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                                                    2021

                                             NORTH DAKOTA

                                 CORPORATE INCOME TAX

                                                    FORM 40

                                                    INSTRUCTIONS

Photo credit: 
ND Tourism

              Tax forms, guidelines, FAQs, and more 
              are available at www.nd.gov/tax.

              Email questions to corptax@nd.gov.

                                                RYAN RAUSCHENBERGER

                                                    Tax Commissioner

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                               New for 2021

Changes to corporate income tax credits -
A summary of the 2021 legislative changes affecting corporate income tax credits is below. See 
the 2021 Corporate Income Tax Credit instruction booklet on our website for additional details.

Contributions to nonprofit private schools - limitation increased
The three existing credits for contributions to nonprofit private schools (primary education, 
secondary education, and higher education) each have a limit based on tax. This limitation 
for each tax credit was raised from 25% to 50% of the tax. Current law provides this new 
limit for tax years 2021 and forward.

Credit for employment of individuals with development disability or severe mental 
illness - 
The 2021 Legislature extended the existing provisions of this tax credit for two additional 
years, through 2022.

Other business tax changes -

Wage Withholding - Beginning with first quarter 2022 returns (due April 30, 2022), all 
quarterly wage withholding returns must be filed and paid electronically. Also, the annual 
withholding tax threshold to allow for annual filings instead of quarterly was increased from 
$500 to $1,000.

Information Returns (Forms 1099 and Form W-2) - Applicable for tax year 2022 filings 
(due January 31, 2023), the annual information return transmittal and attachments must be 
filed electronically. Prior to 2021, electronic filing requirements only applied to businesses 
with ten or more information returns.

Passthrough Entities - Beginning with tax year 2022 (due in 2023), any passthrough entity 
with ten or more owners will be required to electronically file its North Dakota income tax 
return. This applies to a partnership or LLC filing Form 58, an S Corporation filing Form 60, 
and a fiduciary filing Form 38.

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                    Special Reminders

Sales factor weighting - apportioning corporations
Existing provisions allow a corporation the option to make an election (for a term of five tax years) to use 
a more heavily weighted sales factor in its apportionment formula.  For tax year 2021 and any subsequent 
year, any corporation covered by a previous or new election will use a 100% weighted sales factor.   See the 
instructions on page 7 for more information.

Tax Department’s Website - www.nd.gov/tax
We encourage you to visit our website for additional information regarding tax credits, tax forms, news releases, 
to make a payment, or to print a payment voucher. Corporation information is located under the For Businesses 
tab on the home page. Any news affecting corporate income tax will be summarized in a practitioners’ income 
tax newsletter, which is available on our website.

Payment Voucher Requirement
A payment voucher is required for all corporate income tax payment types that are mailed to the Office of State 
Tax Commissioner. Payment voucher Form 40-PV is required for taxpayers filing a paper return and paying by 
check or money order. The vouchers are available on our website at www.nd.gov/tax/payment 

Federal Due Dates and Extensions
Corporation due dates for the Form 40 are found on page 1 of the instructions. The extension of time to file a 
federal return is automatically accepted by North Dakota as an extension of time to file the state return for the 
same period plus one additional month, which for a corporation with a calendar year-end would be November 
15th. To extend the due date of the North Dakota return, mark the circle on the return and attach a copy of the 
federal extension.

Income Tax Withheld
A partnership is not allowed to withhold income tax on the distributive earnings of a C corporation. If income 
tax was withheld in error and reported on a K-1 received from a partnership, the withheld amount cannot be 
claimed on Form 40. Contact the partnership to correct the error.

Filing Attachments 
All required schedules and a complete copy of the federal income tax return must be included with the North 
Dakota return regardless of whether it is filed electronically or on paper. The Modernized e-file (MeF) program 
continues to be available for electronically filing your North Dakota original return. If a required attachment or 
schedule is not included with the software, it must be attached as a PDF to the return submission. PDF examples 
might include a Property Tax Clearance Record, North Dakota credit computation schedules, or the Federal 
Extension Form 7004.

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 Page 1                                                            2021 North Dakota Corporation Income Tax Return Instructions      

                                                   Privacy Act Notification. In compliance with the      If a federal extension is not obtained, or if an 
                                                   Privacy Act of 1974, disclosure of a social security  extension of time beyond the time period covered 
  General instructions                             number or Federal Employer Identification Number      by a federal extension is needed, a North Dakota 
                                                   (FEIN) on this form is required under N.D.C.C.        extension may be obtained by completing and 
Who must file                                      §§ 57-01-15 and 57-38-32, and will be used for        filing North Dakota Form 101 prior to the due 
Every corporation engaged in business in North     tax reporting, identification, and administration of  date of the return. This form may be obtained by 
                                                   North Dakota tax laws. Disclosure is mandatory. 
Dakota or having income from North Dakota          Failure to provide the social security number or      contacting our office.
sources must file a North Dakota Corporation       FEIN may delay or prevent the processing of this      An extension of time to file a North Dakota return 
Income Tax Return, Form 40.                        form.
                                                                                                         does not extend the time for payment of the tax, 
For example, a North Dakota Form 40 must be        Upon request from Legislative Management, the         and extension interest at the rate of 12% per 
filed by:                                          Tax Department is allowed to share the amount of      annum will apply to any payment made after the 
                                                   any tax deduction or tax credit claimed or earned     regular due date of the state tax return. Penalty 
•  Corporations, including business trusts,        by a taxpayer. Disclosure of the taxpayer’s name,     does not apply to tax paid within the extension 
 associations, and joint-stock companies;          federal identification number, or other confidential  period.
•  Cooperative corporations distributing their net information is not permitted.                         Extension payments must be accompanied by 
 income through patronage dividends;                                                                     Form 40-EXT identifying the name, address, and 
                                                                                                         FEIN of the taxpayer. The form can be found 
•  Insurance companies conducting business         Due date                                              on our website. Alternatively, a letter containing 
 activities not subject to a gross premiums tax;   A calendar year corporation filing Form 40 must       the above information along with a copy of the 
•  Tax-exempt organizations having unrelated       file on or before April 15 following the close of the approved state extension of time to file may be 
 business taxable income; Note - A tax-exempt      calendar year.                                        submitted with the prepayment of tax due.
 fiduciary trust that filed a Form 1041 to report 
 the trust’s unrelated business taxable income     A corporation reporting on a fiscal year basis must 
 must file North Dakota Form 38;                   file on or before the 15th day of the fourth month    Payment of tax
                                                   following the close of the fiscal year. Use the 2021 
•  Organizations that anticipate receiving a tax   Form 40 for fiscal years that begin in 2021 and end   If tax due is less than $5, payment need not be 
 exempt status notification from the IRS, but      in 2022.                                              made. If tax is due, the total payment due must be 
 have not actually received such notification by                                                         paid at the time of, or before, the return is filed. 
 the end of the taxable year.                      A cooperative must file on or before the 15th         Payment made by check should be made payable 
                                                   day of the ninth month following the close of         to the North Dakota State Tax Commissioner and 
Except as provided under “Exception for certain    the calendar or fiscal year. Answer “Yes” to          be mailed with payment voucher Form 40PV.
S corporations” below, a corporation that files    Question #4 on page 2.
Federal Form 1120S must file Form 60, North                                                              Payment may be made electronically using an 
Dakota S Corporation Income Tax Return.            Tax-exempt organizations required to file an          ACH debit, ACH credit, credit card, debit card, or 
                                                   income tax return to report unrelated business        electronic check. To learn more, visit our website 
Exception for certain S corporations. An           taxable income must file a corporation income tax     at www.nd.gov/tax/payment. 
S corporation must file Form 40, North Dakota      return on or before the 15th day of the fifth month 
Corporation Income Tax Return, if all the          after the tax year ends.                              Payment in the form of a check drawn on an 
following apply:                                                                                         international bank, except Canada, cannot be 
                                                                                                         accepted. A check must be drawn on a U.S. or 
   The corporation is a bank or other financial   Short period return                                   Canadian bank, be in U.S. dollars, and use a 
  institution that formerly was subject to the     A corporation required to file a federal short period standard nine digit routing number.
  North Dakota financial institution tax under 
  N.D.C.C. ch. 57-35.3 and filed Form 35 for       return must file a North Dakota short period return 
  tax years prior to 2013.                         for the same period. The North Dakota return must 
                                                   be filed by April 15th or by the date prescribed by   Preparer authorization
   The corporation made an election under         the IRS, whichever is later.                          If the corporation wants to allow the North Dakota 
  N.D.C.C. § 57-38-01.35 to be taxed as a                                                                Office of State Tax Commissioner to discuss its 
  C corporation for the 2013 tax year and          See instructions for the North Dakota Form 40-ES      2021 tax return with the preparer who signed it, 
  filed a Form 40 for 2013 through 2020.           for due dates of estimated payments on short          mark the circle in the signature area of the return. 
                                                   period returns.                                       This authorization applies only to the individual 
   The corporation’s North Dakota net tax                                                               whose signature appears in the “Signature of 
  liability on the 2020 Form 40 (page 1,           A corporation terminating as a Subchapter             Preparer” section of the corporation’s return. It 
  line 20) is zero and the corporation is not      S Corporation during the year, or a corporation       does not apply to the firm, if any, shown in that 
  revoking the election, which is done by          changing its annual accounting period, must           section.
  filing Form 60 for the 2021 year.                annualize its North Dakota taxable income and 
                                                   prorate its state tax liability in the same manner as If the circle is marked, the corporation is 
If this election is still in effect and the        the federal tax liability is prorated.                authorizing the North Dakota Office of State Tax 
S corporation files a Form 40 for the 2021 tax                                                           Commissioner to contact the preparer to answer 
year, it may not file electronically and must file                                                       any questions that may arise during the processing 
its return on paper. The corporation must provide  Extension of time for filing                          of its return.
a statement to each individual shareholder 
containing information on the adjustments that     An extension of time to file a federal return is      The corporation is also authorizing the preparer to:
will need to be made on the shareholder’s North    automatically accepted by North Dakota as an 
Dakota individual income tax return to remove      extension of time to file the state return. The state •  Give the North Dakota Office of State Tax 
the income and losses already taxed and deducted   extension is for one month after the due date of         Commissioner any information that is missing 
on the North Dakota corporation income tax         the automatic federal extension. Attach a copy           from the return;
return. For more information, see the Income Tax   of the federal extension Form 7004 (or other          •  Call the North Dakota Office of State Tax 
Guideline: Adjustment For Income (Loss) From       applicable form) to the state tax return and mark        Commissioner about the processing of the 
An S Corporation Electing To Be Taxed Under        the extension circle on page 1. The return will be       return or the status of any related refund or 
N.D.C.C. §57-38-01.35.                             processed as a delinquent return if the circle is        payment(s); and
                                                   not marked and a copy of the federal extension 
                                                   is not attached.

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2021 North Dakota Corporation Income Tax Return Instructions                                                                                       Page 2

•  Respond to certain North Dakota Office of          • the due date of the return (without extension); 
State Tax Commissioner notices that the                 or                                                 Estimated tax payments
corporation has shared with the preparer about                                                             If a corporation’s estimated state income tax 
math errors and return preparation. The notices       • the date the return is filed.                      liability exceeds five thousand dollars ($5,000) 
will not be sent to the preparer.                                                                          and its previous year’s state income tax liability 
                                                                                                           exceeded five thousand dollars ($5,000), the 
The authorization will automatically end no           Attachments and incomplete                           corporation is generally required to make an 
later than the extended due date for filing the                                                            estimated tax payment of at least one-fourth of the 
corporation’s 2021 tax return.                        returns                                              amount due on each of four prescribed dates.
                                                      A complete copy of the federal income tax return 
The corporation is not authorizing the preparer to    as filed with the IRS must be attached to Form 40.   Information regarding estimated tax payments 
receive any refund check, bind the corporation to     All applicable lines on Form 40 must be              is located in the instructions for Form 40-ES.
anything (including any additional tax liability), 
or otherwise represent the corporation before the     completed and the return must be signed. A signed 
North Dakota Office of State Tax Commissioner.        Form 40 is a declaration the return is correct and 
If the corporation wants to expand the preparer’s     complete.                                            Amended returns/federal 
authorization, North Dakota Form 500,                 A return with incomplete lines or schedules or       audit changes
Authorization to Disclose Tax Information and 
Designation of Representative, will need to be        with notations such as “see attached statement”      An Amended North Dakota Corporation Income 
signed and filed with our office. North Dakota        or “available upon audit” is not properly filed and  Tax Return, Form 40X, must be filed if:
Form 500 can be found on our website at               may be returned to the taxpayer. An incomplete       •  North Dakota income is changed when an 
www.nd.gov/tax. Search for Form 500.                  return that is returned will not be considered filed amended federal income tax return is filed or as 
                                                      until resubmitted with the required items. For       a result of a federal audit.
                                                      electronically filed returns, any attachments for 
Overpayments                                          extension forms or applicable schedules that are     •  An error is discovered on a previously filed 
                                                      not included with the software must be attached      return.
Overpayments of income tax may be applied to the      as a PDF.
2022 estimated tax (minimum $5) or issued as a                                                             •  The corporation received a refund of 
refund (minimum $5). If an overpayment is applied                                                          federal income tax which was deducted on 
to the following year, the amount of overpayment      Ratios and decimals                                  a previously filed Form 40 for tax years 
is considered an estimated payment and cannot be                                                           beginning before January 1, 2004.
refunded or applied against other tax liability until On all schedules where a ratio or decimal is called 
the close of the following year.                      for, use 6 digits after the decimal point.           Information about amended returns can be found 
                                                                                                           in N.D.C.C. §§ 57-38-38 and 57-38 -40.
                                                      To file or obtain additional                         Form 40X and instructions can be obtained by 
Interest and penalty                                                                                       visiting our website at www.nd.gov/tax/corp/
The Office of State Tax Commissioner will notify      forms and instructions                               forms.
the taxpayer of any interest and penalty owed on      Completed returns and written requests for 
tax due. If desired, interest and penalty may be      information and forms should be mailed to 
computed by the taxpayer on tax due and entered       the Office of State Tax Commissioner, 600 E.         Federalization
on the return.                                        Boulevard Ave., Dept. 127, Bismarck, ND              The North Dakota income tax law is perpetually 
Interest:                                             58505-0599.                                          “federalized” for the Federal Taxable Income 
If the full amount of the tax is not paid by the                                                           starting point of the North Dakota return.
original due date, the following provisions for         If you have corporate income tax questions 
interest apply:                                         or are seeking tax forms, please e-mail us at 
                                                        corptax@nd.gov, visit our website at               Method of corporation 
•  If an extension was obtained, interest on the tax 
due during the extension period is computed             www.nd.gov/tax, or call our Corporate Tax          taxation
at 12% per annum, through the later of the              Section at 701-328-1249.                           The North Dakota corporation income tax applies 
extended due date or date paid. Beginning with          For the speech or hearing impaired, call Relay     only to that portion of a corporation’s taxable 
the month thereafter, interest is computed at           North Dakota at 1-800-366-6888.                    income which is derived from or attributable to 
1% per month or fraction of a month.                                                                       sources within this state.
•  If an extension was not obtained, interest on                                                           A nonapportioning corporation, (a corporation 
the tax due is computed at 1% per month or            Information at the source                            whose business activity is conducted solely within 
fraction of a month, except the month in which        Any corporation doing business in North Dakota       North Dakota,) computes North Dakota taxable 
the tax became due.                                   that is required to file a Federal Form W-2 or       income by adjusting its federal taxable income by 
                                                      1099 must also file one with this state. For more    North Dakota statutory adjustments.
Penalty:                                              information on the requirements and alternatives 
                                                      for satisfying those requirements, contact our       An apportioning corporation, (a corporation whose 
•  If the full amount of tax is not paid by the due   office.                                              business activity is conducted both within and 
date (or extended due date), penalty is equal to                                                           without North Dakota,) computes North Dakota 
5% of the unpaid tax due or $5, whichever is                                                               taxable income by adjusting its federal taxable 
greater.                                              Quick refund                                         income by North Dakota statutory adjustments and 
•  If the return is not filed by the due date (or     A quick refund of overpaid estimated income tax      apportioning this adjusted taxable income using 
extended due date), a penalty of 5% of the net        may be requested by a corporation prior to filing    Schedule FACT or CR (Part II) of Form 40.
tax liability or $5, whichever is greater, applies    a return if the expected overpayment exceeds         A corporation engaged in a unitary business with 
for the month in which the return is due, with        five hundred dollars ($500) and the claim for        one or more corporations (irrespective of the 
an additional 5% for each additional month            quick refund is filed after the close of the taxable country or countries in which the corporations 
(or a fraction of a month) during which the           year but before the 15th day of the fourth month     conduct business) must file using the combined 
delinquency continues, not to exceed 25% of           thereafter.                                          report method.
the net tax liability.
                                                      The form for the Quick Refund Of Estimated 
If there is an overpayment on Form 40, page 1,        Income Tax For Corporations (Form 40-QR) must 
interest at the rate of 1% per month accrues on the   be obtained by contacting our office.
overpayment beginning forty-five days after the 
later of:

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 Page 3                                                           2021 North Dakota Corporation Income Tax Return Instructions

The starting point for computing North Dakota                                                               •  Except for 100% North Dakota corporations 
taxable income is federal taxable income.                                                                   required to file a consolidated tax return, it 
However, if the combined report excludes            Specific instructions   for                             is essential to have a unitary business group 
any corporation that was included in a federal                Form 40, Page 1                               of corporations before the combined report 
consolidated return, the starting point for                                                                 method can be used. For a discussion of a 
computing North Dakota taxable income is the        Taxpayer Name                                           unitary business group of corporations, see 
pro forma federal taxable income amount for the     If filing a combined return (line 1, circle b or c) the item “Method of corporation taxation” on 
combined group members that were part of the        return should be filed using the taxpayer name and      page 2.
federal consolidated return.                        FEIN of the specific corporation having activity in 
                                                    North Dakota.                                           •  If filing a combined report method return 
A single, pro forma starting point is not                                                                   where only one company apportions income 
computed to reflect the inclusion of additional     If you previously filed a consolidated return           to North Dakota (i.e., circle b or c is marked 
nonconsolidated affiliates in a North Dakota        (line 1, circle b1 or c1) as a member of a unitary      on Form 40, line 1), the answer to Question 
combined group. Instead, the federal taxable        group and are still a member of that group, use the     #8 on page 2 will be “No”.
income as actually reported to the IRS for each     same taxpayer name and FEIN as previously filed 
additional entity is added to the combined          returns. If not, file using the name and FEIN of        •  If filing a consolidated combined report 
group. Federal consolidated return rules are not    another affiliate having activity in North Dakota       method North Dakota tax return where more 
reapplied to this larger combined group. Also, see  in 2020.                                                than one company apportions income to 
Schedule WW (line 4) or Schedule WE (line 2).                                                               North Dakota (i.e., circle b1 or c1 is marked 
                                                    Farming or Ranching Corporation                         on Form 40, line 1), the answer to Question 
A unitary business is a group of corporations       Answer yes if business is registered as a farm or       #8 on page 2 will be “Yes”.
which carries on activities, the component parts of ranch corporation with the North Dakota Secretary 
which transfer value among themselves through       of State.                                               Mark the “Combined Report Method” circle if 
the unities of ownership, operation, and use.                                                               Form 40 includes only one corporation from a 
                                                    Business Code 
•  “Unity of ownership” means the group is under    Enter the business code from the NAICS list             unitary business which apportions its income to 
the common control of a single corporation,         found on our website at www.nd.gov/tax that most        North Dakota.
which is also a member of the group. Control        closely corresponds to the area from which you 
exists when the single corporation owns,            derived the majority of your income for the tax         The return should be filed using the taxpayer name 
directly or indirectly, more than fifty percent of  year.                                                   and federal identification number of the entity 
the voting stock of another corporation;                                                                    having activity in North Dakota.
•  “Unity of operation” means the group receives                                                            Complete Schedule WW on page 4 and enter the 
benefits from functional integration or             Line 1                                                  amount from line 10 on page 1, line 1. Attach the 
economies of scale;                                 Income                                                  completed Schedule WW to Form 40 when filed.
                                                    Mark the circle for the reporting method used 
•  “Unity of use” means the group of corporations   to complete the return and enter the income             Answer “No” to Question #8 on page 2.
contributes to or receives benefits from            reportable under that method. Mark ONE circle 
centralized management and policy formation.        only.                                                   Consolidated Return
Whether a group of corporations is engaged                                                                  For North Dakota corporation income tax 
in a unitary business depends on the facts and      a. Single Corporate Entity                              purposes, a North Dakota “consolidated return” 
circumstances of each case. If unity of ownership                                                           means a single corporation income tax return 
exists, any of the following facts or circumstances The single corporate entity method reports income       that reports the tax liability of more than one 
creates a presumption that the unities of operation or loss of only one incorporated business that is       corporation engaged in business or having 
and use exist; therefore, the corporations are      not part of a unitary business. (See item “Method       sources of income from North Dakota.
engaged in a unitary business if:                   of corporation taxation” on page 2.)
•  All activities of the group are in the same      If the single corporate entity method is used for       •  If part of the same unitary group, file the 
general line or type of business;                   both North Dakota and federal purposes, enter the       return using the same taxpayer name and 
                                                    federal taxable income from Federal Form 1120,          FEIN as previously filed returns if that entity 
•  The activities of the group constitute different line 30.                                                has activity in North Dakota in 2021. If not, 
steps in a vertically structured enterprise; or                                                             file using the name and FEIN of another 
                                                    If the single corporate entity method is used for       affiliate having activity in North Dakota in 
•  The group is characterized by centralized        North Dakota purposes and the corporation is            2021.
management.
                                                    included in a consolidated Federal Form 1120,           •  Only taxpayers who compute their North 
                                                    enter the corporation’s federal taxable income          Dakota tax liability using the combined 
                                                    before consolidating adjustments/eliminations 
Water’s edge election                               from:                                                   report method may file a consolidated return.
A corporation required to file its North Dakota                                                             •  Laws and rules governing consolidated 
return using the worldwide unitary combined         •  A pro forma separate company federal income          returns are found in N.D.C.C. ch. 57-38, and 
report method may elect to use the water’s          tax return, line 30; or                                 N.D. Admin. Code ch. 81-03-05.1.
edge method. The water’s edge election must         •  The by-company schedule showing gross 
be made on the return as originally filed and is    income and deductions, which supports the               •  If filing a consolidated North Dakota tax 
binding for five consecutive tax years. Also see    consolidated federal taxable income.                    return, circle b1 or c1 should be marked on 
Question #9 on page 2. If the election is made,                                                             line 1.
all corporations covered by the election will be    Cooperatives and other organizations using federal      •  Because a North Dakota consolidated return 
subject to a 3.5% surtax on their North Dakota      forms other than Federal Form 1120 must enter the       reports the tax liability of more than one 
taxable income.                                     federal taxable income from the appropriate form.       corporation, North Dakota Schedule CR, 
                                                                                                            Parts I, II, and III will be completed.
                                                    b. Combined Report Method                               •  If filing a consolidated North Dakota tax 
                                                    For North Dakota corporation income tax                 return (i.e., circle b1 or c1 is marked on 
                                                    purposes, a “combined report” means an                  Form 40, line 1) the answer to Question #8 
                                                    income tax return on which the tax liability            on page 2 will be “Yes”. 
                                                    is computed using the methods described in 
                                                    N.D.C.C. chs. 57-38, 57-38.1 and N.D. Admin. 
                                                    Code chs. 81-03-05.1, 81-03-05.2, 81-03-05.3, 
                                                    and 81-03-09.

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2021 North Dakota Corporation Income Tax Return Instructions                                                                               Page 4

Schedule CR                                       If circle c is marked:                               If a North Dakota consolidated tax return is 
Schedule CR, Parts I, II, and III will be         1.  The return should be filed using the taxpayer    being filed to report the tax liability of more 
completed only for corporations which:             name and FEIN of the entity having activity in      than one corporation engaged in business in or 
  - apportion income to North Dakota (i.e., have   North Dakota.                                       having sources of income from North Dakota:
property, payroll, or sales in North Dakota, ) or 2.  Complete Schedule WE on page 5 and enter the       1. Do not complete lines 5-19 on page 1 until 
  - allocate nonbusiness income or loss to North   amount from line 12 on page 1, line 1. Attach            Schedule CR has been completed.
Dakota, or                                         the completed Schedule WE to Form 40 when             2.  Complete Schedule CR, Parts I, II, and III 
  - do not apportion or allocate any income or     filed.                                                   on pages 6, 7, and 8 and enter the totals on 
loss to North Dakota, but choose to be disclosed  3.  Answer “No” to Question #8 on page 2.                 page 1.
as having filed a North Dakota return.                                                                   3.  Complete Form 40, page 1.
The factor denominator of the apportionment                                                              4.  Attach the completed Schedule CR to 
factor computation on Part II will be the total   c1. Water’s Edge Method
property, payroll, and sales for all unitary       Consolidated Return                                      Form 40 when filed.
companies in the combined group.                  Mark the “Water’s Edge Method Consolidated 
                                                  Return” circle if:                                   Line 5
The Schedule CR in this booklet allows for                                                             Apportionment factor
three separate companies to be reported. If       •  The members of a worldwide unitary 
more companies are to be reported, photocopy       business group of corporations elect to file a      If a corporation has business income from activity 
Parts I, II, and III of Schedule CR and continue   consolidated tax return using the water’s edge      solely within this state, enter 1.000000 on this line. 
to complete the additional schedule copies for     method, and
companies that apportion their income to North                                                         Corporations not filing a consolidated return, enter 
Dakota. (See page 8 for specific instructions for •  If two or more apportioning corporations in the   the apportionment factor from Schedule FACT, 
Schedule CR.)                                      combined report have a filing requirement in        line 14 or 16.
                                                   North Dakota.
                                                                                                       Corporations completing Schedule CR must enter 
b1. Combined Report Method                        If circle c1 is marked:                              the apportionment factor from Schedule CR, 
Consolidated Return                               1.  If part of the same unitary group, file the      Part II, line 14a or 16a.
Mark the “Combined Report Method Consol.           return using the same taxpayer name and             It is required that the supporting Schedule FACT 
Return” circle if the corporation is filing one    FEIN as previously filed returns if that entity     or CR, Part II, whichever is applicable, be 
consolidated North Dakota return using the         has activity in North Dakota in 2021. If not,       completed, and that the 6-digit factor from the 
combined report method.                            file using the name and FEIN of another             supporting schedule be carried to page 1, line 5.
                                                   affiliate having activity in North Dakota in 
Two or more apportioning corporations may          2021.                                               If the supporting schedule is not completed, the 
file one North Dakota consolidated return if the 
corporations are required to use the combined     2.  Complete Schedule WE on page 5 and enter the     return will be considered incomplete and mailed 
report method and more than one of the             amount from line 12 on page 1, line 1. Attach       back.
corporations has a filing requirement in North     the completed Schedule WE to Form 40 when 
Dakota.                                            filed.                                              Line 7
If circle b1 is marked:                           3.  Complete North Dakota Schedule CR, Parts I,      Income allocated to North Dakota
                                                   II, and III only for companies that apportion       Enter nonbusiness income allocated to North 
1.  If part of the same unitary group, file the    income to North Dakota.                             Dakota, less related expenses. Nonbusiness 
return using the same taxpayer name and                                                                income is allocated to North Dakota if the income 
FEIN as previously filed returns if that entity   4.  Answer “Yes” to Question #8 on page 2.           is attributable to North Dakota.
has activity in North Dakota in 2021. If not, 
file using the name and FEIN of another                                                                Expenses must be attributed to nonbusiness 
affiliate having activity in North Dakota in      d. Other                                             income in a manner which fairly distributes all of 
2021.                                             Mark the “Other” circle if the corporation has       the corporation’s expenses to its various types of 
2.  Complete Schedule WW on page 4 and enter      received written permission from the Office of       income.
the amount from line 10 on page 1, line 1.        State Tax Commissioner to file a North Dakota 
Attach the completed Schedule WW to               return using a filing method other than those        Corporations completing Schedule CR must enter 
Form 40 when filed.                               specified above.                                     the total nonbusiness income for all corporations 
                                                                                                       having activity within North Dakota.
3.  Complete North Dakota Schedule CR, Parts I,   Other filing methods are contained in N.D.C.C. 
II and III only for companies that apportion      § 57-38.1-18 (for example, separate accounting or 
income to North Dakota. If a corporation          a method using an apportionment factor different     Line 9
does not have property, payroll, and/or sales     from that computed on Schedules FACT or CR).         Exemption for new and expanding 
                                                                                                       business
in North Dakota, it will not be listed on         If the circle entitled “Other” is marked:
Schedule CR.                                                                                           If the corporation received a new and expanding 
4.  Answer “Yes” to Question #8 on page 2.        1.  Attach a copy of the letter from the Office of   business exemption from the State Board of 
                                                   State Tax Commissioner granting permission to       Equalization, enter the amount of exempt 
                                                   use, or requiring the use of, this filing method.   income computed pursuant to N.D. Admin. Code 
c. Water’s Edge Method                            2.  Attach a worksheet substantiating and            § 81-03-01.1-06. If line 8, page 1 is negative, do 
Mark the “Water’s Edge Method” circle if:          explaining the computation of income.               not enter an amount.
•  The corporation is a member of a worldwide     3.  Enter the income from the worksheet on           Corporations completing Schedule CR must enter 
unitary business group of corporations, and        page 1, line 1.                                     the exempt income for each corporation having an 
                                                                                                       exemption.
•  The corporation elects to file a North Dakota                                                       Attach a schedule showing the computation 
tax return using the water’s edge method, and     Line 4
                                                  North Dakota apportionable income                    of exempt income for each corporation and a 
•  No other corporations in the combined report                                                        Property Tax Clearance Record form.
have a filing requirement in North Dakota, if     If completing Schedule CR, enter the amount from 
more than one, see c1 method below.               page 1, line 4 on Schedule CR, Part I, line 4 (enter 
                                                  the same amount for each company) and complete 
                                                  Parts I, II, and III of Schedule CR.

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Page 5                                                                    2021 North Dakota Corporation Income Tax Return Instructions

Line 10                                                  Line 21                                                •  If an extension was not obtained, interest on 
Renaissance zone income                                  Tax year 2021 estimated income                         the tax due is computed at 1% per month or 
exemption                                                tax payments                                           fraction of a month, except the month in which 
                                                                                                                the tax became due.
If the corporation is claiming exempt income as          Enter the total 2021 estimated income tax 
a result of the Renaissance Zone Act, enter the          payments. Also, enter any 2020 overpayment             Penalty:
total amount of exemption from the summary               credited to the 2021 taxable year and any payment      •  If the full amount of tax is not paid by the due 
part of Schedule RZ. The amount of exemption             voluntarily made to the state with an extension of     date (or extended due date), penalty is equal to 
cannot exceed the amount of related income               time for filing.                                       5% of the unpaid tax due or $5, whichever is 
assigned to North Dakota. Contact the Office                                                                    greater.
of State Tax Commissioner at 701.328.1243 to 
obtain Schedule RZ. Attach Schedule RZ and               Line 22                                                •  If the return is not filed by the due date (or 
the Property Tax Clearance Record form to the            North Dakota income tax withheld                       extended due date), a penalty of 5% of the net 
Form 40 when filed.                                      on oil and gas royalties                               tax liability or $5, whichever is greater, applies 
                                                         Enter the amount of North Dakota income                for the month in which the return is due, with 
                                                         tax withheld on oil and gas royalty payments           an additional 5% for each additional month 
Line 11                                                  that were reported to the company on a 2020            (or a fraction of a month) during which the 
ND income after income exemptions                        Form 1099-MISC. The amount to enter should             delinquency continues, not to exceed 25% of 
If the amount on line 11 is a loss, the loss must be     only be income tax withheld and should not             the net tax liability.
carried forward.                                         include any production or extraction taxes. Do not 
                                                         enter income tax withheld and reported on a K-1        Line 24b
                                                         received from a partnership. Income tax withheld       Interest on underpayment of 
Line 12                                                  on K-1 distributive income for a corporation is        estimated tax
North Dakota loss carryforward
                                                         not allowed. In order to substantiate the amount       Instructions for making estimated tax payments 
The North Dakota loss carryforward allowed on            withheld, a copy of the Form 1099-MISC must be         are found on Form 40-ES. If estimated payments 
the Form 40 is the amount of the accumulated             attached or credit will not be allowed for the tax     are not timely made or in the correct amount, 
North Dakota loss less any previously deducted           withheld. If the return is filed electronically, the   interest is charged.
loss.                                                    Form 1099-MISC should be attached as a PDF.
                                                                                                                The amount of interest due for underpaid or 
North Dakota net operating losses incurred in            Enter the amount of tax withheld for the company       late payments of estimated tax can be computed 
taxable years beginning after December 31, 2002,         only if its FEIN is identified as the recipient on the on North Dakota Form 40-UT. Instructions for 
cannot be carried back to a previous taxable             Form 1099-MISC. If this return is a consolidated       Form 40-UT are on the Form 40-UT. Enter the 
year. These net operating losses must be carried         return, the amount to enter should also include        interest from Form 40-UT, line 9 on line 24b. 
forward. Capital losses must still be carried back       any amount withheld on behalf of any corporation       Attach Form 40-UT to Form 40 when filed.
and then carried forward.                                that is included in this return as identified by the 
                                                         recipient’s FEIN on the Form 1099-MISC.
Attach a worksheet showing the accumulated                                                                      Line 25a
loss, by year, less any previously deducted loss         Income tax withheld on royalties received by a         Amount to be credited to year 2022
carryback or carryforward.                               disregarded entity cannot be claimed. If income 
                                                         tax was withheld on a disregarded entity owned by      A corporation may elect to have the overpayment 
Corporations completing Schedule CR must enter           a corporation, a corrected Form W-9 (to correctly      credited to their 2021 estimated tax. The 
the loss carryforward from all corporations listed       identify the owner of the disregarded entity as        overpayment will be credited to the first quarterly 
on Schedule CR.                                          the royalty owner) must be provided to the payer,      installment for 2021.
                                                         and a corrected Form 1099-MISC identifying the 
Enter the amount of federal net operating loss           corporate owner must be obtained.
deducted in arriving at federal taxable income, 
generally as reflected on Federal Form 1120,             If the company is filing with a tax year end 
line 29a. Any North Dakota net operating loss            other than a calendar year basis, it will claim 
carryover deduction is separately computed and           withholding on the corporate income tax return for     Specific instructions   for 
deductible on page 1, line 12 (or Schedule CR,           the year following the year of Form 1099-MISC.                  Schedule SA
line 12).                                                A taxpayer with a fiscal year end in 2021 will 
                                                         claim the amount withheld as shown on its 2020         Additions
                                                         Form 1099-MISC, and so on for each subsequent 
Line 14
Gross proceeds allocated to North                        year and return.                                       Line 1
                                                                                                                Federal net operating loss 
Dakota from sale of North Dakota 
                                                         Line 24a                                               deduction
research tax credits
                                                         Interest and penalty for balance                       Enter the amount of federal net operating loss 
Enter on this line the gross proceeds from the sale,     due                                                    deducted in arriving at federal taxable income, 
assignment, or transfer of unused North Dakota           The Office of State Tax Commissioner will notify       generally as reflected on Federal Form 1120, 
research tax credits. See the 2021 Corporate             the taxpayer of any interest and penalty owed on       line 29a. Any North Dakota net operating loss 
Income Tax Credits booklet for more information.         tax due. If desired, interest and penalty may be       carryover deduction is separately computed and 
                                                         computed by the taxpayer on tax due and entered        deductible on page 1, line 12 (or Schedule CR, 
Line 15                                                  on the return.                                         line 12).
North Dakota taxable income
                                                         Interest:
If line 14 is zero enter the amount from line 13.        If the full amount of the tax is not paid by the       Line 2
                                                         original due date, the following provisions for        Special deductions
If line 13 is zero or less and line 14 is greater than 
zero, enter the amount from line 14.                     interest apply:                                        Enter the amount of special deductions claimed 
                                                         •  If an extension was obtained, interest on the tax   in arriving at federal taxable income, generally as 
If line 13 is greater than zero, enter the total of line due during the extension period is computed at         reflected on Federal Form 1120, line 29b. Even 
13 and line 14.                                          12% per annum, through the extended due date.          though this amount includes the deduction for 
                                                         Beginning with the month thereafter, interest          foreign derived intangible income, that amount 
                                                         is computed at 1% per month or fraction of a           is separately deducted on Schedule SA, line 9 
                                                         month.                                                 (below).

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2021 North Dakota Corporation Income Tax Return Instructions Page 6

Line 3 tax statutes did not allow for the use of ACRS Enter all nonbusiness income on line 11 and enter
All taxes measured by income depreciation for assets placed in service for related expenses on line 12. The method used to
deducted to arrive at federal 1981 and 1982 only and federal taxable income attribute expenses to nonbusiness income must
must be adjusted for the difference in these fairly distribute all of the corporation’s deductions
taxable income two methods. In computing this adjustment, to all of its various types of income.
Enter all taxes measured by income, including exclude safe harbor lease adjustments.
income taxes, franchise or privilege taxes If an entry is made, all of the following must be
measured by income (paid to or withheld by any A worksheet explaining any adjustment on this attached to Form 40:
taxing authority, including a foreign country) to line must be attached.
• A worksheet showing each type of income or
the extent such taxes were deducted to arrive at loss item allocated and its amount;
federal taxable income.
Subtractions • Documentation showing the state to which the
Line 8 item of income or loss was allocated (a copy of
Line 5 Tax refunds received in year 2021 the other state’s tax return is preferred); and
Contribution to endowment fund
credit adjustment Enter all income, franchise, or privilege tax • A narrative explaining the reasons for
refunds received in 2020, to the extent such taxes allocating each item of income or loss.
Enter the contribution made to an endowment were previously included in North Dakota taxable
fund that was deducted on your federal income tax income.
return to the extent a credit has been claimed on Line 14
Schedule TC, line 16. Federal income tax refunds received cannot be IC-DISC distributions
included on this line. Enter the actual distributions made by a
Line 6 corporation who elects to be an interest-charge
Other additions Line 9 domestic international sales corporation, elects
Foreign derived intangible income to use intercompany pricing rules under IRC
• Domestic Production Activity Deduction deduction § 994, and is owned by one or more individuals or
(DPAD) passthrough entities. Answer “Yes” to Question #4
With the federal repeal of the DPAD in IRC Enter the amount of the foreign derived intangible on page 2.
§ 199, which was applicable for tax years income deduction that was included in the
prior to 2019, there is no addition adjustment deduction on Federal Form 1120, line 29b,
required for the DPAD for years after 2017. which was also included in the amount entered Line 15
There is also no requirement for an addition on Schedule SA, line 2 (above). Because this Other subtractions
adjustment related to the federal deduction deduction is allowable in computing North Dakota
provided for in IRC § 199A applicable for income but was added back as a special deduction, Do not include intercompany eliminations
certain cooperatives for years 2019 and the deduction is restored by entering on this line. on this line when filing a combined report
(filing methods b, b1, c, or c1). Report all
forward. The amount entered on this line should be the intercompany eliminations on Schedule WW
• Housing incentive contributions amount from federal Form 8993, line 28. Attach line 9 or Schedule WE line 5.
Include on this line the amount of contribution the form to the return. • Eminent domain sale or transfer
made to a housing incentive fund that was If the amount on page 1, line 1 includes any
deducted on your federal income tax return to Line 10 gain, either ordinary or capital, from property
the extent a credit has been claimed on a North Interest on United States subjected to eminent domain sale or transfer,
Dakota return for any year. such gain is not taxable and must be entered on
• Safe harbor leases Obligations this line.
The safe harbor lease provisions in § 168(f) Enter the following on this line:
• Safe harbor leases
(8) of the IRC of 1954, as amended, are not • Interest income from U.S. obligations. The safe harbor lease provisions in § 168(f)
adopted in North Dakota in those instances (8) of the IRC of 1954, as amended, are not
where the minimum investment by the lessor • Interest income from other securities that is adopted in North Dakota in those instances
is less than one hundred percent (100%). Enter specifically exempted from state income tax by where the minimum investment by the lessor
amounts on line 8. federal statute. is less than one hundred percent (100%). Enter
 Seller/Lessee: sale proceeds, rent expense, Not all interest income from securities issued amounts on line 15.
amortization expense, lease acquisition cost. by federal government agencies is includable  Seller/Lessee: interest income and
 Buyer/Lessor: interest expense, depreciation on this line. Examples of interest income not depreciation expense (for assets placed in
expense, amortization expense, acquisition includable on this line are from certain mortgage service between January 1, 1981, and the
cost, loss on sale of property. backed securities of the Federal Home Loan end of the 1982 taxable year, use methods
Mortgage Corporation, Federal National Mortgage allowed under the IRC as of December 30,
See N.D.C.C. § 57-38-01(5)(a) for more Association, Government National Mortgage 1980. For assets placed in service after the
information. Association, and interest received from a federal 1982 taxable year, use ACRS depreciation).
tax refund.
• Real estate investment trusts  Buyer/Lessor: rental income.
Include on this line, the dividends paid Lines 11 and 12 • Regulated investment companies
deduction allowed by a captive real estate Allocated income and related Regulated investment companies, as defined
investment trust (REIT) on its federal income by the IRC, will be allowed to subtract on this
tax return and included in the taxpayer’s expenses line certain dividends paid to shareholders. The
federal taxable income. See N.D.C.C. Business income: N.D. Admin. Code dividends paid must be attributable to income
§ 57-38-01.3(1)(l) for further information. ch. 81-03-09-03. All income arising from that is taxable under N.D.C.C. ch. 57-38 when
The dividends paid should be added back only transactions and activity in the regular course the regulated investment company earns the
to the extent they have not otherwise been of the taxpayer’s trade or business operations income.
included in apportionable income. including income from tangible and intangible
• ACRS depreciation adjustment property if the acquisition, management, and • North Dakota railway bonds
Enter the amount of depreciation deducted on disposition of the property constitute integral Enter the amount of interest on bonds issued by
the federal return for all currently held assets parts of the taxpayer’s regular trade or business a regional railway authority in North Dakota.
placed in service between January 1, 1981, and operations.
the end of the 1982 tax year using methods Nonbusiness income: All income other than
allowed under the IRC provisions in effect as business income.
of December 31, 1980. North Dakota income

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Page 7 2021 North Dakota Corporation Income Tax Return Instructions

• ACRS depreciation adjustment Sales Factor Weighting Election Do not include amounts related to construction in
Enter the amount of depreciation deducted on A corporation has the option to make an election to progress. A corporation’s share of a passthrough
the federal return for all currently held assets a 100% weighted sales factor in its apportionment entity’s apportionment factors should be included
placed in service between January 1, 1981, and factor. The following provisions apply to a 100% on line 5.
the end of the 1982 tax year using methods weighted sales factor election: The average value of owned and rented property
allowed under the IRC provisions in effect as is assigned to North Dakota if the property is
of December 31, 1980. North Dakota income • The election must be made on an original, located in North Dakota. The amount attributable
tax statutes did not allow for the use of ACRS timely filed return. to mobile property is generally assignable to
depreciation for assets placed in service for • The election is made by marking the box on North Dakota based on a ratio of the property’s
1981 and 1982 only and federal taxable income Schedule FACT, line 15a or Schedule CR, time spent in North Dakota. For more complete
must be adjusted for the difference in these Part II, line 15a, depending on the filing information on the property factor, see N.D.
two methods. In computing this adjustment, method. Admin. Code §§ 81-03-09-15 through 21 and 33.
exclude safe harbor lease assets. • The election applies to all companies included
A worksheet explaining any adjustment on this in a unitary group and to all companies filing Payroll Factor
line must be attached. a consolidated North Dakota return. See
Schedule CR, Part II, line 15a. Line 8
• The election is binding for a term of five Enter the amount of total compensation paid to
consecutive tax years, starting with the year for employees for the tax year. This includes gross
which the election is made.
Specific instructions for wages, salaries, commissions, and any other
• After the fifth tax year of the election, a new form of remuneration paid to the employees.
Schedule FACT election is applicable for a term of five years Use the amount before deductions for deferred
(years 6 through 10). compensation, flexible spending plans, and other
Apportionment factor in • After the fifth year of an election, if a new payroll deductions. Do not include amounts paid
general election is not made (for year 6), the equally- for employee benefit plans that are not considered
weighted three-factor apportionment formula taxable wages to the employee. An employee is an
In general, the apportionment factor is a product of individual treated as an employee under the usual
a formula consisting of an equally weighted three- must be used for at least three tax years before common law rules, which generally mirror an
factor (property, payroll, and sales) apportionment. another election can be made. individual’s status for purposes of unemployment
Each factor represents the percentage of the compensation and the Federal Insurance
corporation’s North Dakota activity compared The application of special industry apportionment Contribution Act.
to its total activity everywhere. Except where provisions in N.D. Admin. Code ch. 81-03-09
a sales factor weighting election is made, the does not preclude making a sales factor weighting Compensation for an employee’s services
apportionment factor calculation equally weights election. If a corporation’s apportionment factors performed entirely within North Dakota is
property, payroll, and sales—see “Sales factor include amounts attributable to a passthrough assigned to North Dakota. For an employee
weighting election” below. entity, the election applies to the calculation of the whose services are performed in more than
corporation’s apportionment factors, as adjusted one state, compensation is generally assigned
If a corporation files under a combined report to include the passthrough entity amounts. (Note: to North Dakota based on the amount of
filing method, the denominator (i.e., the The passthrough entity itself may not make a sales compensation reported to North Dakota for
everywhere amount) of each factor must include factor weighting election.) For more information unemployment compensation purposes. Whether
the amounts for all of the corporations included on the sales factor weighting election, see N.D. or not state income tax was withheld from an
in the combined report. Exclude from each factor Admin. Code ch. 81-03-09.2. employee’s compensation does not affect where
amounts attributable to intercompany transactions the compensation is assigned for apportionment
between corporations included in the combined An election to use the water’s edge filing method factor purposes. For more complete information
report. Also exclude from each factor amounts is unrelated to the sales factor weighting election. on the payroll factor, see N.D. Admin. Code
attributable to allocable income. §§ 81-03-09-22 through 25.
Note: A corporation that did not make a sales
If the amount of any factor’s denominator is factor weighting election for 2016, 2017, 2018, or Sales Factor
zero, exclude that factor from the calculation. If 2019 is not precluded from making one for 2020
a corporation owns an interest in a passthrough or in a future year. Line 9
entity and includes the distributable share Everywhere sales
of income from the passthrough entity in its Specific line instructions Enter the corporation’s total sales or receipts,
apportionable business income, include in the after returns or allowances, for the tax year. Sales
factors the corporation’s proportionate share of the The following line instructions apply to either generally means all gross receipts of a corporation.
passthrough entity’s apportionment factors. Schedule FACT or Schedule CR, Part II, However, the types of sales or gross receipts
whichever schedule applies. The line items for
Special apportionment rules may apply in the the “Everywhere” amounts on the two schedules included in the sales factor depend on the nature
case of certain industries or unique circumstances. correspond to each other. If applicable, also see the of the corporation’s regular business activities and
For example, special apportionment rules apply general instructions for Schedule CR, Part II, on may include amounts other than sales reported on
to financial institutions, as provided under N.D. page 8. Form 1120, line 1. If sales other than Form 1120,
Admin. Code ch. 81-03-09.1. For additional line 1 are entered as everywhere sales, attach a
information on the apportionment factor, see N.D. If a sales factor weighting election applies, the schedule listing the sales types and amounts.
Admin. Code ch. 81-03-09. property and payroll sections are not required. Line 10

Property Factor North Dakota sales
Financial Institutions
For sales of tangible property, the sale is assigned
For any corporation that meets the definition Lines 1 through 6 to North Dakota if the destination of the property
of a financial institution, special apportionment Owned and rented property is in North Dakota, regardless of the shipping
provisions apply for the property and sales factors. terms. For sales of other than tangible property, the
These apportionment provisions are included Enter on the applicable line the average value of sale is assigned to North Dakota if the income-
in N.D. Admin. Code ch. 81-03-09.1 and are real and tangible personal property owned and producing activity which gave rise to the receipt
identical to the provisions that existed for financial rented by the corporation. For owned property, is performed in North Dakota. For more complete
institutions that were subject to the financial this generally means the average of the original information, see N.D. Admin. Code
institution tax and filed Form 35 for years prior cost (before depreciation) used for federal income §§ 81-03-09-26 through 31 and 34.
to 2013. Loans and receivables of a financial tax purposes. For rented property, this generally
institution that are included in the property factor means the amount of rent paid multiplied by eight.
should be reported on the “Other assets” line and Certain property items are subject to special rules.
a supporting schedule should be attached. Please
contact our office if there are questions regarding
these special apportionment provisions.

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2021 North Dakota Corporation Income Tax Return Instructions Page 8

Line 11 A corporation may elect to treat a contribution as If a credit is being claimed on Schedule TC or
Throwback sales having been made during a tax year if made on or Schedule CR Part III, line 7 – 15, 17 – 19, or 22,
Enter the amount of sales shipped from a location before the due date, including extensions, for filing a local tax clearance is required for each county
in North Dakota that are delivered to the U.S. Form 40 for that tax year. the corporation has 50% or more interest in real
property in North Dakota. The tax clearance
government or to another state or country where The credit allowed for each category of school requirement also applies to any officer(s)
the corporation is not subject to a tax measured equals the lesser of (1) 50% of the contributions responsible for the corporation’s state tax filing or
by income in that jurisdiction. For more complete made to eligible schools within the category (2) payment obligations. The tax incentives listed may
information, see N.D. Admin. Code 50% of the corporation’s total income tax, or (3) not be granted, or claimed by, a taxpayer who is
§§ 81-03-09-29 and 30. $2,500. Any excess credit may not be carried delinquent on property tax owed on real property
forward. in North Dakota or is delinquent on any state or
Line 14 Enter on line 1 the credit for nonprofit private local tax obligation.
Apportionment factor colleges. Enter on line 2 the credit for nonprofit
If making a sales factor weighting election, skip private high schools. Enter on line 3 the credit for To satisfy the property tax clearance requirement,
this line and go to line 15. nonprofit private primary schools. a Property Tax Clearance Record form is required
for each county in which the corporation or
Otherwise, divide line 13 by the number of factors For each contribution, attach a copy of a receipt responsible officer(s) holds a 50 percent or more
having an amount greater than zero in column 1 on from the nonprofit private institution or a copy ownership interest. A new Property Tax Clearance
lines 7, 8, and 12. Enter the result on this line and of a cancelled check (front and back) or other Record form must be obtained and attached to
on page 1, line 5. Do not complete lines 15 and 16. documentation for non-cash contributions. the Form 40 for each year a listed income tax
incentive is claimed. The form and instructions are
available on our website.
Sales Factor Weighting Election Lines 4-24
Apportionment Factor Instructions for the following tax credits can be
found in the Corporate Income Tax Credit Booklet
Line 15 on our website at www.nd.gov/tax/corp/forms.
Specific instructions for
If making a sales factor weighting election, mark Line 4. Geothermal, solar, wind, biomass energy Schedule CR
the box on line 15a. See “Sales factor weighting device credits (prior to January 1, 2015).
election” for more information.
On line 15b, indicate the year within the five-year Line 5. Wind energy device credit generated after Schedule CR is a worksheet to compute the
election period for which this return is being filed December 31, 2014, and before January 1, 2017. North Dakota tax liability of multiple nexus
companies in one unitary group on one North
by entering a number from 1 to 5. Entering year 2 Line 6. Employment of the individuals with Dakota “consolidated” return. The tax liabilities
or 3 does not constitute a new five year election. developmental disabilities or severe mental illness are computed for each company apportioning
credit. its income to North Dakota, added together, and
Line 16 the total carried to page 1. Before you begin to
Enter the amount from line 12 column c. Line 7. Research and experimental expenditure complete the CR schedules, you must complete
credits generated by taxpayer. lines 1-4, page 1. Each company separately
Line 8. Research and experimental expenditure listed on Schedule CR, including those with a
credits purchased by taxpayer. zero apportionment factor, will be considered a
taxpayer for purposes of having filed a return.
Line 9. Renaissance Zone credits.
Specific instructions for Schedule CR has three parts:
Line 10. Biodiesel or green diesel fuel production
Schedule TC credit. Schedule CR, Part I calculates the tax liability of
each company.
Line 11. Soybean and canola crushing equipment
Lines 1 through 3 costs credit. • Line 4 - Enter the amount from page 1, line 4
Nonprofit private school tax credits (enter the same amount for each company).
Line 12. Seed capital business investment credit.
Tax credits are allowed for contributions to Schedule CR, Part II calculates the North Dakota
qualifying nonprofit private primary, secondary, Line 13. Biodiesel or green diesel fuel blending apportionment factor for each nexus company.
and higher education schools located in North credit.
• Each company computes its separate North
Dakota. A separate credit is allowed for each Line 14. Biodiesel or green diesel fuel sales Dakota apportionment factor using the
category of school. To qualify, a contribution must equipment costs credit. total everywhere property, payroll, and
be made directly to or specifically designated
for the exclusive use of a qualifying school. If a Line 15. Agricultural commodity processing sales of the entire unitary group for the
contribution is made to an account, fund, or entity facility investment credit. denominators. Each company uses its own
benefiting both qualifying and nonqualifying separate North Dakota property, payroll, and
schools, it qualifies for the credit only if the entity Line 16. Endowment fund contribution credit. sales as the numerator.
provides the donor with a statement showing the Line 17. Internship employment credit. • Line 5 - Enter the factor as calculated for
amount specifically designated for the use of the each company on Schedule CR, Part II,
qualifying school or other documentation for Line 18. Angel fund investment credit carried line 14.
non-cash contributions. A list of qualifying schools forward.
can be found in the Corporate Income Tax Credit Schedule CR, Part III reports the tax credits
Booklet on our website at Line 19. Workforce recruitment credit. available for each company.
www.nd.gov/tax/corp/forms. Line 20. Wages paid to a mobilized military • The tax credits are calculated for each
If a contribution is made to a qualifying school employee credit. company and totaled on Line 25. The total
that provides education in one or more grades Line 21. Housing incentive fund credit carried is carried to line 19 of Schedule CR, Part I.
in both the primary school category (K through forward. After all tax credits are reported on Schedule
8th grades) and secondary school category (9th CR, Part III, each tax credit is totaled for all
through 12th grades), a separate credit is allowed Line 22. Automation manufacturing equipment companies and reported on Schedule TC on
for the amount contributed to each category of purchase credit carried forward. page 4.
school. Unless the school provides the donor
with a statement showing the amount specifically Line 23. New automation tax credit (for purchases
designated for the use of each category of school, made on or after January 1, 2020.)
one-half of the contribution will be deemed to Line 24. Contributions to Rural Leadership ND
have been made to each category of school. scholarship program credit.

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 Page 9                                              2021 North Dakota Corporation Income Tax Return Instructions

After Schedule CR has been completed and each 
separate company that apportions its income to 
North Dakota has computed its North Dakota tax 
liability and net income tax due, page 1, lines 5-20 
are completed as follows:
 1.  Copy the apportionment factor from 
 Schedule CR, Part II, line 14a or from 
 line 16a, if the sales factor weighting 
 election is made, to page 1, line 5.
 2.  Add together all the separate companies’ 
 amounts for lines 6 through 19 on 
 Schedule CR, Part I and copy the total 
 of each line for all companies to the 
 corresponding line on page 1.
 3.  Complete Schedule TC. The total credits 
 for all companies included on Schedule 
 CR must equal the credits reported on 
 Schedule TC.
 4.  Copy the amount from Schedule CR, Part I, 
 line 20a to page 1, line 20.
Attach the completed Schedule CR to Form 40 
when filed.

- 13 -

                              Taxpayer Bill of Rights

     You may obtain a copy of the North Dakota Taxpayer 
             Bill of Rights by contacting the Office of State Tax 
                        Commissioner or visiting our website at
                                        www.nd.gov/tax

Need forms or assistance?
If you need a North Dakota form or schedule, or if you have a question about preparing your North 
Dakota return . . .

Call                                                   Walk-in or appointment service
Questions: 701-328-1249                                Services are available Monday through Friday from
Forms Requests: 701-328-1243                           8:00 am to 5:00 pm, in our Bismarck office located at
                                                       600 E. Boulevard Avenue.
If speech or hearing impaired,
call us through Relay North Dakota: 1-800-366-6888       Corporate Income Tax Section
                                                         State Capitol, 8th Floor
Visit our website
On our website, you will find the following resources: Write
  • Tax forms
  • Electronic payment information                       Office of State Tax Commissioner
  • Income tax statutes and regulations                  600 E. Boulevard Ave. Dept. 127
  • Calendar of due dates, public meetings, and          Bismarck, ND 58505-0599
    workshops
  • Press releases                                     Email us
  • On-line message service                            Request forms, ask us a question, or send a message 
                                                       to us via email at:
Our website address is:                                 corptax@nd.gov
  www.nd.gov/tax
                                                       Fax
                                                       You may fax your request or question to
                                                       701-328-1942

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