Shedule Nd-1cs - Calculation Of Tax On Proceeds From Sale Of Income Tax Credit - North Dakota Office Of State Tax Commissioner - 2012 Page 2
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1
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3North Dakota Offi ce of State Tax Commissioner
2012 Schedule ND-1CS instructions
Page 1
New for 2012!
Line 4 - North Dakota taxable income
How to complete this form
with proceeds
Schedule ND-1CS is a new supplemental
The entire gross proceeds from the sale of
schedule to Form ND-1.
Before completing this schedule:
the credit are assignable to, and taxable
by, North Dakota. If the gross proceeds
1. Complete Form ND-1, lines 1 through
Purpose of form
(on line 2) were included in federal taxable
line 19.
income, enter the North Dakota taxable
If a taxpayer sells an unused angel fund
2. If Schedule ND-1FA (3-year averaging
income amount from line 1 on line 4. If the
investment tax credit (under N.D.C.C.
for farm income) is going to be used
gross proceeds were not included in federal
§ 57-38-01.26) or an unused research and
to calculate the tax for the tax year,
taxable income, add the gross proceeds (on
experimental expenditure tax credit (under
complete that schedule fi rst. Information
line 2) to the North Dakota taxable income
N.D.C.C. § 57-38-30.5) to another taxpayer
from Schedule ND-1FA will be needed
(on line 1) and enter the result on line 4.
for value, the gross sales proceeds from the
to complete Schedule ND-1CS. Do
sale are assignable to North Dakota and are
not enter the tax calculated on
Lines 5 through 7 - Long-term capital
subject to North Dakota income tax. No
Schedule ND-1FA on Form ND-1 or
gain exclusion adjustment
part of the proceeds may be apportioned
Schedule ND-1NR.
The gross proceeds from the sale of the
or allocated outside North Dakota, and the
credit may not be reduced by any loss or
gross proceeds may not be reduced by any
3. If the individual (or the individual's
deduction allowed for North Dakota income
loss or deduction allowed for North Dakota
spouse, if fi ling jointly) was a nonresident
tax purposes. If the gross proceeds (on line
income tax purposes. If the taxpayer is an
of North Dakota for part or all of the
2) were reported as a long-term capital gain
individual, this schedule must be used to
tax year, complete Schedule ND-1NR.
for federal income tax purposes and a long-
calculate the individual's income tax for the
Information from that schedule will be
term capital gain exclusion was claimed
tax year.
needed to complete Schedule ND-1CS.
on Form ND-1, line 8, the portion of the
Do not enter the tax calculated on
exclusion amount attributable to the gross
Note: There are conditions and procedures
Schedule ND-1NR on Form ND-1.
proceeds must be added back into North
that must be satisfied before either of
Dakota taxable income. Complete lines 5
the two tax credits may be transferred to
Credit transfer statement. If the
through 7 to calculate the amount of the
another taxpayer. For more information,
individual completing Schedule ND-1CS
exclusion that must be added back. If this
see Form CTS, Credit Transfer Statement,
is the taxpayer who sold the credit, have
does not apply, enter zero on line 7c and go
which can be obtained at
on hand a copy of the Form CTS, Credit
to line 8.
Transfer Statement, that was required
to be fi led with the Offi ce of State Tax
Who must complete
Line 10 - Tax on North Dakota taxable
Commissioner at the time of the sale. It
income without proceeds
shows the amount of the gross proceeds
An individual must complete this schedule if
If Schedule ND-1FA is going to be used to
received from the buyer.
either (or both) of the following apply:
compute the tax for the year, and if the
• The individual sold an unused angel
Passthrough entity member notice. If
gross proceeds (on Schedule ND-1CS,
fund investment tax credit or an unused
the individual completing Schedule ND-1CS
line 2) were included in federal taxable
research and experimental expenditure
is doing so because the individual owned
income, the tax on Schedule ND-1FA must
tax credit to another taxpayer for value.
an interest in a passthrough entity that
be recomputed by completing a second
sold the credit, have on hand a copy of the
Note: The individual (seller) and the
Schedule ND-1FA. Write "Recomputation
Passthrough Entity Member Notice that the
buyer were required to jointly fi le
of tax for Schedule ND-1CS, line 10" at
passthrough entity was required to provide
Form CTS with the Offi ce of State Tax
the top of the second Schedule ND-1FA.
to each of its owners at the time of the sale.
Commissioner at the time of the sale.
Complete the second Schedule ND-1FA
It shows the owner's share of the gross
using the same fi gures from the original
• The individual held an interest in a
proceeds.
Schedule ND-1FA except that the amount
passthrough entity that sold either of the
on Schedule ND-1CS, line 9, must
two tax credits to another taxpayer for
be entered as the starting fi gure on
value.
Specifi c line instrucitons
line 1 of the second Schedule ND-1FA.
A "passthrough entity" means a
Enter the recomputed tax from line 23
partnership, S corporation, or a
of the second Schedule ND-1FA on
Line 2 - Gross proceeds
limited liability company treated like a
Schedule ND-1CS, line 10.
Enter the amount of gross proceeds from
partnership or S corporation.
Form CTS, Credit Transfer Statement, or
If the gross proceeds (on Schedule ND-1CS,
from the Passthrough Entity Member Notice,
"Partnership" includes all forms
line 2) were not included in federal
whichever is applicable.
of partnerships, such as a limited
taxable income, enter the amount from
partnership, limited liability limited
Schedule ND-1FA, line 23, on this line.
Line 3 - Inclusion of proceeds in federal
partnership, etc.
taxable income
Note: The passthrough entity (seller)
In general, the transfer of a state income
and the buyer were required to jointly
tax credit for value is a taxable sale of
fi le Form CTS with the Offi ce of State
property and the gross proceeds are
Tax Commissioner at the time of the
includable in gross income for federal
sale. In addition, the passthrough
income tax purposes - see Temple, George
entity (seller) was required to provide a
H., 136 TC No. 15 (2011) and IRS Chief
specially-prescribed notice to each of its
Counsel Advice (CCA) 201147024. Fill in
owners showing the owner's share of the
the applicable circle to indicate whether
total gross proceeds and instructing the
or not the gross proceeds (on line 2) were
owner how to report the proceeds on the
included in federal taxable income.
owner's North Dakota income tax return.
See Form CTS for more information.
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