North Dakota Issues Additional IRC Sec. 965 Guidance

North Dakota’s guidance on IRC Sec. 965 has been updated to provide more details on how to report the repatriation income.

Reflecting IRC Sec. 965 Income on North Dakota Returns

All taxpayers must treat the IRC Sec. 965 inclusion amount as Subpart F income. To properly reflect this in North Dakota’s starting point, taxpayers must include the net of the Sec. 965 inclusion and Sec. 965 deduction amounts in the federal taxable income amount reported on North Dakota Form 40.

The Form 40 federal taxable income amount must also include IRC Sec. 78 gross-up included in federal taxable income in arriving at the net federal tax liability on Line 5 of the Transition Tax Statement. Taxpayers must treat this the same as other gross-up would be treated.

In addition, taxpayers must include a schedule detailing the computation of Line 5 of the Transition Tax Statement.

Treatment of TCJA International Tax Provisions, North Dakota Office of State Tax Commissioner, November 15, 2018, ¶200-884

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