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North Dakota Century Code Title 57. Taxation § 57-38.4-02. Water's edge election

Current as of January 01, 2024 | Updated by Findlaw Staff

A corporation required to file a worldwide unitary combined report must do so unless it elects to apportion its income using the water's edge method.

1. A corporation electing to file using the water's edge method must comply with the following:

a. The election must be made on the return as originally and timely filed.

b. The water's edge election is binding for five consecutive taxable years after making the election.

2. All corporations electing the water's edge method must include the income and apportionment factors of the water's edge group. Foreign dividends and income from 80/20 corporations must be included as follows:

a. An existing corporation must include fifty percent of foreign dividends and sixty percent of income from 80/20 corporations. However, an existing corporation that increases and maintains a threshold activity by twenty-five percent or more, but not by business reorganization or acquisition, is only required to include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.

b. A new corporation must include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.

c. For taxable years beginning after December 31, 1994, all corporations making the water's edge election may reduce the inclusion to include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.

3. In addition to the tax imposed under subsection 1 of section 57-38-30, there is imposed an additional tax of three and one-half percent of taxable income which must be levied, collected, and paid annually in the same manner as provided in chapter 57-38.

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Cite this article: FindLaw.com - North Dakota Century Code Title 57. Taxation § 57-38.4-02. Water's edge election - last updated January 01, 2024 | https://codes.findlaw.com/nd/title-57-taxation/nd-cent-code-sect-57-38-4-02/

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