North Dakota Research and Experimental Expenditures Credit

Program overview

North Dakota applies a high rate to the first tranche of excess research spending and a lower rate above it. Certain primary sector businesses that have not yet reached profitability may apply to the Department of Commerce to sell up to a statutory amount of unused credits to another North Dakota taxpayer, providing an immediate cash benefit. The credit follows federal Section 41 definitions applied to research conducted in North Dakota.

Eligibility

Corporations and individuals with qualified research expenses conducted in North Dakota. Credit transfers require certification as a qualified research and development company.

Benefits

Non-refundable credit against North Dakota income tax; transferable for certified early-stage companies.

North Dakota IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

1. S1Confirm the research was physically performed within North Dakota.
2. S2Provide the North Dakota qualified research expense calculation and base amount.
3. S3Reconcile North Dakota expenses to the federal Form 6765.
4. S4Show how wages and supplies were apportioned between North Dakota and other locations.
5. S5Provide the North Dakota return and credit schedule for each year claimed.
6. S6Show the carryforward schedule for unused North Dakota credits.
7. S7Confirm the entity claiming the credit is the entity subject to North Dakota tax.
8. ND-1Document any North Dakota credits transferred or sold, with the approval and the buyer.

Draft questions for illustration, reviewed by a specialist before any engagement.