- 2 -
|
North Dakota Office of State Tax Commissioner
2018 Schedule ND-1CS instructions Page 1
Purpose of form Line 4 - North Dakota taxable income
If a taxpayer sells an unused research and How to complete this form with proceeds
The entire gross proceeds from the sale of
experimental expenditure tax credit (under Before completing this schedule: the credit are assignable to, and taxable
N.D.C.C. §57-38-30.5) to another taxpayer by, North Dakota. If the gross proceeds
for value, the gross proceeds from the sale 1. Complete Form ND-1, lines 1 through
are assignable to North Dakota and are line 19. (on line 2) were included in federal taxable
income, enter the North Dakota taxable
subject to North Dakota income tax. No 2. If Schedule ND-1FA (3-year averaging income amount from line 1 on line 4. If the
part of the proceeds may be apportioned for farm income) is going to be used gross proceeds were not included in federal
or allocated outside North Dakota, and the to calculate the tax for the tax year, taxable income, add the gross proceeds (on
gross proceeds may not be reduced by any complete that schedule first. Information line 2) to the North Dakota taxable income
loss or deduction allowed for North Dakota from Schedule ND-1FA will be needed (on line 1) and enter the result on line 4.
income tax purposes. If the taxpayer is an to complete Schedule ND-1CS. Do
individual, this schedule must be used to not enter the tax calculated on Lines 5 through 7 - Long-term capital
calculate the individual's income tax for the Schedule ND-1FA on Form ND-1 or gain exclusion adjustment
tax year. Schedule ND-1NR. The gross proceeds from the sale of the
credit may not be reduced by any loss or
Note: There are conditions and procedures 3. If the individual (or the individual's deduction allowed for North Dakota income
that must be satisfied before the credit may spouse, if filing jointly) was a nonresident tax purposes. If the gross proceeds (on
be transferred to another taxpayer. For of North Dakota for part or all of the line 2) were reported as a long-term capital
more information, see Form CTS, Credit tax year, complete Schedule ND-1NR. gain for federal income tax purposes and
Transfer Statement, which can be obtained Information from that schedule will be a long-term capital gain exclusion was
at www.nd.gov/tax. needed to complete Schedule ND-1CS. claimed on Form ND-1, line 8, the portion
Do not enter the tax calculated on of the exclusion amount attributable to the
Schedule ND-1NR on Form ND-1.
Who must complete gross proceeds must be added back into
An individual must complete this schedule if Credit transfer statement. If the North Dakota taxable income. Complete
either (or both) of the following apply: individual completing Schedule ND-1CS lines 5 through 7 to calculate the amount
is the taxpayer who sold the credit, have of the exclusion that must be added back.
• The individual sold an unused research on hand a copy of the Form CTS, Credit If this does not apply, enter zero on line 7c
and experimental expenditure tax credit Transfer Statement, that was required and go to line 8.
to another taxpayer for value. to be filed with the Office of State Tax
Note: The individual (seller) and the Commissioner at the time of the sale. It Line 10 - Tax on North Dakota taxable
buyer were required to jointly file shows the amount of the gross proceeds income without proceeds
Form CTS with the Office of State Tax received from the buyer. If Schedule ND-1FA is going to be used to
Commissioner at the time of the sale. compute the tax for the year, and if the
Passthrough entity member notice. If gross proceeds (on Schedule ND-1CS,
• The individual held an interest in a the individual completing Schedule ND-1CS line 2) were included in federal taxable
passthrough entity that sold a research is doing so because the individual owned income, the tax on Schedule ND-1FA must
and experimental expenditure tax credit an interest in a passthrough entity that be recomputed by completing a second
to another taxpayer for value. sold the credit, have on hand a copy of the Schedule ND-1FA. Write "Recomputation
A "passthrough entity" means a Passthrough Entity Member Notice that the of tax for Schedule ND-1CS, line 10" at
partnership, S corporation, or a passthrough entity was required to provide the top of the second Schedule ND-1FA.
limited liability company treated like a to each of its owners at the time of the sale. Complete the second Schedule ND-1FA
partnership or S corporation. It shows the owner's share of the gross using the same figures from the original
"Partnership" includes all forms proceeds. Schedule ND-1FA except that the amount
of partnerships, such as a limited on Schedule ND-1CS, line 9, must
partnership, limited liability limited be entered as the starting figure on
partnership, etc. Specific line instrucitons line 1 of the second Schedule ND-1FA.
Enter the recomputed tax from line 23
Note: The passthrough entity (seller) of the second Schedule ND-1FA on
and the buyer were required to jointly Line 2 - Gross proceeds
file Form CTS with the Office of State Enter the amount of gross proceeds from Schedule ND-1CS, line 10.
Tax Commissioner at the time of the Form CTS, Credit Transfer Statement, or If the gross proceeds (on Schedule ND-1CS,
sale. In addition, the passthrough from the Passthrough Entity Member Notice, line 2) were not included in federal
entity (seller) was required to provide a whichever is applicable. taxable income, enter the amount from
specially-prescribed notice to each of its Schedule ND-1FA, line 23, on this line.
owners showing the owner's share of the Line 3 - Inclusion of proceeds in federal
total gross proceeds and instructing the taxable income
owner how to report the proceeds on the In general, the transfer of a state income Line 12 - Tax on North Dakota taxable
owner's North Dakota income tax return. tax credit for value is a taxable sale of income with proceeds
See Form CTS for more information. property and the gross proceeds are If Schedule ND-1FA is going to be used to
includable in gross income for federal compute the tax for the year, and if the
income tax purposes - see Temple, George gross proceeds (on Schedule ND-1CS,
H., 136 TC No. 15 (2011) and IRS Chief line 2) were included in federal
Counsel Advice (CCA) 201147024. Fill in taxable income, enter the amount from
the applicable circle to indicate whether Schedule ND-1FA, line 23, on this line.
or not the gross proceeds (on line 2) were
included in federal taxable income.
|