North Dakota Administrative Code

Any taxpayer entitled to claim a federal income tax deduction shall compute the deduction in accordance with this chapter. History: Effective July 1, 1989; amended effective May 1, 1991. 1 General Authority: NDCC 57-38-57 Law Implemented: NDCC 57-38-01.3…

Any taxpayer claiming a federal income tax deduction shall compute federal income tax liability on income which is taxable in North Dakota in the following manner: 1. Consolidated federal income tax liability. XXX 2. Separate company pro forma federal income tax liability for all…

1. Any taxpayer that is filing as a member of a worldwide unitary group and claiming a foreign tax credit on its federal return shall compute its federal income tax deduction by multiplying the result of subsection 10 of section 81-03-05.4-03 by the federal income tax ratio. Howe…

1. If members of a unitary group filed more than one federal income tax return, subsections 1 through 10 in section 81-03-05.4-03 must be repeated for each federal income tax return and the result totaled before application of the income tax ratio or apportionment factor in 81-03…

Repealed effective June 1, 2002.

The following provisions are applicable for purposes of interpreting subdivision c of subsection 1 of North Dakota Century Code section 57-38-01.3: 1. Definitions. The following definitions are applicable in computing a taxpayer's federal alternative minimum tax deduction: a. "Ap…

The sections in this chapter are intended to set forth rules concerning the application of the apportionment and allocation provisions of the Uniform Division of Income for Tax Purposes Act, North Dakota Century Code chapter 57-38.1, and article IV of the multistate tax compact, …

As used in this chapter, unless the context otherwise requires: 1. "Allocation" refers to the assignment of nonbusiness income to a particular state. 2. "Apportionment" refers to the division of business income between states by the use of a formula containing apportionment facto…

Subsection 1 of North Dakota Century Code section 57-38.1-01 and article IV(1)(a) of North Dakota Century Code section 57-59-01 define "business income" as income arising from transactions and activity in the regular course of the taxpayer's trade or business and includes income …

A taxpayer may have more than one "trade or business". In such cases, it is necessary to determine the business income attributable to each separate trade or business. The income of each business is then apportioned by an apportionment formula which takes into consideration the i…

Repealed effective November 1, 1991.

In most cases an allowable deduction of a taxpayer will be applicable only to the business income arising from a particular trade or business or to a particular item of nonbusiness income. In some cases an allowable deduction may be applicable to the business income of more than …

If the business activity in respect to any trade or business of a taxpayer occurs both within and without this state, and if by reason of such business activity the taxpayer is taxable in another state, the portion of the net income or net loss arising from such trade or business…

If a particular trade or business carried on by a taxpayer and one or more affiliated corporations, nothing in either North Dakota Century Code chapter 57-38.1 or North Dakota Century Code chapter 57-59 or in this article shall preclude the use of a "combined report" whereby the …

Any taxpayer subject to the taxing jurisdiction of this state shall allocate all of the taxpayer's nonbusiness income or loss within or without this state in accordance with North Dakota Century Code sections 57-38.1-04 through 57-38.1-08 or article IV(4) through IV(8) of North D…

In filing returns with this state, if the taxpayer departs from or modifies the manner in which income has been classified as business income or nonbusiness income in returns for prior years, the taxpayer shall disclose in the return for the current year, the nature and extent of…

Under both North Dakota Century Code section 57-38.1-02 and article IV(2) of North Dakota Century Code section 57-59-01, the taxpayer is subject to the allocation and apportionment provisions of North Dakota Century Code chapter 57-38.1 and article IV of North Dakota Century Code…

1. A taxpayer is "subject to" one of the taxes specified in either subsection 1 of North Dakota Century Code section 57-38.1-03 or article IV(3)(a) of North Dakota Century Code section 57-59-01 if the taxpayer carries on business activity in such state and such state imposes such…

a net income tax. The second test, that of either subsection 2 of North Dakota Century Code section 57-38.1-03 or article IV(3)(b) of North Dakota Century Code section 57-59-01 applies if the taxpayer's business activity is sufficient to give the state jurisdiction to impose a ne…

All business income of each trade or business of the taxpayer shall be apportioned to this state by use of the apportionment formula set forth in either North Dakota Century Code section 57-38.1-09 or article IV(9) of North Dakota Century Code section 57-59-01. The elements of th…

The property factor of the apportionment formula for each trade or business of the taxpayer shall include all real and tangible personal property owned or rented by the taxpayer and used during the tax period in the regular course of such trade or business. The term "real and tan…

Property shall be included in the property factor if it is actually used or is available for or capable of being used during the tax period in the regular course of the trade or business of the taxpayer. Property held as reserves or standby facilities or property held as a reserv…

In filing returns with this state, if the taxpayer departs from or modifies the manner of valuing property, or of excluding or including property in the property factor, used in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and…

The numerator of the property factor shall include the average value of the real and tangible personal property owned or rented by the taxpayer and used in this state during the tax period in the regular course of the trade or business of the taxpayer. Property in transit between…

1. Property owned by the taxpayer shall be valued at its original cost. As a general rule "original cost" is deemed to be the basis of the property for federal income tax purposes, prior to any federal adjustments, at the time of acquisition by the taxpayer and adjusted by subseq…

1. Property rented by the taxpayer is valued at eight times its net annual rental rate. The net annual rental rate for any item of rented property is the annual rental rate paid by the taxpayer 9 for such property, less the aggregate annual subrental rates paid by subtenants of t…

As a general rule, the average value of property owned by the taxpayer shall be determined by averaging the values at the beginning and ending of the tax period. However, the tax commissioner may require or allow averaging by monthly values if such method of averaging is required…

Intangible drilling and development costs incurred by oil and gas producing companies in connection with oil and gas properties must be included in the property factor. Intangible drilling and development costs include such elements as wages, fuel, repairs, hauling, draining, roa…

1. The payroll factor of the apportionment formula for each trade or business of the taxpayer shall include the total amount paid by the taxpayer in the regular course of its trade or business for compensation during the tax period. 2. The total amount "paid" to employees is dete…

The denominator of the payroll factor is the total compensation paid everywhere during the tax period. Accordingly, compensation paid to employees whose services are performed entirely in a state where the taxpayer is immune from taxation, for example, by Public Law 86-272, is in…

The numerator of the payroll factor is the total amount paid in this state during the tax period by the taxpayer for compensation. The tests in either North Dakota Century Code section 57-38.1-14 or article IV(14) of North Dakota Century Code section 57-59-01 to be applied in det…

Compensation is paid in this state if any one of the following tests, applied consecutively, are met: 1. The employee's service is performed entirely within the state. 2. The employee's service is performed both within and without the state, but the service performed without the …

1. Subsection 7 of North Dakota Century Code section 57-38.1-01 defines the term "sales" to mean all gross receipts of the taxpayer not allocated under North Dakota Century Code sections 57-38.1-04 through 57-38.1-08 and article IV(1)(g) of North Dakota Century Code section 57-59…

The denominator of the sales factor shall include the total gross receipts derived by the taxpayer from transactions and activity in the regular course of its trade or business, except receipts excluded under section 81-03-09-34. History: Amended effective March 1, 1988. General …

The numerator of the sales factor shall include gross receipts attributable to this state and derived by the taxpayer from transactions and activity in the regular course of its trade or business. All interest income, service charges, carrying charges, or time-price differential …

1. Gross receipts from sales of tangible personal property, except sales to the United States government, see section 81-03-09-30, are in this state: a. If the property is delivered or shipped to a purchaser within this state regardless of the free on board point or other conditi…

in this state. Gross receipts from sales of tangible personal property to the United States government are in this state if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state. For the purposes of this section, only sales for…

1. In general. Both North Dakota Century Code section 57-38.1-17 and article IV(17) of North Dakota Century Code section 57-59-01 provide for the inclusion in the numerator of the sales factor of gross receipts from transactions other than sales of tangible personal property, inc…

Both North Dakota Century Code section 57-38.1-18 and article IV(18) of North Dakota Century Code section 57-59-01 provide that if the other allocation and apportionment provisions of either North Dakota Century Code chapter 57-38.1 or article IV of North Dakota Century Code chap…

The following special subsections are established in respect to the property factor of the apportionment formula: 1. If the subrents taken into account in determining the net annual rental rate under section 81-03-09-20 produce a negative or clearly inaccurate value for any item …

The following special subsections are established in respect to the sales factor of the apportionment formula: 1. Where substantial amounts of gross receipts arise from an incidental or occasional sale of a fixed asset used in the regular course of the taxpayer's trade or busines…

The following special rules are established in respect to railroads: 1. In general. Where a railroad has income from sources both within and without this state, the amount of business income from sources within this state must be determined pursuant to this section. In such cases…

The following special rules are established with respect to airlines: 1. In general. Where an airline has income from sources both within and without this state, the amount of business income from sources within this state shall be determined pursuant to 24 North Dakota Century C…

The following special rules are established with respect to trucking companies: 1. In general. As used in this section, the term "trucking company" means a motor common carrier, a motor contract carrier, or an express carrier which primarily transports tangible personal property …

The following special rules are established in respect to the apportionment of income from television and radio broadcasting by a broadcaster that is taxable both in this state and in one or more other states. 1. In general. When a person in the business of broadcasting film or r…

The following special rules are established with respect to the apportionment of income derived from the publishing, sale, licensing, or other distribution of books, newspapers, magazines, periodicals, trade journals, or other printed material. 1. In general. Except as specifical…

Except as otherwise specifically provided, a financial institution whose business activity is taxable both within and without this state shall allocate and apportion its net income as provided in this chapter. The provisions of North Dakota Century Code chapter 57-38.1, including…

As used in this chapter, unless the context otherwise requires: 1. "Billing address" means the location indicated in the books and records of the taxpayer on the first day of the taxable year, or on a later date in the taxable year when the customer relationship began, as the add…

1. General. The property factor is a fraction, the numerator of which is the average value of real property and tangible personal property rented to the taxpayer that is located or used within this state during the taxable year, the average value of the taxpayer's real and tangib…

1. General. The receipts factor is a fraction, the numerator of which is the receipts of the taxpayer in this state during the taxable year and the denominator of which is the receipts of the taxpayer within and without this state during the taxable year. The method of calculatin…