) When a taxpayer that provides telecommunications or ancillary services that are subject to Multistate Tax Commission Reg. IV.18(i), receipts from the sale or license of digital goods or services not otherwise assigned for apporti…

section .0100 - FILING INDIVIDUAL INCOME TAX RETURNS 17 NCAC 06B .0101 FORMS History Note: Authority G.S. 105-155; 105-262; Eff. February 1, 1976; Amended Eff. October 1, 1991; Repealed Eff. August 1, 2002.

17 NCAC 06B .0102 GENERAL Careful attention should be given to the answering of all questions and to the completion of all applicable schedules on the return. Incomplete or inaccurate information, or the failure to sign a return, may result in the returning of the forms to the ta…

17 NCAC 06B .0103 COMBINED RETURNS History Note: Authority G.S. 105-152(e); 105-262; Eff. February 1, 1976; Amended Eff. February 4, 1978; Repealed Eff. June 1, 1990.

17 NCAC 06B .0104 completing a return (a) A taxpayer shall use the North Carolina income tax return forms and schedules for the year that his or her taxable year begins. (b) A person who files an income tax return for an unmarried individual who died during the taxable year shall…

17 NCAC 06B .0105 REPRODUCED COPIES History Note: Authority G.S. 105-155; 105-251; 105-252; 105-262; Eff. February 1, 1976; Amended Eff. June 1, 1993; May 1, 1984; Repealed Eff. July 1, 2000.

17 NCAC 06B .0106 FEDERAL FORMS A taxpayer whose federal return reflects an address outside of North Carolina shall attach a copy of the federal return to the taxpayer's North Carolina return. History Note: Authority G.S. 105-153.8; 105-155; 105-251; 105-252; 105-262; Eff. Februa…

17 NCAC 06B .0107 EXTENSIONS (a) Application. -- If an income tax return cannot be filed by the due date, a taxpayer may apply for an automatic six-month extension of time to file the return. To receive the extension, an individual shall file Form D-410, Application for Extension…

17 NCAC 06B .0108 AMENDED RETURNS History Note: Authority G.S. 105-156; 105-159; 105-262; Eff. June 1, 1982; Amended Eff. May 1, 1984; Pursuant to G.S. 150B-21.3A, rule Expired August 1, 2015.