§ 57-38.4-02 — Water's edge election

North Dakota § 57-38.4-02

• Jurisdiction: North Dakota
• Title 57: Taxation
• Ch. 57-38.4: Water's Edge Method Election

Text

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.