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

Current through Supplement No. 393, July, 2024
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