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

North Dakota Ofﬁ ce of State Tax Commissioner

2011 Schedule RZ instructions

Depending on the facts and circumstances,

period is a period of sixty consecutive

the distinction between business-use and

months. Once the 60-month exemption

Instructions for

investment-use will not always be clear.

period begins to run, it runs uninterrupted

Part 1

If in doubt as to whether zone project

through the end of the 60-month period.

property is used for business or investment

The exemption is allowed over the entire

Business or

purposes, the taxpayer is advised to submit

60-month exemption period even though

a written request for an opinion to the

the life of the renaissance zone itself

investment

Ofﬁ ce of State Tax Commissioner.

expires before the end of the 60-month

period.

income

Business use property. If the zone project

property is used for business purposes,

Change in qualifying use. If the zone

exemption

the exemption amount is determined as

project property ceases to be used for its

follows:

qualifying business or investment purpose,

the taxpayer is ineligible for the exemption

1. Determine the business income

starting with the ﬁ rst day of the month in

attributable to the zone project property

General instructions

which the property’s use changes.

by multiplying the total North Dakota

net income derived from the business

Transfer of zone project property. The

by the zone apportionment factor. See

Who should complete

business or investment income exemption

page 11 for how to calculate the zone

Complete Part 1 if the incentive allowed

and its 60-month exemption period attach

apportionment factor.

to the zone project property. If the zone

for the zone project, as speciﬁ ed in the

2. The amount of business income

zone project approval letter, is the:

project property is transferred to another

attributable to the zone project property

taxpayer before the property’s 60-month

•

Business income exemption, or

(determined in step 1 above) must

exemption period expires, the exemption

•

Investment income exemption.

be multiplied by a ratio equal to the

and the unused portion of the 60-month

number of months of exemption

If there is more than one project for which

exemption period transfer with the

eligibility during the tax year divided by

either of the above exemptions is allowed,

property.

the number of months in the tax year.

complete a separate Schedule RZ, Part 1,

The taxpayer who transfers the property is

for each project.

The amount of business income that may

ineligible for the exemption starting with

be exempted is calculated in Part 1, lines 9

The business or investment income

the month of disposition. If the property is

through 13, of Schedule RZ.

exemption may be claimed on the

transferred to a taxpayer who also qualiﬁ es

Investment use property. If the zone

following forms—

for the business or investment income

project property is used for investment

exemption with respect to the property, the

In the case

purposes, the amount of the exemption

taxpayer acquiring the property is eligible

of a(n):

Form

equals the actual net income derived from

for the exemption for the unexpired portion

Individual

ND-1

the zone project property during the tax

of the 60-month exemption period starting

Estate or trust

year while eligible for the exemption. For

with the month of acquisition.

C corporation

this purpose, investment income means:

Financial institution

Amount of income

•

Net rental income from the lease of the

If the taxpayer is a passthrough entity, see

exemption

property.

Passthrough entity

on page 1.

•

Taxable portion of a gain from the sale

The amount of income that may be

or exchange of the property during the

exempted is dependent on whether the

Optional credit election. If certain

exemption period. In the case of an

zone project property is used for business

conditions are met, an individual

installment sale contract, the taxpayer

or investment purposes. The property is

(Form ND-1) ﬁ ler who qualiﬁ es for the

may exempt the taxable portion of the

considered used for business purposes if it

business income exemption may elect to

gain recognized in each tax year over

is used in an occupation, trade, profession,

claim a tax credit in lieu of the business

the life of the contract, even though

or commercial or mercantile enterprise.

income exemption. See the instructions to

the 60-month exemption period or the

Property is used for investment purposes

Part 2 (Business purchase or expansion tax

renaissance zone itself expires before

if the property is not part of or used in the

credit) on page 6 for details.

all installments are received. However,

regular course of any trade or business of

Five-year exemption period

interest income derived from the

the taxpayer. Unless a taxpayer can show

installment sale contract is not eligible

otherwise, any property that is purchased,

The exemption is allowed in each year of

for the exemption.

leased, or rehabilitated by a passthrough

a ﬁ ve-year exemption period that begins

entity will be presumed to be used for

The exemption is allowed only to the

on the date speciﬁ ed in the zone project

business purposes.

extent that the investment income is

approval letter. The ﬁ ve-year exemption

included in North Dakota taxable income.

Schedule Rz - Booklet - Renaissance Zone Act Exemptions And Tax Credits - 2011 Page 5

Related Articles

Related forms

Related Categories