An income tax credit is available to a taxpayer for its investment in a qualified business certified to participate in the seed capital investment program.
Qualifications
Investments made on or after the date a business was certified by the North Dakota Department of Commerce for the program. Credit must be claimed in the first taxable year in which the investment is received by the qualified business. The investment must be at risk and must remain in the business for at least three years. Investment monies placed in escrow are not at risk until paid out of escrow to the qualified business for its use.
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.
Credit Amounts
The amount of the allowable credit is equal to 45% of the amount invested by the taxpayer in qualified businesses during the taxable year. The maximum annual credit a taxpayer may claim is $112,500. The maximum cumulative amount a qualified business may claim for all tax years is limited to $500,000.
The amount of the allowable credit not used in the taxable year the investment was made may be carried over to the following four taxable years. The amount of tax credits allowed for all investments made in all qualified businesses is limited to $3.5 million per calendar year.
Application Process
Certification from the Department of Commerce.
How to Claim
If you're filing as a/an: | Claim the credit on: |
| Individual or Sole Proprietor | Schedule ND-1TC, Tax Credits |
| C Corporation | Form 40, Corporation Income Tax Return Schedule TC |
| S Corporation | Form 60, S Corporation Income Tax Return Schedule K |
| Partnership | Form 58, Partnership Income Tax Return Schedule K |
| Fiduciary | Form 38, Fiduciary Income Tax Return Schedule 38-TC |