Form 58 - Partnership Income Tax - 2013 Page 3
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351
Form 58 Instructions
2013
North Dakota Partnership Income Tax Return
“N.D.C.C.” references are to the North Dakota Century Code, which contains North Dakota’s statutes.
“N.D. Admin. Code” references are to the North Dakota Administrative Code, which contains North Dakota’s rules.
Special Reminders
Income tax withholding from
An unused credit may be carried over up to
oil and gas royalty income
5 tax years. The total credits allowed for all
purchases by all taxpayers is limited to $2
Starting in 2014, payments of oil and gas
Passthrough withholding and
million per calendar year. To participate, a
royalties to a nonresident royalty owner with
taxpayer must fi le an application form with
composite fi ling
a nonworking interest in the production will
the Commerce Department.
become subject to North Dakota income tax
For tax years 2013 and after, the tax rate for
withholding. A “nonresident royalty owner”
passthrough entity withholding and composite
Housing incentive fund credit
means an individual who is a nonresident
return purposes was reduced to 3.22%.
The income tax credit allowed for making
of North Dakota or a business entity with a
For tax years 2014 and after, the defi nition of
a contribution to the North Dakota Housing
commercial domicile outside North Dakota.
“nonresident member” for passthrough entity
Incentive Fund was extended for two
withholding and composite return purposes
North Dakota income tax must be withheld
additional years through the 2014 tax year.
was expanded to include a nonresident
at the highest marginal income tax rate
Contact the North Dakota Housing Finance
individual who is the settlor of a grantor
applicable to the royalty owner. If the royalty
Agency for more information.
trust and another passthrough entity with a
owner is a partnership or other passthrough
commercial domicile outside North Dakota.
entity, the applicable rate will depend on
Angel fund tax credit
In the case of a nonresident member that is
the type of entities that own the passthrough
For investments made in a North Dakota
another passthrough entity, the member may
entity.
certifi ed angel fund on or after January 1,
elect to not have income tax withheld from its
2013, the lifetime limit on the total credits
Some royalty owners will not see any North
distributive share of income if it certifi es that
allowed to a taxpayer was increased to
Dakota income tax withheld from their
it will fi le any return and pay any tax required
royalty payments if the person making the
$500,000. Also, starting January 1, 2013, an
under North Dakota income tax law.
payment is exempt from the withholding
angel fund may not invest its funds in real
Renaissance zone income
requirement or the amount of the payment is
estate or a real estate holding company. If an
exemption
angel fund certifi ed before January 1, 2013,
below thresholds specifi ed in the law.
invested in real estate or a real estate holding
For zone projects approved on or after
Oil and gas royalty payments based on oil and
company, the angel fund is not eligible for
August 1, 2013, the income exemption
gas production in North Dakota constitute
recertifi cation.
allowed under the North Dakota renaissance
income from a real property interest in North
zone program is subject to two new
Dakota and are subject to North Dakota
Mobile workforce exclusion for
limitations. One limitation applies if a zone
income tax, regardless of whether any North
nonresident individuals
project primarily consists of a physical
Dakota income tax is withheld from them.
Starting with the 2013 tax year, wages
expansion of an existing building, in which
See the Offi ce of State Tax Commissioner’s
received by an individual for services
case the exemption amount is limited to the
web site at for more
performed in North Dakota are excluded
eligible income attributable to the expanded
information.
from North Dakota source income and are not
portion of the building. The other limitation
subject to North Dakota income tax if all of
provides that a taxpayer may exclude no more
Financial institution tax repeal
the following conditions apply:
than $500,000 of eligible income derived
Effective January 1, 2013, the North Dakota
from all business and investment interests
1. The individual is a nonresident of North
fi nancial institution tax was repealed, and
held during the tax year.
Dakota for the tax year.
banks and other entities formerly subject to
2. The individual worked in North Dakota
that tax became subject to the North Dakota
Automation tax credit
for less than 21 days during the tax year.
income tax. These entities will now fi le
The 2013 tax year is the fi rst of three tax
3. The individual’s state of residence
Form 40, Form 58, or Form 60, whichever
years in which a primary sector business is
either does not impose an income tax or
applies. Special transitional rules that apply
allowed an income tax credit for purchasing
provides a substantially similar exclusion.
are summarized in the July 2013 edition
new or used machinery and equipment to
4. The individual has no other income from
of Income Tax Update, the tax practitioner
automate a manufacturing process. The
North Dakota sources.
newsletter, which is available online at
credit is equal to 20 percent of the cost of the
.
Also, an employer is not required to withhold
machinery and equipment approved by the
North Dakota income tax from wages paid to
North Dakota Commerce Department. The
an individual who meets conditions 1 through
credit is allowed in the tax year in which title
3 above. Certain individuals, as specifi ed in
to the machinery and equipment transfers.
the law, are not eligible for this exclusion. For
more details, see N.D.C.C. § 57-38-59.3.
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