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                        CALCULATION OF TAX ON PROCEEDS
                        FROM SALE OF INCOME TAX CREDIT
                        OFFICE OF STATE TAX COMMISSIONER                                             Schedule ND-1CS
                        SFN 28746 (12-2022)
                                                                                                             2022
                                                                                                             Attach to Form ND-1
Your Name (First, MI, Last Name)                                                                    Your Social Security Number

       Before completing this schedule, complete Form ND-1, lines 1 through 18.
       If using either Schedule ND-1FA or Schedule ND-1NR, see "How to complete this form" in instructions.
1. North Dakota taxable income - Enter the amount from Form ND-1, line 18. However, if using
    Schedule ND-1FA, enter the amount from line 3 of that schedule. If less than zero, enter 0.     (C1) 1
2. Gross proceeds - Enter the gross proceeds from the sale of the credit                            (C2) 2
3.  Were the gross proceeds (on line 2) included in federal taxable income?                         (C3) 3   Yes No
4.  If line 3 is Yes, enter the amount from line 1. If line 3 is No, add lines 1 and 2 and enter the
    result on this line, and then enter -0- on line 7c and go to line 8                             (C4) 4
5.  Were the gross proceeds (on line 2) reported as a long-term capital gain on the federal return? (C5) 5   Yes No
       If line 5 is Yes, go to line 6.
       If line 5 is No, enter -0- on line 7c, and go to line 8.
6.  Was a long-term capital gain exclusion claimed on Form ND-1, line 7?                            (C6) 6   Yes No
       If line 6 is Yes, go to line 7a.
       If line 6 is No, enter -0- on line 7c, and go to line 8.
7. a.  Enter the amount from Form ND-1, line 7                          7a
    b. Multiply line 2 by 40% (.40)                                     7b
    c. Enter smaller of line 7a or 7b                                                               (C7) 7c
8.  Add lines 4 and 7c                                                                               8
9.  Subtract line 2 from line 8.  If less than zero, enter -0-          9
10. Tax on North Dakota taxable income without proceeds -
    If using Schedule ND-1FA, see the instructions. Otherwise,
    figure the tax on the amount on line 9 using the 2022 Tax
     Table in the instructions for Form ND-1                       (C10) 10
11. Enter larger of line 2 or line 8                                                                 11
12. Tax on North Dakota taxable income with proceeds - If using Schedule ND-1FA, see the
    instructions. Otherwise, figure the tax on the amount on line 11 using the 2022 Tax
    Table in the Form ND-1 instructions                                                             (C12) 12
       Full-year resident - If the taxpayer (and taxpayer's spouse, if filing jointly) are full-year
       residents, skip lines 13 through 18, and go to line 19.
       Full-year nonresident or part-year resident - If the taxpayer (or taxpayer's spouse, if filing
       jointly) is filing as a full-year nonresident or part-year resident, go to line 13.
13. a. If Line 3 is Yes, enter amount from Schedule ND-1NR,
       line 18; otherwise, skip lines 13 and 14, and go to line 15      13a
    b. Subtract line 2 from line 13a                                                                (C13) 13b
14. a.  Enter amount from Schedule ND-1NR, line 19                      14a
    b. Subtract line 2 from line 14a                                                                (C14) 14b
15. If required to complete lines 13 and 14, divide line 13b by line 14b (round to nearest
    four decimal places); otherwise, enter the ratio from Schedule ND-1NR, line 20                  (C15) 15
16. Multiply line 10 by line 15                                                                      16
17. Subtract line 10 from line 12                                                                   (C17) 17
18. Add lines 16 and 17                                                                              18
19. Tax - If the taxpayer (and taxpayer's spouse, if filing jointly) are full-year residents, enter
    amount from line 12. If the taxpayer (or taxpayer's spouse, if filing jointly) is a full-year
    nonresident or part-year resident, enter amount from line 18. Enter the amount from
    this line on Form ND-1, line 19.                                                                (C19) 19

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2022 Schedule ND-1CS
SFN 28746 (12‑2022), Page 2

Purpose of form required to provide a specially‑
If an individual sells an unused prescribed notice to each of its Specific line instrucitons
research and experimental owners showing the owner's share Line 2 - Gross proceeds
expenditure tax credit (under N.D.C.C. of the total gross proceeds and Enter the amount of gross proceeds
§ 57‑3‑30.5) to another taxpayer for instructing the owner how to report from Form CTS, Credit Transfer
value, the gross proceeds from the the proceeds on the owner's North Statement, or from the Passthrough
sale are assignable to North Dakota Dakota income tax return. See Entity Member Notice, whichever is
and are subject to North Dakota Form CTS for more information. applicable.
income tax. No part of the proceeds
may be apportioned or allocated Line 3 - Inclusion of proceeds in
How to complete this form
outside North Dakota, and the gross federal taxable income
proceeds may not be reduced by any Before completing this schedule: In general, the transfer of a state
loss or deduction allowed for North income tax credit for value is a taxable
Dakota income tax purposes. This 1. Complete Form ND‑1, lines 1 sale of property and the gross proceeds
schedule must be used to calculate the through line 18. are includable in gross income for
individual's income tax for the tax year. 2. If Schedule ND‑1FA (3‑year federal income tax purposes ‑ see
Note: There are conditions and averaging for farm income) is Tempel, George H., 136 TC No. 15
procedures that must be satisfied going to be used to calculate the (2011) and IRS Chief Counsel Advice
before the credit may be transferred tax for the tax year, complete that (CCA) 201147024. Fill in the applicable
to another taxpayer. For more schedule first. Information from circle to indicate whether or not
information, see Form CTS, Credit Schedule ND‑1FA will be needed the gross proceeds (on line 2) were
Transfer Statement, which can be to complete Schedule ND‑1CS. Do included in federal taxable income.
obtained at www.tax.nd.gov. not enter the tax calculated on
Schedule ND-1FA on Form ND-1 Line 4 - North Dakota taxable
or Schedule ND-1NR. income with proceeds
Who must complete The entire gross proceeds from the
3. If the individual (or the individual's sale of the credit are assignable to, and
An individual must complete this spouse, if filing jointly) was a taxable by, North Dakota. If the gross
schedule if either (or both) of the nonresident of North Dakota for proceeds (on line 2) were included in
following apply: part or all of the tax year, complete federal taxable income, enter the North
• The individual sold an unused Schedule ND‑1NR. Information Dakota taxable income amount from
research and experimental from that schedule will be needed line 1 on line 4. If the gross proceeds
expenditure tax credit to another to complete Schedule ND‑1CS. Do were not included in federal taxable
taxpayer for value. not enter the tax calculated on income, add the gross proceeds (on
Schedule ND-1NR on Form ND-1. line 2) to the North Dakota taxable
Note: The individual (seller) and the income (on line 1) and enter the result
buyer were required to jointly file Credit transfer statement. If the on line 4.
Form CTS with the Office of State individual completing Schedule ND‑1CS
Tax Commissioner at the time of the is the taxpayer who sold the credit, Lines 5 through 7 - Long-term
sale. have on hand a copy of the Form CTS, capital gain exclusion adjustment
• The individual held an interest Credit Transfer Statement, that was The gross proceeds from the sale of
in a passthrough entity that sold required to be filed with the Office of the credit may not be reduced by
a research and experimental State Tax Commissioner at the time any loss or deduction allowed for
expenditure tax credit to another of the sale. It shows the amount of North Dakota income tax purposes. If
taxpayer for value. the gross proceeds received from the the gross proceeds (on line 2) were
buyer. reported as a long‑term capital gain
A "passthrough entity" means a for federal income tax purposes and
partnership, S corporation, or a Passthrough entity member a long‑term capital gain exclusion
limited liability company treated like notice. If the individual completing was claimed on Form ND‑1, line 7,
a partnership or S corporation. Schedule ND‑1CS is doing so because the portion of the exclusion amount
the individual owned an interest in
"Partnership" includes all forms attributable to the gross proceeds
a passthrough entity that sold the
of partnerships, such as a limited must be added back into North Dakota
credit, have on hand a copy of the
partnership, limited liability limited taxable income. Complete lines 5
Passthrough Entity Member Notice that
partnership, etc. through 7 to calculate the amount of
the passthrough entity was required the exclusion that must be added back.
Note: The passthrough entity to provide to each of its owners at the If this does not apply, enter zero on
(seller) and the buyer were required time of the sale. It shows the owner's line 7c and go to line 8.
to jointly file Form CTS with the share of the gross proceeds.
Office of State Tax Commissioner
at the time of the sale. In addition,
the passthrough entity (seller) was

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2022 Schedule ND-1CS
SFN 28746 (12‑2022), Page 3

Line 10 - Tax on North Dakota           Line 12 - Tax on North Dakota           If the taxpayer (and the taxpayer's 
taxable income without proceeds         taxable income with proceeds            spouse, if filing jointly) are filing as 
If Schedule ND‑1FA is going to be       If Schedule ND‑1FA is going to be       full‑year residents, enter the amount 
used to compute the tax for the         used to compute the tax for the         from Schedule ND‑1CS, line 12, on 
year, and if the gross proceeds (on     year, and if the gross proceeds         Schedule ND‑1CS, line 19. Do not 
Schedule ND‑1CS, line 2) were           (on Schedule ND‑1CS, line 2)            complete lines 13 through 18 of 
included in federal taxable income,     were included in federal taxable        Schedule ND-1CS.
the tax on Schedule ND‑1FA must         income, enter the amount from 
be recomputed by completing a           Schedule ND‑1FA, line 23, on this line. If the taxpayer (or the taxpayer's 
second Schedule ND‑1FA. Write                                                   spouse, if filing jointly) is filing as a 
"Recomputation of tax for               If the gross proceeds (on               full‑year nonresident or a part‑year 
Schedule ND‑1CS, line 10" at the        Schedule ND‑1CS, line 2) were not       resident, complete lines 13 through 18.
top of the second Schedule ND‑1FA.      included in federal taxable income, 
Complete the second Schedule ND‑1FA     the tax on Schedule ND‑1FA must         Lines 13 and 14 - North Dakota
using the same figures from the         be recomputed by completing a           income ratio
original Schedule ND‑1FA except that    second Schedule ND‑1FA. Write           If the answer to the question on 
the amount on Schedule ND-1CS,          "Recomputation of tax for               line 3 is Yes, lines 13 and 14 
line 9, must be entered as the          Schedule ND‑1CS, line 12" at the        must be completed to recompute 
starting figure on line 1 of the        top of the second Schedule ND‑1FA.      the North Dakota income ratio on 
second Schedule ND-1FA. Enter           Complete the second Schedule ND‑1FA     Schedule ND‑1NR.
the recomputed tax from line 23         using the same figures from the 
of the second Schedule ND‑1FA on        original Schedule ND‑1FA except that    If the answer to the question on 
Schedule ND‑1CS, line 10.               the amount on Schedule ND-1CS,          line 3 is No, skip lines 13 and 14, and 
                                        line 11, must be entered as the         enter the North Dakota income ratio 
If the gross proceeds (on               starting figure on line 1 of the        from Schedule ND‑1NR, line 20, on 
Schedule ND‑1CS, line 2) were           second Schedule ND-1FA. Enter           Schedule ND‑1CS, line 15.
not included in federal taxable         the recomputed tax from line 23 
income, enter the amount from           of the second Schedule ND‑1FA on 
Schedule ND‑1FA, line 23, on this line. Schedule ND‑1CS, line 12.

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