57-38.6-03. Agricultural business investment tax credit
If a taxpayer makes a qualified investment in a qualified business, the taxpayer is entitled to
a credit against state income tax liability as determined under section 57-38-30 or 57-38-30.3.
1. The amount of the credit to which a taxpayer is entitled is thirty percent of the amount
invested by the taxpayer in qualified businesses during the taxable year.
2. The maximum annual credit a taxpayer may obtain under this section is fifty thousand
dollars and no taxpayer may obtain more than two hundred fifty thousand dollars in
credits under this section over any combination of taxable years. This subsection may
not be interpreted to limit additional investment by a taxpayer for which that taxpayer is
not applying for a credit.
3. The credit under this section may not exceed the liability for tax under chapter 57-38. If
the amount of credit under this section exceeds the liability for tax, the excess may be
carried forward for up to ten taxable years after the taxable year in which the
investment was made.
4. A passthrough entity that invests in a qualified business must be considered to be the
taxpayer for purposes of the investment limitations in this section and, except for the
tax liability limitation under subsection 2, the amount of the credit allowed with respect
to the passthrough entity's investment in a qualified business must be determined at
the passthrough entity level. The amount of the total credit determined at the
passthrough entity level must be allowed to the passthrough entity's partners,
shareholders, or members in proportion to their respective ownership interests in the
passthrough entity.
5. An investment made in a qualified business from the assets of a retirement plan is
deemed to be the retirement plan participant's investment for the purposes of this
chapter if a separate account is maintained for the plan participant and the participant
directly controls where the account assets are invested.
6. The investment must be made on or after the certification effective date and must be at
risk in the business to be eligible for the tax credit under this section. A qualified
investment must be in the form of a purchase of ownership interests or the right to
receive payment of dividends from the business. An investment for which a credit is
received under this section must remain in the business for at least three years. An
investment placed in escrow does not qualify for the credit.
7. The entire amount of an investment for which a credit is claimed under this section
must be expended by the qualified business for plant, equipment, research and
development, marketing and sales activity, or working capital for the qualified
business. Real property that qualifies as an investment must be used in, and be an
integral part of, the qualified business's North Dakota business operations.
8. If the investment is a contribution of real property:
a. The value of the contribution may not exceed the appraised value as established
by a licensed or certified appraiser licensed or certified under the requirements of
sections 43-23.3-04, 43-23.3-04.1, 43-23.3-05, 43-23.3-06, 43-23.3-07,
43-23.3-08, 43-23.3-09, 43-23.3-10, 43-23.3-11, and 43-23.3-12.
b. The value of the contribution must be approved by the governing body of the
qualified business applying the valuation standards set forth in subsection 3 of
section 10-19.1-63.
c. The qualified business receiving the contribution of real property shall provide to
the tax commissioner a copy of the appraised valuation, a copy of the governing
body's resolution approving the value of the contribution, and a copy of the
statement of full consideration within thirty days after the instrument transferring
title to the real property is recorded with the recorder as provided in chapter
47-19.
d. A taxpayer making a contribution of real property is entitled to the tax credit in the
taxable year in which the instrument transferring title to the real property is
recorded with the recorder as provided in chapter 47-19.
9. The tax commissioner may disallow any credit otherwise allowed under this section if
any representation by a business in the application for certification as a qualified
business proves to be false or if the taxpayer or qualified business fails to satisfy any
conditions under this section or any conditions consistent with this section otherwise
determined by the tax commissioner. The amount of any credit disallowed by the tax
commissioner that reduced the taxpayer's income tax liability for any or all applicable
tax years, plus penalty and interest provided under section 57-38-45, must be paid by
the taxpayer.
