Schedule Rz - Booklet - Renaissance Zone Act Exemptions And Tax Credits

North Dakota Ofﬁ ce of State Tax Commissioner

2011 Schedule RZ instructions

Real and tangible personal property

•

Monthly averaging exception. If the

The mobile or movable property, such

includes land, buildings, machinery, stocks

averaging method described above does

as construction equipment, trucks, or

of goods, equipment, and other tangible

not properly reﬂ ect the average value of

leased electronic equipment, is assigned

property. It does not include coin and

the property, the tax commissioner may

to the zone project location. This

require or allow averaging on a monthly

currency.

includes an automobile assigned to a

basis. This method will generally be

traveling employee who is assigned to

Property used in the business. Property

applied in the following situations:

the zone project location.

is used in the business if it is actually

•

There are substantial ﬂ uctuations in the

used, available for use, or capable of being

values of the property during the tax

used in the regular course of the business

Speciﬁ c line

year.

during the tax period. This includes the

•

following:

instructions

The property is acquired after the

•

beginning of the tax year.

Inventoriable goods in process.

Lines 10a through 10e

•

The property is disposed of before the

Property held as reserves or standby

In Column A (Total North Dakota

end of the tax year.

facilities, or property held as a reserve

property), enter on the applicable line the

source of materials.

average value of the business’s tangible

Example of monthly averaging

•

Property under construction if actually

assets that are owned and located in North

Assume the following property values

used in the regular course of the

Dakota. In Column B (Zone project

determined as of the end of each month:

business, but only to the extent of

property only), enter the portion of the

January

2,000

the value attributable to its use. In

amount in Column A that is physically

the case of an improvement to an

February

2,000

located and used at the zone project

March

3,000

existing business that is approved

location. See “Exception for certain

as a zone project, personal property

April

3,500

Factor in general

rented property” under

that is purchased for purposes of the

May

4,500

for treatment of tangible assets owned and

June

10,000

improvement and becomes an integral

located in certain rented property.

part of the business real property is

July

15,000

August

17,000

excluded from the zone factor until

Determining the average value of owned

completion of the improvement project.

September

23,000

property. The average value of owned

October

25,000

property must be determined by adding

Property required to be included in the

November

13,000

the original cost (or other basis used

zone apportionment factor must remain

December

2,000

for federal income tax purposes) of the

in the zone apportionment factor until its

Total

$ 120,000

property as properly reported on the books

permanent withdrawal is established by

of the business on the ﬁ rst and last days of

an identiﬁ able event, such as its sale or

The average value of the property

the tax year and dividing the sum by two.

the lapse of an extended period of time

for the tax year is $10,000 ($120,000

(normally ﬁ ve years) during which the

divided by 12).

Depreciation, amortization, and depletion

property is held for sale.

must be disregarded. Include capital

Property used at zone project location.

additions or improvements made during

Line 10f

Property is included in the numerator

the tax year in this calculation. Also note

Rented property

of the zone apportionment factor if it is

the following:

For rented property, enter in Column A

physically located and used at the zone

•

Inventory of stock of goods must be

(Total North Dakota property) the amount

project location. Property in transit on

valued using the valuation method used

determined by multiplying the net annual

the last day of the tax year and mobile

for federal income tax purposes.

rental rate by eight. In Column B (Zone

or movable property is considered to

•

project property only), enter the portion of

Property acquired by gift or inheritance

be located and used at the zone project

the amount in Column A that is attributable

must be valued at its basis for

location in the following situations:

to the rented property physically located

depreciation purposes under federal

•

The property is in transit between

and used at the zone project location. See

income tax law.

separate physical locations of the same

“Exception for certain rented property”

•

Leasehold improvements are considered

business and the property’s destination

Factor in general

under

property owned by the lessee regardless

is the zone project location.

Note: Leasehold improvements are

of whether the lessee is entitled to

•

The property is in transit between a

remove the improvements or the

considered property owned by the lessee

buyer and seller and, based on the

regardless of whether the lessee is entitled

improvements revert to the lessor when

taxpayer’s regular accounting practices,

the lease expires. Value at the original

to remove the improvements or the

is included in the denominator of the

improvements revert to the lessor when

cost of the improvements.

zone factor, and the property’s ﬁ nal

the lease expires. See the instructions to

destination is the zone project location.

lines 10a through 10e.

Schedule Rz - Booklet - Renaissance Zone Act Exemptions And Tax Credits - 2011 Page 14

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