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

North Dakota Ofﬁ ce of State Tax Commissioner

2011 Schedule RZ instructions

tax under N.D.C.C. ch. 57-35.3, you will

3. Subtract the amount of the ﬁ rst

Exception for ﬁ nancial institution. If

receive a Renaissance Zone Passthrough

exemption (determined in step 2 above)

a partnership, S corporation, or limited

Member Notice instead of a North Dakota

from the total North Dakota net income

liability company treated like a partnership

Schedule K-1, which will show your share

of the business to determine the amount

or S corporation is subject to the North

of the entity’s income exemption only. If

of the North Dakota net income that

Dakota ﬁ nancial institution tax under

you receive a North Dakota Schedule K-1

remains.

N.D.C.C. ch. 57-35.3, the business or

or Renaissance Zone Passthrough Member

investment income exemption under

4. Calculate the amount of the exemption

Notice, claim your share of the income

the Act is claimed as a deduction on the

to be applied second by multiplying the

exemption or tax credit on your North

entity’s North Dakota ﬁ nancial institution

remaining North Dakota net income

Dakota tax return as follows:

tax return (Form 35) and is passed

(determined in step 3 above) by the

through to the owners in proportion to

1. Enter your share of the exemption

second exemption’s apportionment

their respective interests in the entity. The

or credit on the applicable line of

factor (see “Apportionment factor”

credits under the Act, however, may not

Schedule RZ. A separate line is

below).

be passed through to the entity’s owners.

provided in Parts 1, 4, 5, and 6 of

Apportionment factor. For purposes of

On or before the due date or extended due

Schedule RZ on which to report an

steps 2 and 4, the “apportionment factor”

date of Form 35, the entity must provide

exemption or tax credit passed through

means the:

each of its owners with a notice containing

to you by a passthrough entity. Also

• Zone apportionment factor in the case

the following:

complete Part 7 of Schedule RZ.

of the business income exemption under

2. Attach Schedule RZ and a copy of

• The heading: Renaissance Zone

the Renaissance Zone Act. See page 11

the North Dakota Schedule K-1 or

Passthrough Member Notice.

for details.

Renaissance Zone Passthrough Member

• Apportionment factor prescribed under

• The statement: This notice contains

Notice to your North Dakota tax return.

N.D. Admin. Code § 81-03-01.1-06

information that is important to the

in the case of the new or expanding

preparation of your North Dakota tax

Priority of exemptions

business income exemption under

return. For instructions on how to

and credits

N.D.C.C. ch. 40-57.1.

report this information on your North

A taxpayer may qualify for more than one

Dakota return, obtain Schedule RZ from

Multiple tax credits

tax incentive under the Act. If a taxpayer

the North Dakota Ofﬁ ce of State Tax

If you qualify for more than one tax credit

qualiﬁ es for both an income exemption

Commissioner. Attach a copy of this

under North Dakota law (including the

and a tax credit under the Act, the income

notice to your North Dakota tax return.

Act), the credits must be applied in the

exemption must be applied ﬁ rst to

following order:

• Name, address, and federal employer

determine North Dakota taxable income.

1. Tax credits that may not be carried back

identiﬁ cation number (FEIN) of the

Then the tax credit must be subtracted

or carried forward to another tax year.

entity.

from the tax calculated on North Dakota

2. Tax credits that may be carried back.

taxable income.

• Tax year of the entity to which the

3. Tax credits that may be carried forward.

Multiple income exemptions

income exemption relates.

If a business qualiﬁ es for both the business

• Name and social security number (or

Note: In the case of an individual, the

income exemption under the Act and

FEIN) of the owner.

credit for income tax paid to another state

the new or expanding business income

must be applied ﬁ rst in all cases.

exemption under N.D.C.C. ch. 40-57.1, the

• Owner’s share of the income

following steps apply:

exemption.

Financial institution

1. Choose which of the two exemptions to

minimum payment

Passthrough entity owner. If you own

apply ﬁ rst.

an interest in a partnership, S corporation,

The tax incentives under the Act do not

2. Calculate the amount of the

or a limited liability company treated like

affect the $50.00 minimum payment

exemption to be applied ﬁ rst by

a partnership or S corporation, the entity

required of a ﬁ nancial institution under

multiplying the total North Dakota

must provide you with a North Dakota

N.D.C.C. § 57-35.3-03.

net income of the business by the ﬁ rst

Schedule K-1 showing your share of the

exemption’s apportionment factor (see

entity’s income exemption or tax credit.

“Apportionment factor” below).

However, if the entity is subject to the

North Dakota ﬁ nancial institution

Schedule Rz - Booklet - Renaissance Zone Act Exemptions And Tax Credits - 2011 Page 4

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