Form Schd-ND-1CS Calculation of tax on proceeds from sale of income tax credit

Add lines 16 and 17 18 Add lines 4 and 7c 8 If line 3 is Yes enter the amount from line 1 If line 3 is No add lines 1 and 2 and enter the result on this line and then enter 0 on line 7c and go to line 8 If required to complete lines 13 and 14 divide line 13b by line 14b (round to nearest four decimal places); otherwise enter the ratio from Schedule ND 1NR line 18 (C15) 15 Multiply line 10 by line 15 16 resident If the taxpayer (and taxpayer's spouse if filing jointly) are full year residents skip lines 13 through 18 and go to line 19 Schedule ND 1FA enter the amount from line 3 of that schedule If less than zero enter 0 Subtract line 10 from line 12 (C17) 17 Table on page 20 of the Form ND 1 instructions (C12) 12 Table on page 20 of the instructions for Form ND 1 The individual held an interest in a passthrough entity that sold either of the two tax credits to another taxpayer for value The individual sold an unused angel fund investment tax credit or an unused research and experimental expenditure tax credit to another taxpayer for value Were the gross proceeds (on line 2) included in federal taxable income? Were the gross proceeds (on line 2) reported as a long term capital gain on the federal return? "Partnership" includes all forms (C1) 1 (C10) 10 (C2) 2 (C3) 3 (C4) 4 (C5) 5 (C6) 6 (C7) 7c 1 North Dakota taxable income Enter the amount from Form ND 1 line 19 However if using 10 Tax on North Dakota taxable income without proceeds If using Schedule ND 1FA see the instructions Otherwise figure the tax on the amount on line 9 using the 2012 Tax 11 Enter larger of line 2 or line 8 12 Tax on North Dakota taxable income with proceeds If using Schedule ND 1FA see the instructions Otherwise figure the tax on the amount on line 11 using the 2012 Tax 13 a If Line 3 is Yes enter amount from Schedule ND 1NR line 16; otherwise skip lines 13 and 14 and go to line 15 13a 14 a Enter amount from Schedule ND 1NR line 17 14a 2012 Schedule ND 1CS instructions Page 1 2012 Schedule ND 1CS instructions Page 2 6 Was a long term capital gain exclusion claimed on Form ND 1 line 8? 7 a Enter the amount from Form ND 1 line 8 7a A "passthrough entity" means a partnership S corporation or a limited liability company treated like a partnership or S corporation An individual must complete this schedule if either (or both) of the following apply: b Multiply line 2 by 30% ( 30) 7b b Subtract line 2 from line 13a (C13) 13b b Subtract line 2 from line 14a (C14) 14b Before completing this schedule complete Form ND 1 lines 1 through 19 Before completing this schedule: c Enter smaller of line 7a or 7b Calculation of tax on proceeds from 2012 Complete Form ND 1 lines 1 through line 19 Credit transfer statement If the individual completing Schedule ND 1CS is the taxpayer who sold the credit have on hand a copy of the Form CTS Credit Transfer Statement that was required to be led with the Of ce of State Tax Commissioner at the time of the sale It shows the amount of the gross proceeds received from the buyer Do not enter the tax calculated on Enter the amount of gross proceeds from Form CTS Credit Transfer Statement or from the Passthrough Entity Member Notice whichever is applicable Enter the recomputed tax from line 23 of the second Schedule ND 1FA on Schedule ND 1CS line 10 Enter the recomputed tax from line 23 of the second Schedule ND 1FA on Schedule ND 1CS line 12 Full year Gross proceeds Enter the gross proceeds from the sale of the credit How to complete this form If a taxpayer sells an unused angel fund investment tax credit (under N D C C 57 38 01 26) or an unused research and experimental expenditure tax credit (under If line 5 is No enter 0 on line 7c and go to line 8 If line 5 is Yes go to line 6 If line 6 is No enter 0 on line 7c and go to line 8 If line 6 is Yes go to line 7a If Schedule ND 1FA (3 year averaging for farm income) is going to be used to calculate the tax for the tax year complete that schedule rst Information from Schedule ND 1FA will be needed to complete Schedule ND 1CS Do not enter the tax calculated on Schedule ND 1FA on Form ND 1 or Schedule ND 1NR If Schedule ND 1FA is going to be used to compute the tax for the year and if the gross proceeds (on Schedule ND 1CS line 2) were included in federal taxable income enter the amount from Schedule ND 1FA line 23 on this line If Schedule ND 1FA is going to be used to compute the tax for the year and if the gross proceeds (on Schedule ND 1CS line 2) were included in federal taxable income the tax on Schedule ND 1FA must be recomputed by completing a second Schedule ND 1FA Write "Recomputation of tax for Schedule ND 1CS line 10" at the top of the second Schedule ND 1FA Complete the second Schedule ND 1FA using the same gures from the original Schedule ND 1FA except that the amount on Schedule ND 1CS line 9 must be entered as the starting gure on line 1 of the second Schedule ND 1FA If the answer to the question on line 3 is No skip lines 13 and 14 and enter the North Dakota income ratio from Schedule ND 1NR line 18 on Schedule ND 1CS line 15 If the answer to the question on line 3 is Yes lines 13 and 14 must be completed to recompute the North Dakota income ratio on Schedule ND 1NR If the gross proceeds (on Schedule ND 1CS line 2) were not included in federal taxable income enter the amount from Schedule ND 1FA line 23 on this line If the gross proceeds (on Schedule ND 1CS line 2) were not included in federal taxable income the tax on Schedule ND 1FA must be recomputed by completing a second Schedule ND 1FA Write "Recomputation of tax for Schedule ND 1CS line 12" at the top of the second Schedule ND 1FA Complete the second Schedule ND 1FA using the same gures from the original Schedule ND 1FA except that the amount on Schedule ND 1CS line 11 must be entered as the starting gure on line 1 of the second Schedule ND 1FA If the individual (or the individual's spouse if ling jointly) was a nonresident of North Dakota for part or all of the tax year complete Schedule ND 1NR Information from that schedule will be needed to complete Schedule ND 1CS If the taxpayer (and the taxpayer's spouse if ling jointly) are ling as full year residents enter the amount from Schedule ND 1CS line 12 on Form ND 1 line 19 Do not complete lines 13 through 18 of Schedule ND 1CS If the taxpayer (or the taxpayer's spouse if ling jointly) is ling as a full year nonresident or a part year resident complete lines 13 through 18 If using either Schedule ND 1FA or Schedule ND 1NR see "How to complete this form " In general the transfer of a state income tax credit for value is a taxable sale of property and the gross proceeds are includable in gross income for federal income tax purposes see Temple George H 136 TC No 15 (2011) and IRS Chief Counsel Advice (CCA) 201147024 Fill in the applicable circle to indicate whether or not the gross proceeds (on line 2) were included in federal taxable income Line 10 Tax on North Dakota taxable income without proceeds Line 12 Tax on North Dakota taxable income with proceeds Line 2 Gross proceeds Line 3 Inclusion of proceeds in federal taxable income Line 4 North Dakota taxable income with proceeds Lines 13 and 14 North Dakota income ratio Lines 5 through 7 Long term capital gain exclusion adjustment N D C C 57 38 30 5) to another taxpayer for value the gross sales proceeds from the sale are assignable to North Dakota and are subject to North Dakota income tax No part of the proceeds may be apportioned or allocated outside North Dakota and the gross proceeds may not be reduced by any loss or deduction allowed for North Dakota income tax purposes If the taxpayer is an individual this schedule must be used to calculate the individual's income tax for the tax year ND 1CS New for 2012! nonresident or part year resident If the taxpayer (or taxpayer's spouse if filing jointly) is filing as a full year nonresident or part year resident go to line 13 North Dakota Of ce of State Tax Commissioner Note: The individual (seller) and the buyer were required to jointly le Form CTS with the Of ce of State Tax Commissioner at the time of the sale Note: The passthrough entity (seller) and the buyer were required to jointly le Form CTS with the Of ce of State Tax Commissioner at the time of the sale In addition the passthrough entity (seller) was required to provide a specially prescribed notice to each of its owners showing the owner's share of the total gross proceeds and instructing the owner how to report the proceeds on the owner's North Dakota income tax return See Form CTS for more information Note: There are conditions and procedures that must be satisfied before either of the two tax credits may be transferred to another taxpayer For more information see Form CTS Credit Transfer Statement which can be obtained at www nd gov/tax of partnerships such as a limited OffOff partnership etc partnership limited liability limited Passthrough entity member notice If the individual completing Schedule ND 1CS is doing so because the individual owned an interest in a passthrough entity that sold the credit have on hand a copy of the Passthrough Entity Member Notice that the passthrough entity was required to provide to each of its owners at the time of the sale It shows the owner's share of the gross proceeds Please type or print in black or blue ink Purpose of form sale of income tax credit Attach to Form ND 1 Schedule ND 1CS is a new supplemental schedule to Form ND 1 Schedule ND 1NR on Form ND 1 Schedule North Dakota Office of State Tax Commissioner Speci c line instrucitons Subtract line 2 from line 8 If less than zero enter 0 9 Tax If the taxpayer (and taxpayer's spouse if filing jointly) are full year residents enter amount from line 12 If the taxpayer (or taxpayer's spouse if filing jointly) is a full year nonresident or part year resident enter amount from line 18 Enter the amount from this line on Form ND 1 line 20 (C19) 19 The entire gross proceeds from the sale of the credit are assignable to and taxable by North Dakota If the gross proceeds (on line 2) were included in federal taxable income enter the North Dakota taxable income amount from line 1 on line 4 If the gross proceeds were not included in federal taxable income add the gross proceeds (on line 2) to the North Dakota taxable income (on line 1) and enter the result on line 4 The gross proceeds from the sale of the credit may not be reduced by any loss or deduction allowed for North Dakota income tax purposes If the gross proceeds (on line 2) were reported as a long term capital gain for federal income tax purposes and a long term capital gain exclusion was claimed on Form ND 1 line 8 the portion of the exclusion amount attributable to the gross proceeds must be added back into North Dakota taxable income Complete lines 5 through 7 to calculate the amount of the exclusion that must be added back If this does not apply enter zero on line 7c and go to line 8 Who must complete