N.D. Admin. Code 81-03-05.1-03
A DISC (domestic international sales corporation) is treated as an ordinary corporation and subject to state income tax. If the domestic international sales corporation has no activity within this state, but the parent corporation is required to file a tax return with this state, the deemed and actual distributions made by the domestic international sales corporation must be included in business income of the parent and subject to state tax.
The tax commissioner may require a combined report whereby income of the domestic international sales corporation is included in the parent's income for state tax purposes and deemed distributions and intercompany items are eliminated.
If both the parent corporation and the domestic international sales corporation are nonapportioning North Dakota corporations, the domestic international sales corporation must be required to file a return and compute income subject to state tax based on its total income, and the parent corporation will be allowed a deduction for the deemed distribution to the extent of the domestic international sales corporation's business activity taxed in this state. If the domestic international sales corporation is taxed on its total income, then the parent corporation may deduct one hundred percent of the deemed distribution.
An FSC (foreign sales corporation) must be treated the same as a domestic international sales corporation for state tax purposes. Distributions made by the foreign sales corporation to the parent corporation must be included in the parent's income for state tax purposes. The tax commissioner may also require a combined report by the parent corporation to include the total income of the foreign sales corporation, with deemed distributions and intercompany items eliminated.
N.D. Admin Code 81-03-05.1-03
General Authority: NDCC 57-38-56
Law Implemented: NDCC 57-38-01, 57-38-01.3