North Dakota Administrative Code
Title 81 - Tax Commissioner
Article 81-03 - Income Taxes and Privilege Taxes Based on Income
Chapter 81-03-09.1 - Division of Income for Financial Institutions
Section 81-03-09.1-02 - Definitions
As used in this chapter, unless the context otherwise requires:
1. "Billing address" means the location indicated in the books and records of the taxpayer on the first day of the taxable year, or on a later date in the taxable year when the customer relationship began, as the address where any notice, statement, or bill relating to a customer's account is mailed.
2. "Borrower or credit card holder located in this state" means:
a. A borrower, other than a credit card holder, who is engaged in a trade or business that maintains its commercial domicile in this state; or
b. A borrower who is not engaged in a trade or business or a credit card holder whose billing address is in this state.
3. "Commercial domicile" means:
a. The headquarters of the trade or business, meaning the place from which the trade or business is principally managed and directed; or
b. If a taxpayer is organized under the laws of a foreign country, or of the Commonwealth of Puerto Rico, or any territory or possession of the United States, the taxpayer's commercial domicile must be deemed for the purposes of this chapter to be the state of the United States or the District of Columbia from which the taxpayer's trade or business in the United States is principally managed and directed. It is presumed, subject to rebuttal, that the location from which the taxpayer's trade or business is principally managed and directed is the state of the United States or the District of Columbia to which the greatest number of employees are regularly connected or out of which they are working, irrespective of where the services of the employees are performed, as of the last day of the taxable year.
4. "Compensation" means wages, salaries, commissions, and any other form of remuneration paid to employees for personal service that are included in the employees' gross income under the Internal Revenue Code. In the case of employees not subject to the Internal Revenue Code, such as those employed in foreign countries, the determination of whether payments would constitute gross income to employees under the Internal Revenue Code must be made as though those employees were subject to the Internal Revenue Code.
5. "Credit card" means a credit, travel, or entertainment card.
6. "Credit card issuer's reimbursement fee" means the fee a taxpayer receives from a merchant's bank because one of the persons to whom the taxpayer has issued a credit card has charged merchandise or services to the credit card.
7. "Employee" means, with respect to a particular taxpayer, any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee of that taxpayer.
8. "Financial institution" means:
a. A corporation or other business entity registered under state law as a bank holding company, registered under the Bank Holding Company Act of 1956, as amended [ Pub. L. 84-240; 70 Stat. 133; 12 U.S.C. 1841 etseq.], or registered as a savings and loan holding company under the National Housing Act, as amended [ Pub. L. 73-847; 48 Stat. 1246; 12 U.S.C. 1701 et seq.];
b. A national bank organized and existing as a national bank association pursuant to the provisions of the National Bank Act [1864 ch. 106, 5; 13 Stat. 100; 12 U.S.C. 21 et seq.];
c. A savings association or federal savings bank as defined in the Federal Deposit Insurance Act [ Pub. L. 81-967; 64 Stat. 873; 12 U.S.C. 1813(b)(1)] ;
d. A bank or thrift institution incorporated or organized under the laws of any state;
e. A trust company organized under the laws of any state, the United States, a dependency or insular possession of the United States, or a foreign country;
f. A corporation organized under the provisions of Public Law No. 63-6, 25A [38 Stat. 273; 12 U.S.C. 611 to 631] ;
g. An agency or branch of a foreign depository as defined in Public Law No. 95-369 [92 Stat. 607; 12 U.S.C. 3101] ;
h. A production credit association organized under the Farm Credit Act of 1933 [ Pub. L. 73-98; 48 Stat. 257; 12 U.S.C. 1131 et seq.], all of the stock of which held by the federal production credit corporation has been retired;
i. A corporation the voting stock of which is more than fifty percent owned, directly or indirectly, by any person or business entity described in subdivisions a through h other than an insurance company taxable under North Dakota Century Code chapter 26.1-03; or
j. A corporation or other business entity that derives more than fifty percent of its total gross income for financial accounting purposes from finance lease. For purposes of this subdivision, a "finance lease" means any lease transaction that is the functional equivalent of an extension of credit and which transfers substantially all of the benefits and risks incident to the ownership of property. The phrase includes any "direct financing lease" or "leverage lease" that meets the criteria of financial accounting standards board statement no. 13, "accounting for leases", or any other lease that is accounted for as a financing by a lessor under generally accepted accounting principles. For the classification under this subdivision to apply:
(1) The average of the gross income in the current tax year and immediately preceding two tax years must satisfy the more than fifty percent requirement; and
(2) Gross income from incidental or occasional transactions must be disregarded.
9. "Gross rents" means the actual sum of money or other consideration payable for the use or possession of property.
a. Gross rents includes:
(1) Any amount payable for the use or possession of real property or tangible property whether designated as a fixed sum of money or as a percentage of receipts, profits, or otherwise;
(2) Any amount payable as additional rent or in lieu of rent, including interest, taxes, insurance, repairs, or any other amount required to be paid by the terms of a lease or other arrangement; and
(3) A proportionate part of the cost of any improvement to real property made by or on behalf of the taxpayer which reverts to the owner or lessor upon termination or a lease or other arrangement. The amount to be included in gross rents is the amount of the amortization or depreciation allowed in computing the taxable income base for the taxable year. However, if a building is erected on leased land by or on behalf of the taxpayer, the value of the land is determined by multiplying the gross rent by eight and the value of the building is determined in the same manner as if owned by the taxpayer.
a. Gross rents does not include:
(1) Reasonable amounts payable as separate charges for water and electric service furnished by the lessor;
(2) Reasonable amounts payable as service charges for janitorial services furnished by the lessor;
(3) Reasonable amounts payable for storage, provided the amounts are payable for space not designated and not under the control of the taxpayer; and
(4) That portion of any rental payment which is applicable to the space subleased from the taxpayer and not used by it.
10. "Loan" means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of the extension of credit from another. Loans include participation, syndications, and leases treated as loans for federal income tax purposes. "Loan" does not include properties treated as loans under section 595 of the Internal Revenue Code; futures or forward contracts; options, notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; non-interest-bearing balances due from depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in an REMIC, or other mortgage-backed or asset-backed security; and other similar items.
11. "Loan secured by real property" means that fifty percent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair market value as of the time the original loan or obligation was incurred, was real property.
12. "Merchant discount" means the fee or negotiated discount charged to a merchant by the taxpayer for the privilege of participating in a program whereby a credit card is accepted in payment for merchandise or services sold to the credit card holder.
13. "Participation" means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.
14. "Principal base of operations" with respect to transportation property means the place of more or less permanent nature from which said property is regularly directed or controlled. With respect to an employee, the "principal base of operations" means the place of more or less permanent nature from which the employee regularly starts the employee's work and to which the employee customarily returns in order to receive instructions from the employee's employer, communicates with the employee's customers or other persons, or performs any other functions necessary to the exercise of the employee's trade or profession at some other point or points.
15. "Real property owned" and "tangible personal property owned" mean real and tangible personal property, respectively, on which the taxpayer may claim depreciation for federal income tax purposes, or to which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes, or could claim depreciation if subject to federal income tax. Real and tangible personal property do not include coin, currency, or property acquired in lieu of or pursuant to a foreclosure.
16. "Regular place of business" means an office at which the taxpayer carries on its business in a regular and systematic manner and which is continuously maintained, occupied, and used by employees of the taxpayer.
17. "Syndication" means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.
18. "Transportation property" means vehicles and vessels capable of moving under their own power, such as aircraft, trains, water vessels, and motor vehicles, as well as any equipment or containers attached to the property, including rolling stock, barges, trailers, or the like.
General Authority: NDCC 57-38-56
Law Implemented: NDCC 57-38, 57-38.1, 57-38.1-18
