Schedule Nd-1cs - Calculation Of Tax On Proceeds From Sale Of Income Tax Credit - 2013 Page 2
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3North Dakota Offi ce of State Tax Commissioner
2013 Schedule ND-1CS instructions
Page 1
Purpose of form
Line 4 - North Dakota taxable income
How to complete this form
with proceeds
If a taxpayer sells an unused research and
The entire gross proceeds from the sale of
experimental expenditure tax credit (under
Before completing this schedule:
the credit are assignable to, and taxable
N.D.C.C. § 57-38-30.5) to another taxpayer
by, North Dakota. If the gross proceeds
1. Complete Form ND-1, lines 1 through
for value, the gross sales proceeds from the
(on line 2) were included in federal taxable
line 19.
sale are assignable to North Dakota and are
income, enter the North Dakota taxable
subject to North Dakota income tax. No
2. If Schedule ND-1FA (3-year averaging
income amount from line 1 on line 4. If the
part of the proceeds may be apportioned
for farm income) is going to be used
gross proceeds were not included in federal
or allocated outside North Dakota, and the
to calculate the tax for the tax year,
taxable income, add the gross proceeds (on
gross proceeds may not be reduced by any
complete that schedule fi rst. Information
line 2) to the North Dakota taxable income
loss or deduction allowed for North Dakota
from Schedule ND-1FA will be needed
(on line 1) and enter the result on line 4.
income tax purposes. If the taxpayer is an
to complete Schedule ND-1CS. Do
individual, this schedule must be used to
not enter the tax calculated on
Lines 5 through 7 - Long-term capital
calculate the individual's income tax for the
Schedule ND-1FA on Form ND-1 or
gain exclusion adjustment
tax year.
Schedule ND-1NR.
The gross proceeds from the sale of the
credit may not be reduced by any loss or
Note: There are conditions and procedures
3. If the individual (or the individual's
deduction allowed for North Dakota income
that must be satisfied before the credit may
spouse, if fi ling jointly) was a nonresident
tax purposes. If the gross proceeds (on line
be transferred to another taxpayer. For
of North Dakota for part or all of the
2) were reported as a long-term capital gain
more information, see Form CTS, Credit
tax year, complete Schedule ND-1NR.
for federal income tax purposes and a long-
Transfer Statement, which can be obtained
Information from that schedule will be
term capital gain exclusion was claimed
at
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
Schedule ND-1NR on Form ND-1.
Who must complete
proceeds must be added back into North
Dakota taxable income. Complete lines 5
Credit transfer statement. If the
An individual must complete this schedule if
through 7 to calculate the amount of the
individual completing Schedule ND-1CS
either (or both) of the following apply:
exclusion that must be added back. If this
is the taxpayer who sold the credit, have
• The individual sold an unused research
does not apply, enter zero on line 7c and go
on hand a copy of the Form CTS, Credit
and experimental expenditure tax credit
to line 8.
Transfer Statement, that was required
to another taxpayer for value.
to be fi led with the Offi ce of State Tax
Line 10 - Tax on North Dakota taxable
Note: The individual (seller) and the
Commissioner at the time of the sale. It
income without proceeds
buyer were required to jointly fi le
shows the amount of the gross proceeds
If Schedule ND-1FA is going to be used to
Form CTS with the Offi ce of State Tax
received from the buyer.
compute the tax for the year, and if the
Commissioner at the time of the sale.
Passthrough entity member notice. If
gross proceeds (on Schedule ND-1CS,
• The individual held an interest in a
the individual completing Schedule ND-1CS
line 2) were included in federal taxable
passthrough entity that sold a research
is doing so because the individual owned
income, the tax on Schedule ND-1FA must
and experimental expenditure tax credit
an interest in a passthrough entity that
be recomputed by completing a second
to another taxpayer for value.
sold the credit, have on hand a copy of the
Schedule ND-1FA. Write "Recomputation
Passthrough Entity Member Notice that the
A "passthrough entity" means a
of tax for Schedule ND-1CS, line 10" at
passthrough entity was required to provide
partnership, S corporation, or a
the top of the second Schedule ND-1FA.
to each of its owners at the time of the sale.
limited liability company treated like a
Complete the second Schedule ND-1FA
It shows the owner's share of the gross
partnership or S corporation.
using the same fi gures from the original
proceeds.
Schedule ND-1FA except that the amount
"Partnership" includes all forms
on Schedule ND-1CS, line 9, must
of partnerships, such as a limited
be entered as the starting fi gure on
partnership, limited liability limited
Specifi c line instrucitons
line 1 of the second Schedule ND-1FA.
partnership, etc.
Enter the recomputed tax from line 23
Note: The passthrough entity (seller)
of the second Schedule ND-1FA on
Line 2 - Gross proceeds
and the buyer were required to jointly
Schedule ND-1CS, line 10.
Enter the amount of gross proceeds from
fi le Form CTS with the Offi ce of State
Form CTS, Credit Transfer Statement, or
Tax Commissioner at the time of the
If the gross proceeds (on Schedule ND-1CS,
from the Passthrough Entity Member Notice,
sale. In addition, the passthrough
line 2) were not included in federal
whichever is applicable.
entity (seller) was required to provide a
taxable income, enter the amount from
specially-prescribed notice to each of its
Schedule ND-1FA, line 23, on this line.
Line 3 - Inclusion of proceeds in federal
owners showing the owner's share of the
taxable income
total gross proceeds and instructing the
In general, the transfer of a state income
Line 12 - Tax on North Dakota taxable
owner how to report the proceeds on the
tax credit for value is a taxable sale of
income with proceeds
owner's North Dakota income tax return.
property and the gross proceeds are
If Schedule ND-1FA is going to be used to
See Form CTS for more information.
includable in gross income for federal
compute the tax for the year, and if the
income tax purposes - see Temple, George
gross proceeds (on Schedule ND-1CS,
H., 136 TC No. 15 (2011) and IRS Chief
line 2) were included in federal
Counsel Advice (CCA) 201147024. Fill in
taxable income, enter the amount from
the applicable circle to indicate whether
Schedule ND-1FA, line 23 on this line.
or not the gross proceeds (on line 2) were
included in federal taxable income.
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