Income Tax Incentives
Seed Capital Investment Tax Credit
An individual, estate, trust, partnership, corporation, or limited liability company is allowed an income tax credit for investing in a business certified by the Department of Commerce Division of Economic Development and Finance.
An investment may consist of a direct cash payment, or a direct transfer of cash from a retirement plan for which the investor controls where the plan’s assets are invested. The credit is equal to 45% of the investment. No more than $112,500 of the credit may be used in any year. An unused credit may be carried forward up to four tax years. In the case of a passthrough entity, such as a partnership or S corporation, or in the case of an angel fund, the credit is passed through to the entity’s owners, or the fund’s investors, in proportion to their respective interests.
Only the first $500,000 of eligible investments in the business are eligible for the tax credit. The total amount of tax credits allowed for investments made in all certified businesses in any calendar year is limited to $3.5 million.
See the following links for more information:
- Certification as a qualified business-To obtain certification as a qualified business for purposes of the Seed Capital Investment Tax Credit Program, a business must complete and submit two application forms to the North Dakota Commerce Department’s Division of Economic Development and Finance: a primary sector certification application form and a seed capital qualified business certification application form. If a business has already obtained primary sector certification for this or another purpose, only the seed capital qualified business certification application is required.
- Questions relating to certification should be directed to the North Dakota Commerce Department’s Division of Economic Development and Finance as follows:
ND Commerce Department
Division of Economic Development and Finance
PO Box 2057
Bismarck, ND 58503
Phone: (701) 328-5300
Web site: http://www.business.nd.gov
- Program provisions – For a rundown of the Program’s provisions, see Seed Capital Investment Tax Credit Program – Program provisions.
- Once certified, a qualified business must report each qualified investment it receives by completing and submitting the Qualified seed capital business investment reporting form.
- Credit rates, limitations, and other features by tax year – Because of changes in the law, the applicable rate, limitations, and other features of the tax credit have changed over the years. For a summary of the applicable rates, limitations, and other features on a year-by-year basis, see Seed Capital Investment Tax Credit Program – Rates, limitations, and other features of the tax credit by tax year.
- North Dakota seed capital investment tax credit statute (law) – For the text of the law, see N.D.C.C. ch. 57-38.5.