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Renaissance Zone Program Where to get help
Under the Renaissance Zone Program (N.D.C.C. ch. 40-63), a city may establish a If you have questions about the
renaissance zone, a designated area within the city in which income tax and property tax tax incentives under the Act or the
incentives are available to taxpayers who purchase, lease, or improve real estate in the completion of Schedule RZ:
zone, or invest in a renaissance fund organization.
Call
Division of Community Services Individuals 701.328.1247
The North Dakota Commerce Department’s Division of Community Services administers Partnerships, 701.328.1258
the establishment and operation of a zone. For information on the Program in general, a S corporations
list of North Dakota cities with an approved zone, and contact information for each zone trusts, and estates
city, contact the Division of Community Services as follows:
C corporations and 701.328.1249
Website: www.communityservices.nd.gov financial institutions
Phone: 701.328.5300 Speech or hearing impaired—call Relay
Office address: 1600 E. Century Avenue, Bismarck, ND 58503 North Dakota at 1.800.366.6888
E-mail
Reminders Individuals, estates, trusts, partnerships,
The following apply to taxpayers claiming a tax incentive under the Renaissance Zone and S corporations—
Program: individualtax@nd.gov
C corporations and financial
• Tax incentive disclosure—If requested by the chairman of North Dakota’s Legislative
institutions—
Management or a standing committee of the North Dakota Legislature, the Tax
corptax@nd.gov
Commissioner must disclose the amount of any tax deduction or tax credit earned or
claimed by a taxpayer. The taxpayer’s name, federal identification number, or any Write
other confidential information will not be disclosed. This applies to deductions and ND Office of State Tax Commissioner
credits earned or claimed after July 31, 2017. 600 E. Boulevard Ave., Dept. 127
Bismarck, ND 58505-0599
• State and local tax clearance requirements—Starting August 1, 2017, certain state
and local tax incentives may not be granted to, or claimed, by a taxpayer unless the Website
taxpayer has satisfied all state and local tax obligations and tax liens of record for www.nd.gov/tax
taxes owed to North Dakota or a political subdivision. In certain cases, a taxpayer
may have to obtain a state or local tax clearance record. For more information, see
the State and Local Tax Clearance Requirements Guideline on the Office of State Tax
Commissioner’s website.
Contents
Renaissance Zone Act ......................................................................................... This page
Where to get help ................................................................................................ This page
General information .......................................................................................................... 1
General and specific instructions for:
Part 1: Business or investment income exemption ...................................................... 3
Part 2: Business purchase or expansion tax credit ....................................................... 6
Part 3: Single-family residence tax credit ....................................................................8
Part 4: Historic property preservation or renovation tax credit ...................................9
Part 5: Renaissance fund organization investment tax credit ...................................... 9
Part 6: Nonparticipating property owner credit ......................................................... 10
Instructions for calculating the zone apportionment factor ........................................ 11
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
Renaissance fund organization— The information in the final zone project
means an entity established by a city for approval letter will be needed to complete
2018 the sole purpose of raising funds to invest Schedule RZ. A copy of the final zone
in and provide financing to zone projects project approval letter must be attached
Schedule RZ and other projects located in a renaissance to the North Dakota tax return along
zone. with Schedule RZ. If a taxpayer did not
instructions
Taxpayer—means an individual, estate, receive a copy of the letter or misplaces it,
trust, corporation, passthrough entity, the taxpayer must contact the local zone
General or other entity subject to North Dakota authority to obtain one.
information income tax under N.D.C.C. ch. 57-38. For certain projects, the Division
Zone—means a state-approved of Community Services will issue a
renaissance zone created under the Act. preliminary approval letter. The purpose
Purpose of form of the preliminary letter is to allow the
Schedule RZ is a supplemental schedule Zone project—means a qualifying
taxpayer to proceed with the eligible
that must be completed by a taxpayer transaction with respect to a parcel of
transaction or begin the rehabilitation
claiming any of the income tax incentives property that is approved by both the
work. The final zone project approval
available under the North Dakota local zone authority and the North Dakota
letter is issued after the Division of
Renaissance Zone Act. All five pages Commerce Department’s Division of
Community Services determines that
of Schedule RZ must be attached to the Community Services.
the project has satisfied the criteria for
taxpayer’s North Dakota tax return. Zone project property—means the eligibility.
portion of a parcel of property that has
For detailed information about the been approved as a zone project. Passthrough entity. In the case of a
available income tax incentives under passthrough entity, the copy of the zone
the Act, see the Renaissance Zone Tax Eligibility for tax incentives project approval letter must be attached to
Incentives Guideline on the Office of Except for the tax credit for investing in a the entity’s tax return. The owners of the
State Tax Commissioner’s web site at renaissance fund organization, eligibility passthrough entity do not attach a copy
www.nd.gov/tax. for the tax incentives is dependent on of the zone project approval letter to their
having a zone project. North Dakota tax returns.
Definitions
Zone project
Unless stated otherwise in these Passthrough entity
A taxpayer must apply to the local zone
instructions, the following definitions If the taxpayer is a passthrough entity, the
authority for approval of a proposed amount of the exemption or credit must
apply: transaction as a zone project. For more be determined at the passthrough entity
Act—means the Renaissance Zone information on eligible transactions and level and passed through to the owners
Act under North Dakota Century Code how to apply for a zone project, contact the according to their respective interests
ch. 40 -63. local zone authority for the zone in which in the entity. Schedule RZ must be
Local zone authority—means the the project will be located prior to entering completed by the entity and attached to
governing body of the city in which the the transaction. Form 58 or Form 60. The total amount of
zone is located, or the entity designated the exemption or credit must be reported
by the city governing body to promote, Zone project approval letter
on Schedule K of the applicable return.
develop, and manage the zone. Upon final approval of a zone project, the Each owner’s share of the exemption or
North Dakota Commerce Department’s
Parcel of property—means a specific credit must be reported on North Dakota
Division of Community Services will Schedule K-1. See the instructions to
piece of real property consisting of land issue a final zone project approval letter to
and the buildings, fixtures, structures, and Form 58 or Form 60 for more information.
the local zone authority, a copy of which
improvements affixed to the land.
is also provided to the taxpayer. Among Exception for certain S corporations. In
Passthrough entity—means an other things, the letter will include the the case of an S corporation that is being
S corporation, limited liability company following: taxed as a C corporation under an election
not taxed as a corporation, general Project number assigned to the project pursuant to N.D.C.C. § 57-38-01.35, the
•
partnership, limited partnership, limited by the local zone authority. business or investment income exemption
liability partnership, limited liability under the Act is claimed as a deduction on
limited partnership, or similar entity that • Description of the tax incentive(s)
allowed for the project. the corporation’s North Dakota income tax
passes its income, deductions, and credits (This does not
to its owners. However, it does not include include any property tax exemption that return (Form 40) and is passed through
a cooperative or a real estate investment may be granted at the local government to its shareholders according to their
trust. level.) respective interests in the corporation. The
credits under the Act, however, may not
• The starting date of the 5-year
be passed through to the shareholders.
exemption or credit period, if On or before the due date or extended due
applicable.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
date of Form 40, the corporation must 2. Attach Schedule RZ and a copy of Multiple tax credits
provide each of its shareholders with a the North Dakota Schedule K-1 or If you qualify for more than one tax credit
notice containing the following: Renaissance Zone Shareholder Notice under North Dakota law (including the
• The heading: Renaissance Zone to your North Dakota income tax return. Act), the credits must be applied in the
Shareholder Notice. following order:
• The statement: This notice contains Priority of exemptions 1. Tax credits that may not be carried back
information that is important to the and credits or carried forward to another tax year.
preparation of your North Dakota A taxpayer may qualify for more than one 2. Tax credits that may be carried back.
income tax return. For instructions on tax incentive under the Act. If a taxpayer 3. Tax credits that may be carried forward.
how to report this information on your qualifies for both an income exemption
North Dakota income return, obtain and a tax credit under the Act, the income Note: In the case of an individual, the
Schedule RZ from the North Dakota exemption must be applied first to credit for income tax paid to another state
Office of State Tax Commissioner. determine North Dakota taxable income. must be applied first in all cases.
Attach a copy of this notice to your Then the tax credit must be subtracted
North Dakota income tax return. from the tax calculated on North Dakota Property tax clearance
• Name, address, and federal employer taxable income. requirement
identification number (FEIN) of the Multiple income exemptions North Dakota Century Code § 57-01-15.1
corporation. If a business qualifies for both the business provides that, before certain state tax
• Tax year of the corporation to which the income exemption under the Act and incentives may be claimed, a taxpayer
income exemption relates. the new or expanding business income must obtain a property tax clearance
• Name and social security number (or exemption under N.D.C.C. ch. 40-57.1, the record from each North Dakota county in
FEIN) of the shareholder. following steps apply: which the taxpayer holds a 50 percent or
more ownership interest in real property.
• Shareholder’s share of the business or 1. Choose which of the two exemptions to The property tax clearance record(s)
investment income exemption. apply first.
must be attached to the North Dakota tax
Passthrough entity owner. If you own 2. Calculate the amount of the return on which the incentive is claimed.
exemption to be applied first by
an interest in a passthrough entity, the The income exemptions and tax credits
entity must provide you with a North multiplying the total North Dakota claimed on Schedule RZ are subject to this
net income of the business by the first
Dakota Schedule K-1 showing your share requirement. For more information and
of the entity’s income exemption or tax exemption’s apportionment factor (see the procedure for meeting this requirement,
credit. However, if you are a shareholder “Apportionment factor” below). see the instructions to the applicable North
of an S corporation that elected to be 3. Subtract the amount of the first Dakota income tax form as follows:
taxed as a C corporation under N.D.C.C. exemption (determined in step 2) from If you file: See instructions to:
§ 57-38-01.35, you will receive a the total North Dakota net income of the
Renaissance Zone Shareholder Notice business to determine the amount of the Form ND-1 Sch. ND-1SA (exemption)
instead of a North Dakota Schedule K-1, North Dakota net income that remains. or Sch. ND-1TC (credit)
which will show your share of the 4. Calculate the amount of the exemption Form 38 Schedule 38-TC
corporation’s income exemption only. to be applied second by multiplying the Form 40 Form 40, pg. 1 (exemption)
If you receive a North Dakota remaining North Dakota net income or Sch. TC (credit)
Schedule K-1 or Renaissance Zone (determined in step 3) by the second Form 58 Schedule K
exemption’s apportionment factor
Shareholder Notice, claim your share of (see
Form 60 Schedule K
the income exemption or tax credit on your “Apportionment factor” below).
North Dakota income tax return as follows: Apportionment factor. For purposes of Disclosure notification
steps 2 and 4, the “apportionment factor” Upon written request from the chairman
1. Enter your share of the exemption means the: of a North Dakota legislative standing
or credit on the applicable line of
• Zone apportionment factor in the case committee or Legislative Management,
Schedule RZ. A separate line is
of the business income exemption under the law requires the Office of State Tax
provided in Parts 1, 4, 5, and 6 of
the Renaissance Zone Act. See page 11 Commissioner to disclose the amount of
Schedule RZ on which to report an
for details. any deduction or credit claimed on a tax
exemption or tax credit passed through
to you by a passthrough entity. Also • Apportionment factor prescribed under return. Any other confidential information,
complete Part 7 of Schedule RZ. N.D. Admin. Code § 81-03-01.1-06 such as a taxpayer’s name, social security
in the case of the new or expanding number, or federal employer identification
business income exemption under number, may not be disclosed.
N.D.C.C. ch. 40-57.1.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
The exemption is allowed over the entire Business use property. If the zone project
60-month exemption period even though property is used for business purposes,
Instructions for the life of the renaissance zone itself the amount of the exemption depends on
expires before the end of the 60-month the location of the real property (owned
Part 1 period. or leased) by the business, the portion of
Change in qualifying use. If the zone the tax year the taxpayer is eligible for
Business or project property ceases to be used for its the exemption, and whether or not the
zone project primarily consists of the
qualifying business or investment purpose,
investment the taxpayer is ineligible for the exemption expansion of an existing building. See the
starting with the first day of the month in instructions to Part 1, lines 8 through 15,
income which the property’s use changes. of Schedule RZ for the calculation of the
exemption amount.
exemption Transfer of zone project property. The
business or investment income exemption Investment use property. If the zone
project property is used for investment
and its 60-month exemption period attach
General instructions to the zone project property. If the zone purposes, the amount of the exemption
project property is transferred to another equals the actual net income derived
Who should complete taxpayer before the property’s 60-month from the zone project property during
Complete Part 1 if the incentive allowed the portion of the tax year the taxpayer
exemption period expires, the exemption
for the zone project, as specified in the is eligible for the exemption. For this
and the unused portion of the 60-month
zone project approval letter, is the business purpose, investment income means:
exemption period transfer with the
or investment income exemption. property. The taxpayer who transfers the • Net rental income from the lease of the
If there is more than one project for which property is ineligible for the exemption property.
this exemption is allowed, complete a starting on the first day of the month of • Taxable portion of a gain from the sale
separate Schedule RZ, Part 1, for each disposition. If the property is transferred or exchange of the property during the
project. to a taxpayer who also qualifies for the exemption period. In the case of an
business or investment income exemption
The business or investment income installment sale contract, the taxpayer
with respect to the property, the taxpayer may exempt the taxable portion of the
exemption may be claimed on the
acquiring the property is eligible for the gain recognized in each tax year over
following forms—
exemption for the unexpired portion of the the life of the contract, even though
In the case 60-month exemption period starting on the the 60-month exemption period or the
of a(n): Form first day of the month of acquisition. renaissance zone itself expires before
Individual ND-1 all installments are received. However,
Estate or trust 38 Amount of income interest income derived from the
C corporation 40 exemption installment sale contract is not eligible
If the taxpayer is a passthrough entity, see The amount of income that may be for the exemption.
“Passthrough entity” on page 1. exempted is dependent on whether the The exemption is allowed only to the
zone project property is used for business extent that the investment income is
Optional credit election. If certain or investment purposes. The property is included in North Dakota taxable income.
conditions are met, an individual considered used for business purposes if it In addition, if the zone project primarily
(Form ND-1) filer who qualifies for the is used in an occupation, trade, profession, consists of an expansion of an existing
business income exemption may elect to or commercial or mercantile enterprise. building, the exemption amount is
claim a tax credit in lieu of the business Property is used for investment purposes limited to an amount attributable to the
income exemption. See the instructions to if the property is not part of or used in the expanded portion of the building. See the
Part 2 (Business purchase or expansion tax regular course of any trade or business of instructions to Part 1, line 16, of Schedule
credit) on page 6 for details. If the election the taxpayer. Unless a taxpayer can show RZ for the calculation of the exemption
is made, do not complete Part 1; instead, otherwise, any property that is purchased, amount.
complete Part 2. leased, or rehabilitated by a passthrough
Maximum exemption amount per
entity will be presumed to be used for
year for zone projects approved on or
Five-year exemption period business purposes.
after August 1, 2013. In any tax year,
The exemption is allowed in each year of Depending on the facts and circumstances, a taxpayer may exempt no more than
a five-year exemption period that begins the distinction between business-use and $500,000 of eligible income derived
on the date specified in the zone project investment-use will not always be clear. from zone projects approved on or after
approval letter. The five-year exemption If in doubt as to whether zone project August 1, 2013. The eligible income
period is a period of sixty consecutive property is used for business or investment amounts attributable to zone projects
months. Once the 60-month exemption purposes, the taxpayer is advised to submit approved on or after August 1, 2013,
period begins to run, it runs uninterrupted a written request for an opinion to the that are derived from all business and
through the end of the 60-month period. Office of State Tax Commissioner. investment interests held by the taxpayer
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
during the tax year must be combined for Note: If the taxpayer has more than • S corporation—For an S corporation
purposes of this limitation. This limitation one zone project for which the taxpayer filing North Dakota Form 60 that carries
is accounted for in Part 1, lines 18 and 19, qualifies for the business or investment on 100 percent of its business in North
and Part 7, line 1, of Schedule RZ. income exemption, complete a separate Dakota, enter the amount from Form 60,
Schedule RZ, Part 1, for each project. Add Schedule KS, line 1.
the separately calculated amounts and
Regardless of where the corporation
Specific line enter the total in Part 7, line 1, of one of
carries on its business, if all of its
instructions the schedules.
shareholders are full-year residents of
• If the taxpayer directly owns or leases North Dakota, enter the amount from
Line 7
the zone project property, complete Form 60, Schedule KS, line 1.
Enter the exemption period start date for
lines 1 through 18 of Part 1. On lines If the corporation carries on its
the zone project, as shown on the final
8 through 18, only include the numbers business both within and without North
zone project approval letter. This date
for the business that owns or leases the Dakota (and is required to complete
establishes the beginning of the five-year
zone project property. lines 1 through 14 of Schedule FACT,
(60-month) exemption period that applies
• If the taxpayer owns an interest in to the zone project. This date does not Form 60), and all of the shareholders
a passthrough entity, and Part 1 of change even if the property is transferred are full-year nonresidents of North
Schedule RZ is being completed to another taxpayer. See “Five-year Dakota, multiply the amount from
only to claim the taxpayer’s share exemption period” on page 3 for more Form 60, Schedule KS, line 1, by the
of a business or investment income information. apportionment factor from Form 60,
exemption amount shown on a North Schedule FACT, line 14, and enter the
Dakota Schedule K-1 received from the Line 8 result.
passthrough entity, skip lines 1 through North Dakota business income If the corporation’s shareholders include
18, and enter the exemption amount
If the taxpayer qualified for the both residents and nonresidents of
on line 19 of Part 1. Include a copy of
investment income exemption, do not North Dakota, calculate the amount
the North Dakota Schedule K-1 with
enter any of the investment income on to enter on this line by combining the
Schedule RZ. See “Passthrough entity
this line—see line 16. amounts calculated for the shareholders
owner” on page 2 of these instructions
for more information. If the taxpayer is claiming both the as follows:
business income exemption under the Full-year resident individual, estate,
Line 1a Act and the new or expanding business or trust—Include the shareholder’s
Enter the project number assigned to the income exemption under N.D.C.C. amount from Form 60, Schedule KS,
zone project by the local zone authority, as ch. 40‑57.1, see “Multiple income Column 5.
shown on the final zone project approval exemptions” on page 2 before completing Full-year nonresident individual,
letter. If the taxpayer does not have a this line. estate, or trust—Include the
copy of the final zone project approval shareholder’s amount from Form 60,
letter, contact the local zone authority to If the business incurred a net loss, enter
obtain one. Attach a copy of the final zero. Otherwise, enter a net income as Schedule KS, Column 6.
zone project approval letter to the North follows: Part-year resident individual—
Dakota return. • Resident individual—For a resident Include the sum of the shareholder’s
individual filing North Dakota amounts attributable to the resident and
Line 1b Form ND-1, enter the amount from nonresident portions of the tax year. To
Fill in the circle indicating when the zone Federal Form 1040, Schedule C or calculate the amount for the resident
project received final approval, as shown Schedule C-EZ. portion of the tax year, multiply the
shareholder’s amount from Form 60,
on the final zone project approval letter. • Nonresident or part-year resident
Schedule KS, Column 5, by a ratio
individual—For a nonresident or
equal to the number of months the
Line 3 part-year resident individual filing
shareholder was a resident of North
Enter the street address of the zone project North Dakota Form ND-1, enter the Dakota divided by 12 months. To
property. Include the apartment, suite, or amount from Schedule ND-1NR, line 3,
calculate the amount for the nonresident
other unit number, if applicable. Do not Column B. portion of the tax year, first multiply the
•
enter a post office box number. C corporation—For a C corporation shareholder’s amount from Form 60,
filing North Dakota Form 40, enter Schedule KS, Column 5, by a ratio
Line 4 the amount from Form 40, page 1, equal to the number of months the
If the taxpayer qualified for more than one line 6. However, if Schedule CR was shareholder was a nonresident of
zone project at the same street address, completed, enter the amount from North Dakota divided by 12 months,
check the “Yes” box and enter the project Schedule CR, Part 1, line 6 of the and then multiply this result by the
numbers for all of them on the line applicable column. apportionment factor from Form 60,
provided on the schedule.
Schedule FACT, line 14.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
• Partnership—For a partnership filing Corporation partner—If a partner is a purpose of the zone project is the
North Dakota Form 58 that carries on corporation, contact the Office of State expansion of an existing building that the
100 percent of its business in North Tax Commissioner, Corporation Income taxpayer owned and used for business
Dakota, enter the amount from Form 58, Tax Section, for information on how to purposes prior to applying for the zone
Schedule KP, line 1. determine the amount to include. project, complete lines 11a through 11c.
For this purpose, an “expansion” means
Regardless of where the partnership • Fiduciary—For a fiduciary filing
adding physical square footage to an
carries on its business, if all of its North Dakota Form 38 that operates a
existing building to increase the amount of
partners are individuals, estates, and business as a sole proprietorship, enter
usable space within the building.
trusts that are full-year residents of the net income from Schedule C or
North Dakota, enter the amount from Schedule C-EZ (Form 1040) attached to Generally, the type of qualifying
Form 58, Schedule KP, line 1. Federal Form 1041. transaction which may involve an
If the partnership carries on its Note: For a nonresident estate or trust, expansion is a purchase with major
business both within and without North enter only that portion of the net income improvements (see line 5, item b) or a
Dakota (and is required to complete from Schedule C or Schedule C-EZ qualified rehabilitation (see line 5, item d).
lines 1 through 14 of Schedule FACT, (Form 1040) that is attributable to If the primary purpose of the zone project
Form 58), and all of the partners are North Dakota. is to make improvements to, or rehabilitate,
individuals, estates, and trusts that the existing building, and any expansion of
are full-year nonresidents of North Lines 9a through 9h the existing building is only incidental to
Dakota, multiply the amount from Zone apportionment factor the larger project, the zone project will not
Form 58, Schedule KP, line 1, by the (business income only) be considered an expansion for purposes of
apportionment factor from Form 58, If all of the taxpayer’s business real this limitation. In this case, skip lines 11a
Schedule FACT, line 14, and enter the property in North Dakota is located at the and 11b, and enter “1.000000” on line 11c.
result. zone project location, skip lines 9a through Then go to line 12.
9g and enter “1.000000” on line 9h. Then
If the partnership’s partners include
go to line 10. Lines 14a through 14c
different types of partners—resident Exemption period limitation
individual, nonresident individual, If only a portion of the taxpayer’s business (business income only)
corporation, etc.—calculate the amount real property in North Dakota is located
to enter on this line by combining the at the zone project location, complete Full-year eligibility. If the taxpayer is
eligible for the exemption for the entire
amounts calculated for the partners as lines 9a through 9g to calculate the zone
tax year, skip lines 14a and 14b, and
follows: apportionment factor to enter on line 9h.
enter “1.000000” on line 14c. Then go to
Full-year resident individual, estate, The instructions for lines 9a through 9g are
line 15. This applies if all of the following
or trust—Include the partner’s amount on page 11 of these instructions.
apply:
from Form 58, Schedule KP, Column 5. Real property includes leaseholds, i.e., real The taxpayer is eligible for the business
•
Full-year nonresident individual, property that the taxpayer is leasing and income exemption as of the beginning
estate, trust—Include the partner’s using in the business. of the tax year. See “Five-year
amount from Form 58, Schedule KP, If the zone project consists of the lease of exemption period” on page 3.
Column 6. space in a building for business purposes, • The taxpayer used the zone project
Part-year resident individual— and the taxpayer had previously qualified property in the business for the entire
Include the sum of the partner’s for a zone project for leasing space in the tax year.
amounts attributable to the resident same building for use in the same business,
• The 60-month exemption period did
and nonresident portions of the tax complete lines 9a through 9h. For
not expire during the tax year. This
year. To calculate the amount for the purposes of completing lines 9a through
condition is satisfied if the 60th month
resident portion of the tax year, multiply 9h, do not include the previously leased
of the exemption period falls in the last
the partner’s amount from Form 58, space or its contents in Column B (Zone
month of the tax year or later.
Schedule KP, Column 5, by a ratio project property location).
equal to the number of months the Partial year eligibility. The taxpayer is
partner was a resident of North Dakota Lines 11a through 11c eligible for the business income exemption
divided by 12 months. To calculate the Expansion limitation factor for only part of the tax year if any of the
amount for the nonresident portion of (business income only) following apply:
the tax year, first multiply the partner’s If the project approval date on line 1b is
amount from Form 58, Schedule KP, before August 1, 2013, skip lines 11a and • The taxpayer became eligible for the
Column 5, by a ratio equal to the 11b, and enter “1.000000” on line 11c. business income exemption during the
number of months the partner was a Then go to line 12. tax year in a month other than the first
month of the tax year. See “Five-year
nonresident of North Dakota divided If the project approval date on line 1b is exemption period” on page 3.
by 12 months, and then multiply this after July 31, 2013, and if the primary
result by the apportionment factor from
Form 58, Schedule FACT, line 14.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
• The taxpayer sold the zone project case of an installment sale contract,
property, terminated the lease on the the taxpayer may exempt the taxable
zone project property, or permanently portion of the gain recognized in each Instructions
withdrew the zone project property tax year over the life of the contract,
for Part 2
from use in the business during the tax even though the exemption period or
year. renaissance zone expires before all
• The maximum 60-month exemption installments are received. However, Business
period allowed for the zone project interest income derived from the
purchase or
property expired during the tax year, installment sale contract is not eligible
for the exemption.
and the 60th month is a month other expansion tax
than the last month of the tax year. Expansion project limitation. If the
If any of the above conditions apply, project approval date on line 1b is after credit
complete lines 14a through 14c to calculate July 31, 2013, and if the primary purpose
an exemption period eligibility factor. of the zone project is the expansion of an
Enter on line 14a the smaller of the existing building that the taxpayer owned General instructions
following: and used for investment purposes prior to
applying for the zone project, the amount Who should complete
• Number of months the taxpayer was Complete Part 2 only if all of the following
of the exemption is limited. For this
eligible for the exemption during the tax conditions are met:
purpose, an “expansion” means adding
year. • The taxpayer is an individual
physical square footage to an existing
• Number of months the taxpayer owned building to increase the amount of usable (Form ND-1) filer with a zone project
or leased the zone project property space within the building. that qualified for the business income
during the tax year. If the taxpayer exemption.
acquired the zone project property Generally, the type of qualifying
• The zone project consists of a purchase,
during the tax year, include the month transaction which may involve an
lease, or improvement of real property
of acquisition. If the taxpayer disposed expansion is a purchase with major
used in a business owned and operated
of the zone project property during improvements (see line 5, item b) or a
as a sole proprietorship by the
the tax year, exclude the month of qualified rehabilitation (see line 5, item d).
individual.
disposition. If the primary purpose of the zone project
• Number of months the zone project is to make improvements to, or rehabilitate, • The underlying purpose of the zone
property was used in the business the existing building, and any expansion of project is to purchase, expand, or make
during the tax year. If the taxpayer put the existing building is only incidental to leasehold improvements to the business.
the zone project property into use in the the larger project, the zone project will not • The zone project is located in a
business during the tax year, include be considered an expansion for purposes of renaissance zone city with a population
the month in which the zone project this limitation. of no more than 2,500.
property was first put into use in the If the expansion project limitation applies, • The zone project’s cost is over $75,000.
business. If the taxpayer removed the complete the following worksheet to • The individual elects to claim the
zone project property from use in the calculate the amount to enter on this line: business purchase or expansion credit in
business during the tax year, exclude lieu of the business income exemption
the month in which the zone project was 1. Total eligible (in Part 1 of Schedule RZ).
permanently removed from use in the investment income ..........1__________
Making the election. To make the
business. 2. Square footage added election, complete Part 2 of Schedule RZ
by project .........................2__________
Line 16 and attach Schedule RZ to Form ND-1.
Expansion limitation factor 3. Total square footage Do not complete Part 1. For the election
(investment income only) of building after to be valid, Form ND-1 must be filed on or
If the taxpayer qualified for the investment expansion.........................3__________ before its due date or extended due date.
The election is irrevocable and binding
income exemption, enter the following on 4. Divide line 2 by over the zone project’s entire five-year
this line: line 3 ................................4__________ exemption period.
• Rents, less related expenses, from the
zone project property received during 5. Investment income
the months the taxpayer was eligible for exemption. Multiply
the exemption during the tax year. line 1 by line 4. Amount of tax credit
The tax credit is equal to $2,000 per year
Enter this amount on
• Taxable portion of a gain from the sale over a five-year credit period—see “Five-
line 16 of Part 1 ...............5__________
or exchange of the zone project property year credit period” below. If the credit
during the exemption period. In the exceeds the individual’s tax, the unused
portion is not refundable and may not be
carried over and used on a subsequent tax
year’s return.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
Five-year credit period Line 2 • The 60-month credit period did not
The credit is allowed in each year of a Enter the project number assigned to the expire during the tax year. This applies
five-year credit period that begins on the zone project by the local zone authority, as if the 60th month of the credit period
same date the business income exemption shown on the final zone project approval falls in the last month of the tax year or
begins, as specified in the zone project letter. If the taxpayer does not have a copy later.
approval letter. The five-year credit period of the final zone project approval letter,
is a period of sixty consecutive months, contact the local zone authority to obtain Partial-year eligibility. The taxpayer is
consisting of five 12-month periods. A one. eligible for the credit for only part of the
tax year if any of the following apply:
$2,000 credit is allowed in each 12-month Attach a copy of the final zone project
period. With respect to the individual’s approval letter to the North Dakota • The taxpayer became eligible for the
credit during the tax year in a month
tax year, if the individual is not eligible for return.
the credit for the entire tax year, a credit of other than the first month of the tax
$166.67 ($2,000 divided by 12) is allowed Line 4 year. See “Five-year credit period” on
for each month of eligibility during the tax Enter the street address of the zone project this page for more information.
year. property. Include the suite or unit number, • The taxpayer ceases to use the zone
if applicable. Do not enter a post office project property for business purposes
Once the 60-month credit period begins
to run with respect to the zone project box number. during the tax year.
property, it runs uninterrupted through the • The 60-month credit period expired
Line 5
end of the 60-month credit period. The during the tax year, and the 60th month
If the taxpayer qualified for more than one is not the last month of the tax year.
credit is allowed over the entire 60-month zone project at the same street address,
credit period even if the renaissance check the “Yes” box and enter the project If any of the above conditions apply,
zone itself expires. If the property is enter on line 9 the number of months the
numbers for all of them on the line
permanently withdrawn from business use, taxpayer is eligible for the credit during
provided on the schedule.
the individual is ineligible for the credit the tax year. Enter the smaller of the
starting on the first day of the month in Line 8 following:
which the withdrawal occurs. Enter the five-year exemption period • Number of months the taxpayer was
Transfer of zone project property. The start date for the zone project, as shown eligible for the credit during the tax
tax credit and its 60-month credit period on the final zone project approval letter. year.
attach to the zone project property. If This date establishes the beginning of the Number of months the taxpayer owned
•
the property is transferred to another five-year credit period that applies to the or leased the zone project property
individual before the end of the 60-month zone project property. This date does not during the tax year. If the taxpayer
credit period, the individual transferring change even if the property is transferred acquired the zone project property
the property is ineligible for the credit to another taxpayer. See “Five-year credit during the tax year, include the month
starting with the month of disposition. period” on this page for more information. of acquisition. If the taxpayer disposed
If the property is transferred to another of the zone project property during
qualifying individual before the end of Line 9
the tax year, exclude the month of
the 60-month credit period, the individual Credit period limitation disposition.
acquiring the property is eligible for the Full-year eligibility. If the taxpayer is • Number of months the zone project
credit for the unexpired portion of the eligible for the credit for the entire tax property was used in the business
60-month credit period. year, enter “12” on line 9 and go to line 10. during the tax year. Include the month
The taxpayer is eligible for the credit for in which the zone project property was
the entire tax year if all of the following first put into use in the business, and
Specific line apply: exclude the month in which the zone
instructions • The taxpayer was eligible for the credit project was permanently removed from
as of the beginning of the tax year. use in the business.
Line 1 See “Five-year credit period” on this
Fill in the circle on this line to indicate page for more information.
eligibility for the credit in Part 2,
Schedule RZ, and to irrevocably elect • The taxpayer used the zone project
property in the business for the entire
to take the credit in lieu of the business
tax year.
income exemption in Part 1, Schedule RZ.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
for the tax credit for the unexpired portion Line 10
of the five-year credit period starting with Credit period limitation
Instructions the month of acquisition.
Full-year eligibility. If the taxpayer is
for Part 3 Change in primary place of residence. eligible for the tax credit for the entire
If an individual who qualifies for the tax tax year, enter “12” on line 10 and go to
credit with respect to a single-family line 11. The taxpayer is eligible for the
Single-family
residence ceases to use it as the primary credit for the entire tax year if all of the
residence tax place of residence, i.e., as the legal following apply:
residence, during the five-year credit • The taxpayer was eligible for the credit
credit period, the individual is ineligible for the as of the beginning of the tax year. See
tax credit starting with the first day of the “Five-year credit period” on this page.
month in which the change occurs. • The taxpayer used the zone project
General instructions
property as his or her primary place of
Who should complete Specific line residence for the entire tax year.
• The 60-month credit period did not
Complete Part 3 if the incentive allowed instructions expire during the tax year. This applies
for the zone project, as specified in the
Line 1 if the 60th month of the credit period
zone project approval letter, is the single- Enter the project number assigned to the falls in the last month of the tax year or
family residence tax credit. This credit zone project by the local zone authority, as later.
is only allowed to an individual on Form shown on the final zone project approval
ND-1. letter. If the taxpayer does not have a Partial-year eligibility. The taxpayer is
copy of the final zone project approval eligible for the credit for only part of the
Five-year credit period letter, contact the local zone authority to tax year if any of the following apply:
The credit is allowed in each year of a five- obtain one. Attach a copy of the final • The taxpayer became eligible for the
year credit period. The five-year credit zone project approval letter to the North credit during the tax year in a month
period is a period of sixty consecutive Dakota return. other than the first month of the tax
months, consisting of five 12-month year. See “Five-year credit period” on
periods. The $10,000 credit is allowed Line 3 this page.
in each of the five 12-month periods. If Enter the street address of the zone project
the individual is not eligible for the tax property. Do not enter a post office box • The taxpayer sold or otherwise disposed
of the residence during the tax year.
credit for the entire tax year, a credit number.
• The taxpayer established another
equal to $833.33 ($10,000 divided by 12) Line 4 residence as his or her primary place of
is allowed for each month of eligibility If the taxpayer qualified for more than one residence during the tax year.
during the tax year. zone project at the same street address,
• The 60-month credit period expired
Once the 60-month credit period begins to check the “Yes” box and write the project
during the tax year, and the 60th month
run, it runs uninterrupted through the end numbers for all of them on the line
is not the last month of the tax year.
of the 60-month credit period. The credit provided on the schedule.
is allowed over the entire 60-month credit If any of the above conditions apply,
period even if the renaissance zone itself Line 9
expires before the end of the 60-month Enter the five-year credit period start enter on line 10 the number of months the
credit period. date for the zone project, as shown on the taxpayer is eligible for the credit during
final zone project approval letter. This the tax year. Enter the smaller of the
following:
Transfer of zone project property. The date establishes the beginning of the
tax credit and its five-year credit period five-year credit period that applies to the • Number of months the taxpayer is
attach to the single-family residence. If the zone project property. This date does not eligible for the credit during the tax
residence is transferred to another taxpayer change even if the property is transferred year.
before the five-year credit period expires, to another taxpayer. See “Five-year credit • Number of months the taxpayer owned
the tax credit and the unused portion of period” on this page. and occupied the residence during the
the five-year credit period transfer with tax year. If the taxpayer acquired the
the property. The individual who transfers residence during the tax year, include
the residence is ineligible for the tax credit the month in which the taxpayer took
starting with the month of disposition. If title to the residence or first occupied it,
the residence is transferred to another whichever occurs last. If the taxpayer
individual who also qualifies for the tax disposed of the residence during the tax
credit with respect to the residence, the year, exclude the month of disposition.
individual acquiring the property is eligible • Number of months the residence was
used as the primary place of residence.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
the passthrough entity, skip lines 1 If the taxpayer is a passthrough entity,
through 6c, and enter the credit amount enter the total amount from line 9, and
Instructions for on line 7 of Part 4. Include a copy of skip line 11. Except for passthrough
the North Dakota Schedule K-1 with entities, attach a statement showing
Part 4 Schedule RZ. See “Passthrough entity how the amount entered on this line was
owner” on page 2 of these instructions determined.
Historic property for more information.
Line 11
preservation or Line 1 Carryforward to 2019
Enter the project number assigned to the If the total available tax credit on line 9
renovation tax zone project by the local zone authority, as exceeds the amount on line 10, enter on
shown on the final zone project approval this line the portion of the excess that is
credit letter. If the taxpayer does not have a eligible for carryover to the 2019 tax year.
copy of the final zone project approval Except for passthrough entities, attach
General instructions letter, contact the local zone authority to a statement showing how the amount
obtain one. Attach a copy of the final entered on this line was determined.
Who should complete zone project approval letter to the North
Complete Part 4 if the incentive allowed Dakota return.
for the zone project, as specified in the
zone project approval letter, is the historic Line 3 Instructions
property preservation or renovation tax Enter the street address of the project
credit. property. Include the apartment, suite, or for Part 5
This credit may be claimed on the other unit number, if applicable. Do not
following forms: enter a post office box number. Renaissance
In the case Line 4 fund
of a(n): Form If the taxpayer qualified for more than one
Individual ND-1 zone project at the same street address, organization
Estate or trust 38 check the “Yes” box and write the project
C corporation 40 numbers for all of them on the line investment tax
If the taxpayer is a passthrough entity, see provided on the schedule.
credit
“Passthrough entity” on page 1. Note: If the taxpayer has more than
one zone project for which the taxpayer General instructions
When to claim credit qualifies for the historic property
The first year the tax credit must be preservation or renovation tax credit, Who should complete
claimed is the tax year in which the complete a separate Schedule RZ Complete Part 5 if the taxpayer made a
preservation or renovation work is for each project. Add the separately qualifying investment in a renaissance
completed, as specified in the final zone calculated amounts and enter the total in fund organization (RFO), as evidenced
project approval letter. If the entire credit Part 7, line 4, of one of the schedules. by receipt of a North Dakota Renaissance
cannot be used in the tax year in which it Fund Organization Investment Reporting
is first claimed, the unused credit may be Line 7 Form from the RFO.
carried over for up to five tax years. Enter the historic property preservation or
renovation tax credit from North Dakota This credit may be claimed on the
Schedule K-1. See “Passthrough entity” following forms—
Specific line
on page 1 for more information. Attach a In the case
instructions copy of the North Dakota Schedule K-1. of a(n): Form
• If the taxpayer directly owns the zone Individual ND-1
project property, complete lines 1 Line 10 Estate or trust 38
through 11 of Part 4. Current year credit
C corporation 40
• If the taxpayer owns an interest in Enter on this line the portion of the total
a passthrough entity, and Part 4 of available tax credit (on line 9) that is being If the taxpayer is a passthrough entity, see
Schedule RZ is being completed used to reduce the 2018 tax liability. If “Passthrough entity” on page 1.
only to claim the taxpayer’s share of there is a tax credit carryforward from a
the historic property preservation or prior tax year (on line 8), use the credits in
the order that is most beneficial.
renovation tax credit shown on a North
Dakota Schedule K-1 received from
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
When to claim credit • If the taxpayer owns an interest in
The first year the tax credit must be a passthrough entity, and Part 5 of
claimed is the tax year in which the Schedule RZ is being completed Instructions for
investment was made. The date of the only to claim the taxpayer’s share
Part 6
investment is shown on the investment of the renaissance fund organization
reporting form. If the entire credit cannot investment tax credit shown on a North
be used in the tax year in which it is first Dakota Schedule K-1 received from Nonparticipating
claimed, the unused credit may be carried the passthrough entity, skip lines 1
over for up to five tax years. through 3, and enter the credit amount property owner
on line 4 of Part 5. Include a copy of
credit
Disqualifying redemption the North Dakota Schedule K-1 with
The tax credit is disallowed and must be Schedule RZ. See “Passthrough entity
repaid to the state by a taxpayer if the owner” on page 2 of these instructions General instructions
taxpayer originally made the investment for more information.
and redeems the investment within ten Who should complete
years of making it. For this purpose, Line 1 Complete Part 6 if the incentive allowed
“redeem” means that the taxpayer initiates Enter the name of the renaissance zone city for the zone project, as specified in
a transaction with the RFO in which the having the renaissance fund organization in the zone project approval letter, is the
taxpayer receives cash or property in which the taxpayer made the investment. nonparticipating property owner credit.
return for the stock or other investment This city will be identified on the North This credit may be claimed on the
interest. A disqualifying redemption does Dakota Renaissance Fund Organization following forms:
not occur if a taxpayer transfers part or all Investment Reporting Form received from
of an investment interest to a third party, the renaissance fund organization. In the case
nor does it occur if the RFO initiates the of a(n): Form
transaction. Line 4 Individual Form ND-1
Enter the RFO investment tax credit Estate or trust 38
If there is a disqualifying redemption, the
from North Dakota Schedule K-1. See C corporation 40
RFO must complete another North Dakota
“Passthrough entity” on page 1 for more
Renaissance Fund Organization Investment If the taxpayer is a passthrough entity, see
information. Attach a copy of the North
Reporting Form and submit it to the Office “Passthrough entity” on page 1.
Dakota Schedule K-1.
of State Tax Commissioner. A copy of
the completed form must be given to the Line 7 When to claim credit
taxpayer. Current year credit The first year the tax credit must be
Repayment of disallowed credit. A credit Enter on this line the portion of the total claimed is the tax year in which the related
disallowed as the result of a disqualifying available tax credit (on line 6) that is being zone project is completed, as specified in
redemption must be repaid to the state. used to reduce the 2018 tax liability. If the final zone project approval letter issued
The repayment must be made with the there is a tax credit carryforward from a to the nonparticipating property owner. If
North Dakota income tax return filed prior tax year (on line 5), use the credits in the entire credit cannot be used in the tax
for the tax year in which the redemption the order that is most beneficial. year in which it is first claimed, the unused
credit may be carried over for up to five
occurred. No penalty or interest applies If the taxpayer is a passthrough entity, tax years.
to a timely repayment of the disallowed enter the total amount from line 6, and
credit. Do not file an amended return or
skip line 8. Except for passthrough
use Schedule RZ to report the redemption. entities, attach a statement showing Specific line
If a taxpayer makes a disqualifying how the amount entered on this line was instructions
redemption, the taxpayer must contact determined. • If the taxpayer directly owns the zone
the Office of State Tax Commissioner project property, complete lines 1
for instructions on how to report the Line 8 through 10 of Part 6.
redemption on the North Dakota tax Carryforward to 2019
return. If the total available tax credit on line 6 • If the taxpayer owns an interest in
exceeds the amount on line 7, enter on a passthrough entity, and Part 6 of
this line the portion of the excess that is Schedule RZ is being completed
Specific line eligible for carryover to the 2019 tax year. only to claim the taxpayer’s share
of the nonparticipating property
instructions Except for passthrough entites, attach owner tax credit shown on a North
• If the taxpayer made the investment, a statement showing how the amount Dakota Schedule K-1 received from
complete lines 1 through 8 of Part 5. entered on this line was determined. the passthrough entity, skip lines 1
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
through 5, and enter the credit amount Real and tangible personal property
on line 6 of Part 6. Include a copy of includes land, buildings, machinery, stocks
the North Dakota Schedule K-1 with Instructions of goods, equipment, and other tangible
Schedule RZ. See “Passthrough entity property. It does not include coin and
owner” on page 2 of these instructions for calculating currency.
for more information.
the zone Property used in the business. Property
is used in the business if it is actually
Line 1 apportionment
used, available for use, or capable of being
Enter the project number assigned to the
used in the regular course of the business
zone project by the local zone authority, as factor during the tax period. This includes the
shown on the final zone project approval (for Part 1, lines 9a-9h)
following:
letter. If the taxpayer does not have a
copy of the final zone project approval • Inventoriable goods in process.
letter, contact the local zone authority to • Property held as reserves or standby
obtain one. Attach a copy of the final General instructions facilities, or property held as a reserve
source of materials.
zone project approval letter to the North These instructions explain how to calculate
Dakota return. the zone apportionment factor for Part 1, • Property under construction if actually
used in the regular course of the
Line 3 lines 9a through 9h.
business, but only to the extent of
Enter the street address of the
the value attributable to its use. In
nonparticipating property owner’s project Factor in general the case of an improvement to an
property. Include the apartment, suite, or The zone apportionment factor is a fraction
existing business that is approved
other unit number, if applicable. Do not composed of the following: as a zone project, personal property
enter a post office box number. that is purchased for purposes of the
• Numerator (Column B)
The numerator includes the average improvement and becomes an integral
Line 4 part of the business real property is
If the taxpayer qualified for more than one value of the owned and rented
zone project at the same street address, properties that are used at the business’s excluded from the zone factor until
check the “Yes” box and write the project zone project location. completion of the improvement project.
numbers for all of them on the line Exception for certain rented property. Property required to be included in the
provided on the schedule. If the zone project consists of the rental zone apportionment factor must remain
of space in a building for business in the zone apportionment factor until its
Line 6 purposes, and the taxpayer had permanent withdrawal is established by
Enter the nonparticipating property owner previously qualified for a zone project an identifiable event, such as its sale or
credit from North Dakota Schedule K-1. for renting space in the same building the lapse of an extended period of time
See “Passthrough entity” on page 1 for for use in the same business, do not (normally five years) during which the
more information. Attach a copy of the include in the numerator the space property is held for sale.
North Dakota Schedule K-1. leased for the previous zone project and Property used at zone project location.
any owned or rented property located in Property is included in the numerator
Line 9 that space. of the zone apportionment factor if it is
Current year credit physically located and used at the zone
• Denominator (Column A)
Enter on this line the portion of the total The denominator includes the average project location. Property in transit on
available tax credit (on line 8) that is being value of all owned and rented properties the last day of the tax year and mobile
used to reduce the 2018 tax liability. If the used in the business in North Dakota. or movable property is considered to
taxpayer is a passthrough entity, enter the be located and used at the zone project
total amount from line 8, and skip line 10. Determining average value of property.
location in the following situations:
Except for passthrough entities, attach See the specific line instructions for
a statement showing how the amount lines 9a through 9g later in this section for • The property is in transit between
entered on this line was determined. how to determine the average value of the separate physical locations of the same
property. business and the property’s destination
is the zone project location.
Line 10 Property includable in zone
Carryforward to 2019 apportionment factor. The zone • The property is in transit between a
If the total available tax credit on line 8 apportionment factor must include all buyer and seller and, based on the
taxpayer’s regular accounting practices,
exceeds the amount on line 9, enter on North Dakota real and tangible personal
this line the portion of the excess that is property owned and rented that is used is included in the denominator of the
eligible for carryover to the 2019 tax year. in the regular course of the taxpayer’s zone factor, and the property’s final
destination is the zone project location.
Except for passthrough entities, attach business during the tax period.
a statement showing how the amount
entered on this line was determined.
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
• The mobile or movable property, such Monthly averaging exception. If the Net annual rental rate. The net annual
as construction equipment, trucks, or averaging method described above does rental rate for an item of rented property
leased electronic equipment, is assigned not properly reflect the average value of equals the annual rental rate paid less any
to the zone project location. This the property, the tax commissioner may subrents received from subtenants. If the
includes an automobile assigned to a require or allow averaging on a monthly taxpayer received subrents, the following
traveling employee who is assigned to basis. This method will generally be apply:
the zone project location. applied in the following situations: • Do not deduct the subrents from the
• There are substantial fluctuations in the annual rental rate if they constitute
values of the property during the tax income earned in the regular course of
Specific line year. the business.
• The property is acquired after the • If the subrents produce a negative or
instructions beginning of the tax year. clearly inaccurate value for any item
Lines 9a through 9e • The property is disposed of before the of rented property, another method
In Column A (Total North Dakota end of the tax year. that properly reflects the value of the
property), enter on the applicable line the rented property may be required by the
average value of the business’s tangible Example of monthly averaging tax commissioner or requested by the
assets that are owned and located in North Assume the following property values taxpayer. For this purpose, the resulting
Dakota. In Column B (Zone project determined as of the end of each month: value must not be less than an amount
property only), enter the portion of the which bears the same ratio to the annual
January $ 2,000
amount in Column A that is physically rental rate paid for the rented property
February 2,000
located and used at the zone project as the fair market value of that portion
March 3,000
location. See “Exception for certain rented of the rented property used by the
April 3,500
property” under “Factor in general” for taxpayer bears to the total fair market
May 4,500
treatment of tangible assets owned and value of the rented property.
June 10,000
located in certain rented property.
July 15,000 Annual rental rate. Generally, the annual
Determining the average value of owned August 17,000 rental rate means the amount paid as
property. The average value of owned September 23,000 rent for the rented property for a twelve
property must be determined by adding October 25,000 month period. If the property is rented
the original cost (or other basis used November 13,000 for a term of less than twelve months, the
for federal income tax purposes) of the December 2,000 annual rental rate equals the rent paid for
property as properly reported on the books Total $ 120,000 the actual rental term during the tax year.
of the business on the first and last days of If property is rented for a term of twelve
The average value of the property
the tax year and dividing the sum by two. or more months and the current tax year
for the tax year is $10,000 ($120,000
Depreciation, amortization, and depletion divided by 12). covers a period of less than twelve months
because of a reorganization or change of
must be disregarded. Include capital
accounting period, etc., the rent paid for
additions or improvements made during Line 9f the short tax year must be annualized.
the tax year in this calculation. Also note Rented property
the following: For rented property, enter in Column A Rent. Rent means the actual sum of
• Inventory of stock of goods must be (Total North Dakota property) the amount money or other consideration payable,
valued using the valuation method used determined by multiplying the net annual directly or indirectly, by the taxpayer or
for federal income tax purposes. rental rate by eight. In Column B (Zone for the taxpayer’s benefit for the use of the
• Property acquired by gift or inheritance project property only), enter the portion of rented property, including the following:
must be valued at its basis for the amount in Column A that is attributable • Any amount payable for the use of real
depreciation purposes under federal to the rented property physically located or tangible personal property, or any
income tax law. and used at the zone project location. See part thereof, whether designated as a
• Leasehold improvements are considered “Exception for certain rented property” fixed sum of money or as a percentage
property owned by the lessee regardless under “Factor in general.” of sales, profits, or otherwise.
of whether the lessee is entitled to Note: Leasehold improvements are • Any amount payable as additional
remove the improvements or the considered property owned by the lessee rent or in lieu of rent, such as interest,
improvements revert to the lessor when regardless of whether the lessee is entitled taxes, insurance, repairs or any other
the lease expires. Value at the original to remove the improvements or the items which are required to be paid
cost of the improvements. improvements revert to the lessor when by the terms of the lease or other
the lease expires. See the instructions to arrangement. This does not include an
lines 9a through 9e. amount paid as a service charge, such
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North Dakota Office of State Tax Commissioner 2018 Schedule RZ instructions
as for utilities or janitorial services. If Rent does not include incidental Exception to net annual rental rate
a payment includes both rent and other day-to-day expenses, such as hotel method. If the use of the net annual
unsegregated charges, the amount of accommodations or daily automobile rental rate method produces a negative or
rent must be determined by considering rentals. clearly inaccurate value, or where rented
the relative values of the rent and the property is used by the taxpayer at no
other items. charge or rented at a nominal rate, the net
annual rental rate for the property must be
determined on the basis of a reasonable
market rental rate for the property.
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Schedule North Dakota Office of State Tax Commissioner 2018
RZ Schedule for Renaissance Zone Income Attach to
Form ND-1, 38,
Exemption and Tax Credits 40, 58, or 60
Taxpayer's name as shown on tax return Social security number (or FEIN, if applicable)
Part 1 Business or investment income exemption
See the instructions for Part 1 on page 3 of the instruction booklet.
If the taxpayer directly owns or leases the zone project property, complete lines 1 through 18 of Part 1. On lines 8 through 18,
only include the numbers for the business that owns or leases the zone project property.
If the taxpayer is completing Schedule RZ, Part 1, only to claim a business or investment income exemption shown on a
North Dakota Schedule K-1, skip lines 1 through 18, and enter the income exemption amount on page 2, Part 1, line 19.
1. a. Project number assigned by the local zone authority (Attach a copy of the final zone project
approval letter) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a
b. This project was approved by the local zone authority: Before August 1, 2013 After July 31, 2013
2. Renaissance zone city in which the zone project property is located
3. Street address of zone project property
4. Does taxpayer have more than one zone project at the address shown on line 3 above? Yes No
If yes, enter all of the project numbers here
5. Type of qualifying transaction (from final zone project approval letter):
a Purchase b Purchase with major improvements c Lease d Qualified rehabilitation
e Public utility infrastructure changes f Leasehold improvements
6. If aor cis checked on line 5, enter the date on which title to the property was obtained or the date
the lease took effect, whichever applies. If b ,d ,e, or fis checked on line 5, enter the date the
improvement or rehabilitation work was completed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Exemption period start date (from final zone project approval letter) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
If the zone project property is being used solely for investment purposes, skip lines 8
through 15, and go to line 16. See instructions for what is considered investment use.
8. North Dakota business income for 2018 tax year (See instructions for the amount to enter on this line) . . . 8
If less than 100% of the taxpayer's North Dakota business real property is located at
the zone project location, complete lines 9a through 9h; otherwise, enter "1.000000"
on line 9h and go to line 10.
Column A Column B
9. Enter the average value at original cost of each of the following All property in Property at zone
real and tangible personal property items used in the business: North Dakota project location
a. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9a
b. Buildings and other fixed assets . . . . . . . . . . . . . . . . . . . . 9b
c. Depletable assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9c
d. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d
e. Other assets (Attach a statement identifying assets) . . . . . . 9e
f. Rented property (Annual rent x 8) . . . . . . . . . . . . . . . . . . . 9f
g. Total property (Add lines 9a through 9f) . . . . . . . . . . . . . 9g
h. Zone apportionment factor (Divide line 9g, Column B, by line 9g, Column A) . . . . . . . . . . . . . . . . . 9h
10. North Dakota business income attributable to zone project (Multiply line 8 by line 9h) . . . . . . . . . . . . . . 10
See the instructions to lines 11a through 11c before completing them.
11. a. Amount of square feet added by the zone project . . . . . . . . . . . . . . . . . . . . . . . . . . 11a
b. Total square footage of building after expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . 11b
c. Expansion limitation factor (Divide line 11a by line 11b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11c
12. Multiply line 10 by line 11c. Enter the amount from this line on page 2, Part 1, line 13 . . . . . . . . . 12
Attach all 5 pages of Schedule RZ to the North Dakota income tax return
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North Dakota Office of State Tax Commissioner
2018 Schedule RZ, page 2
Taxpayer's name as shown on tax return Social security number (or FEIN, if applicable)
Part 1 continued
13. Enter the amount from page 1, Part 1, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
See the instructions to lines 14a through 14c before completing them.
14. a. Number of months of eligibility for the exemption during the 2018 tax year . . . . . . . . 14a
b. Number of months in taxpayer's 2018 tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14b
c. Exemption period eligibility factor (Divide line 14a by line 14b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c
15. North Dakota business income exemption for this project (Multiply line 13 by line 14c) . . . . . . . . . . . . . 15
16. Investment income exemption for this project (See instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17. Total business and/or investment income exemption (Add lines 15 and 16) . . . . . . . . . . . . . . . . . . . . . 17
18. Income exemption from directly-owned zone project property. Enter the amount from line 17
on line 18a or line 18b, whichever applies.
a. If the project approval date on page 1, Part 1, line 1b, is before August 1, 2013,
enter the amount from line 17 here and on page 5, Part 7, line 1a . . . . . . . . . . . . . . . . . . . . . . . . . 18a
b. If the project approval date on page 1, Part 1, line 1b, is after July 31, 2013,
enter the amount from line 17 here and on page 5, Part 7, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . 18b
Complete line 19 only if the taxpayer is claiming a renaissance zone income exemption
from a North Dakota Schedule K-1.
19. Income exemption from a passthrough entity. Enter the amount from the North Dakota
Schedule K-1 on line 19a or line 19b, whichever applies.
a. For projects approved before August 1, 2013, enter the amount here and on
page 5, Part 7, line 1b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19a
b. For projects approved after July 31, 2013, enter the amount here and on
page 5, Part 7, line 1e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19b
Part 2 Business purchase or expansion tax credit
See the instructions for Part 2 on page 6 of the instruction booklet.
1. Fill in this circle only if the taxpayer is eligible for this credit and is irrevocably electing to claim it
instead of the business income exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Project number assigned by the local zone authority (Attach a copy of the final zone project approval letter)
3. Renaissance zone city in which the zone project is located
4. Street address of zone project property
5. Does taxpayer have more than one zone project at the address shown on line 4 above? Yes No
If yes, enter all of the project numbers here
6. Type of qualifying transaction (from final zone project approval letter):
abPurchase of new business Expansion of existing business c Leasehold improvement
7. If ais checked on line 6, enter the date on which title to the property was obtained. If bor isc
checked on line 6, enter the date the expansion or leasehold improvement work was completed . . . . . . . . 7
8. Credit period start date (from final zone project approval letter) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
See the instructions to line 9 before completing it.
9. Number of months of eligibility for the credit for the 2018 tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Business purchase or expansion tax credit. If the number on line 9 is less than 12, multiply the number
on line 9 by $166.67; otherwise, enter $2,000. Enter the amount from this line on page 5, Part 7, line 2 10
Attach all 5 pages of Schedule RZ to the North Dakota income tax return
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North Dakota Office of State Tax Commissioner
2018 Schedule RZ, page 3
Taxpayer's name as shown on tax return Social security number (or FEIN, if applicable)
Part 3 Single-family residence tax credit
See the instructions for Part 3 on page 8 of the instruction booklet.
1. Project number assigned by the local zone authority (Attach a copy of final zone project approval letter)
2. Renaissance zone city in which the zone project is located
3. Street address of zone project property
4. Does taxpayer have more than one zone project at the address shown on line 3 above? Yes No
If yes, enter all of the project numbers here
5. Type of qualifying transaction (from final zone project approval letter):
a Purchase b Qualified rehabilitation
6. If ais checked on line 5, enter the date on which title to the qualifying property was obtained . . . . . . . . . . 6
7. If ais checked on line 5, enter the date on which the taxpayer first occupied the qualifying property . . . . . 7
8. If bis checked on line 5, enter the date on which the rehabilitation work was completed . . . . . . . . . . . . . . 8
9. Credit period start date (from final zone project approval letter) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
See instructions to line 10 before completing it.
10. Number of months of eligibility for this credit for the 2018 tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Single-family residence tax credit. If the number on line 10 is less than 12, multiply the number on
line 10 by $833.33; otherwise, enter $10,000. Enter the amount from this line on page 5, Part 7,
line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Part 4 Historic property preservation or renovation tax credit
See the instructions for Part 4 on page 9 of the instruction booklet.
1. Project number assigned by the local zone authority (Attach a copy of final zone project approval letter)
2. Renaissance zone city in which the zone project is located
3. Street address of zone project property
4. Does taxpayer have more than one zone project at the address shown on line 3 above? Yes No
If yes, enter all of the project numbers here
5. Total amount paid to preserve or renovate the qualifying historic property . . . . . . . . . . . . . . . . . . . . . . . 5
6. a. Multiply line 5 by 25% (.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a
b. Maximum tax credit per project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b 250,000
c. Enter the smaller of line 6a or line 6b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6c
7. Historic tax credit from a passthrough entity (Attach copy of North Dakota Schedule K-1) . . . . . . . . . . . . . 7
8. Carryforward from 2017 tax year (from 2017 Schedule RZ, Part 4, line 11) . . . . . . . . . . . . . . . . . . . . . . 8
9. Total available credit (Add lines 6c, 7 and 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Credit for 2018 tax year (See instructions) (Attach statement) Enter here and on page 5, Part 7, line 4 . . 10
11. Carryforward to 2019 tax year (See instructions) (Attach statement) . . . . . . . . . . 11
Attach all 5 pages of Schedule RZ to the North Dakota income tax return
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North Dakota Office of State Tax Commissioner
2018 Schedule RZ, page 4
Taxpayer's name as shown on tax return Social security number (or FEIN, if applicable)
Part 5 Renaissance fund organization (RFO) investment tax credit
See the instructions for Part 5 on page 9 of the instruction booklet.
1. Renaissance zone city having the RFO in which the investment was made
2. Amount invested in the RFO during the 2018 tax year (Attach a copy of the Renaissance Fund
Organization Investment Reporting Form received from the RFO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Multiply line 2 by 50% (.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. RFO tax credit from a passthrough entity (Attach copy of North Dakota Schedule K-1) . . . . . . . . . . . . . . . 4
5. Carryforward from 2017 tax year (from 2017 Schedule RZ, Part 5, line 8) . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Total available credit (Add lines 3, 4, and 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Credit for 2018 tax year (See instructions) (Attach statement) Enter here and on page 5, Part 7, line 5 . . . 7
8. Carryforward to 2019 tax year (See instructions) (Attach statement) . . . . . . . . . . 8
Part 6 Nonparticipating property owner tax credit
See the instructions for Part 6 on page 10 of the instruction booklet.
1. Project number assigned by the local zone authority (Attach a copy of final zone project approval letter)
2. Renaissance zone city in which the zone project is located ________________________________________
3. Street address of zone project property __________________________________________________________________
4. Does taxpayer have more than one zone project at the address shown on line 3 above? Yes No
If yes, enter all of the project numbers here ____________________________________________________
5. Approved cost of making utility changes (from final zone project approval letter) . . . . . . . . . . . . . . . . . . . 5
6. Nonparticipating property owner tax credit from a passthrough entity (Attach copy of North Dakota
Schedule K-1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Carryforward from 2017 tax year (from 2017 Schedule RZ, Part 6, line 10) . . . . . . . . . . . . . . . . . . . . . . . 7
8. Total available credit (Add lines 5, 6, and 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. Credit for 2018 tax year (See instructions) (Attach statement) Enter here and on page 5, Part 7, line 6 . . . 9
10. Carryforward to 2019 tax year (See instructions) (Attach statement) . . . . . . . . 10
Attach all 5 pages of Schedule RZ to the North Dakota income tax return
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North Dakota Office of State Tax Commissioner
2018 Schedule RZ, page 5
Taxpayer's name as shown on tax return Social security number (or FEIN, if applicable)
Part 7 Exemption and tax credit summary
Interest in multiple zone projects. A separate Schedule RZ (for Parts 1 through 6) must be completed for each
zone project. If more than one Schedule RZ is completed for the tax year, add the separate amounts from all of the
Schedule RZ forms and enter the total on the appropriate line of Part 7 on only one of the Schedule RZ forms.
1. Business or investment income exemption:
Projects approved before August 1, 2013
a. Exemption amount from directly-owned property from Part 1, line 18a . . . . 1a
b. Exemption amount from passthrough entity from Part 1, line 19a . . . . . . . 1b
c. Business or investment income exemption for projects approved before August 1, 2013.
Add lines 1a and 1b. Enter this amount on the 2018 North Dakota return as instructed below . . . . . . 1c
If filing: Enter amount from line 1c on:
Form ND-1 . . . . . . . Schedule ND-1SA, line 1
Form 38 . . . . . . . . . Form 38, Tax Computation Schedule, line 4d
Form 40 . . . . . . . . . Form 40, line 10, or Schedule CR, Part I, line 10
Form 58 . . . . . . . . . Form 58, Schedule K, line 4a
Form 60 . . . . . . . . . Form 60, Schedule K, line 2a
Projects approved after July 31, 2013
d. Exemption amount from directly-owned property from Part 1, line 18b . . . . 1d
e. Exemption amount from passthrough entity from Part 1, line 19b . . . . . . . 1e
f. Add lines 1d and 1e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1f
g. Maximum exemption per year for projects approved after July 31, 2013. . . . 1g 500,000
h. Business or investment income exemption for projects approved after July 31, 2013. Enter lesser
of line 1f or line 1g. Enter this amount on the 2018 North Dakota return as instructed below . . . . . . 1h
If filing: Enter amount from line 1h on:
Form ND-1 . . . . . . . Schedule ND-1SA, line 1
Form 38 . . . . . . . . . Form 38, Tax Computation Schedule, line 4d
Form 40 . . . . . . . . . Form 40, line 10, or Schedule CR, Part I, line 10
Form 58 . . . . . . . . . Form 58, Schedule K, line 4b
Form 60 . . . . . . . . . Form 60, Schedule K, line 2b
2. Business purchase or expansion tax credit from Part 2, line 10 . . . . . . . . . . . . . . . 2
3. Single-family residence tax credit from Part 3, line 11 . . . . . . . . . . . . . . . . . . . . . 3
4. Historic property preservation or renovation tax credit from Part 4, line 10 . . . . . . 4
5. Renaissance fund organization investment tax credit from Part 5, line 7 . . . . . . . . 5
6. Nonparticipating property owner tax credit from Part 6, line 9 . . . . . . . . . . . . . . . 6
7. Total renaissance zone credit. Add lines 2 through 6. Enter this amount on the 2018 North Dakota
return as instructed below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
If filing: Enter amount from line 7 on:
Form ND-1 . . . . . . . Schedule ND-1TC, line 2
Form 38 . . . . . . . . . Schedule 38-TC, line 1
Form 40 . . . . . . . . . Form 40, Schedule TC, line 9, or Schedule CR, Part III, line 9
Form 58 . . . . . . . . . Form 58, Schedule K, line 7
Form 60 . . . . . . . . . Form 60, Schedule K, line 4
Attach all 5 pages of Schedule RZ to the North Dakota income tax return
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