An income tax credit is available for a taxpayer that makes a charitable contribution to a qualified endowment fund.
The credit may not exceed the taxpayer’s income tax liability. Any unused credit may be carried forward for three taxable years. If the contribution is recovered, the tax credit must be added to tax due in the year recovery occurs. Contact our office for instructions on how to report the recovery of the contribution.
Qualifications
A qualified endowment fund means a permanent, irrevocable fund held under/within a qualified nonprofit organization that meets all the following:
- It is held by a qualified nonprofit organization (defined below) or by a bank or trust company on behalf of a qualified nonprofit organization.
- It is comprised of cash, securities, mutual funds, or other investment assets.
- It is established for a specific religious, educational, or other charitable purpose.
- It may expend only the income generated by, or the increase in value of, the assets contributed to it
- For the purposes of this credit, a qualified non-profit organization is defined as one of the following:
- An organization incorporated or established in North Dakota and has a physical presence in North Dakota and is a tax-exempt organization under I.R.C. § 501(c) that qualifies as a charitable organization under I.R.C. § 170
- An organization incorporated or established in a state bordering North Dakota that is a tax-exempt organization under I.R.C. § 501(c) that qualifies as a charitable organization under I.R.C. § 170; and supports or benefits a hospital, nursing home, or medical center, or any combination of these, that is located outside North Dakota but within five miles of a North Dakota city with a population of 5,000 or more that does not have a hospital.
Credit Amounts
The credit is equal to 40% of the contribution and the maximum allowable credit for a tax year is $10,000. North Dakota taxable income must be increased by the amount of the contribution upon which the credit is computed to the extent the contribution reduced federal taxable income. A taxpayer that holds an interest in a passthrough entity that qualifies for this credit may claim its share of the tax credit in proportion to its interest in the entity. The credit must be claimed in the same taxable year in which the taxable year of the passthrough entity ends.
Application Process
Not Applicable.
How to Claim
If you're filing as a/an: | Claim the credit on: |
| Individual or Sole Proprietor | Schedule ND-1 QEC, Qualified Endowment Fund Credit |
| C Corporation | Form 40, Corporation Income Tax Return Schedule QEC |
| S Corporation | Form 60, S Corporation Income Tax Return Schedule QEC |
| Partnership | Form 58, Partnership Income Tax Return Schedule QEC |
| Fiduciary | Form 38, Fiduciary Income Tax Return Schedule QEC |