North Dakota Administrative Code › Title 81 - Tax Commissioner › Article 81-03 - Income Taxes and Privilege Taxes Based on Income › Chapter 81-03-09 - Division of Income › Section 81-03-09-36 - Special rules - Airlines

Current through Supplement No. 393, July, 2024
The following special rules are established with respect to
				  airlines:
1.
In general.
Where an airline has income from sources both within and without this
				state, the amount of business income from sources within this state shall be
				determined pursuant to North Dakota Century Code chapter 57-38.1 and article IV
				of North Dakota Century Code section
				57-59-01 of the multistate tax
				compact, except as modified by this section.
2.
Apportionment of business
				income.
a. General definitions. The
				following definitions are applicable to the terms used in the apportionment
				factor descriptions:
(1) "Value" of owned
				real and tangible personal property means its original cost. See North Dakota
				Century Code section
				57-38.1-11 and article IV(11) of
				North Dakota Century Code section
				57-59-01 and section
				81-03-09-19.
(2) "Cost of aircraft by type" means the
				average original cost or value of aircraft by type which are ready for flight.
(3) "Original cost" means the
				initial federal tax basis of the property plus the value of capital
				improvements to such property, except that, for this purpose, it must be
				assumed that safe harbor leases are not true leases and do not effect the
				original initial federal tax basis of the property. See section
				81-03-09-19.
(4) "Average value" of property means the
				amount determined by averaging the values at the beginning and ending of the
				income year, but the office of the state tax commissioner may require the
				averaging of monthly values during the income year if such averaging is
				necessary to reflect properly the average value of the airline's property. See
				North Dakota Century Code section
				57-38.1-12 and article IV(12) of
				North Dakota Century Code section
				57-59-01 and section
				81-03-09-21.
(5) The "value" of rented real and tangible
				personal property means the product of eight times the net annual rental rate.
				See North Dakota Century Code section
				57-38.1-11 and article IV(11) of
				North Dakota Century Code section
				57-59-01 and section
				81-03-09-20.
(6) "Net annual rental rate" means the annual
				rental rate paid by the taxpayer.
(7) "Property used during the income year"
				includes property that is available for use in the taxpayer's trade or business
				during the income year.
(8)
				"Aircraft ready for flight" means aircraft owned or acquired through rental or
				lease (but not interchange) which are in the possession of the taxpayer and are
				available for service on the taxpayer routes.
(9) "Revenue service" means the use of
				aircraft ready for flight for the production of revenue.
(10) "Transportation revenue" means revenue
				earned by transporting passengers, freight, and mail, as well as revenue earned
				from liquor sales, and pet crate rentals, and so forth.
(11) "Departures" means, for purposes of this
				section, all takeoffs, whether they be regularly scheduled or charter flights,
				that occur during revenue service.