N.D. Admin. Code § 81-03-09-35 — Special rules - Railroads

The following special rules are established in respect to railroads: 1. In general. Where a railroad has income from sources both within and without this state, the amount of business income from sources within this state must be determined pursuant to this section. In such cases, the first step is to determine what portion of the railroad's income constitutes "business" income and which portion constitutes "nonbusiness" income under 21 North Dakota Century Code section 57 -38.1-01 and article IV(1) of North Dakota Century Code section 57 -59-01 and section 81 -03-09-03. Nonbusiness income is directly allocable to specific states pursuant to the provisions of North Dakota Century Code sections 57 -38.1-05 through 57-38.1-08 and article IV(5) to IV(8) of North Dakota Century Code section 57 -59-01, inclusive. Business income is apportioned among the states in which the business is conducted pursuant to the property, payroll, and sales apportionment factors set forth in the regulation. The sum of the items of nonbusiness income directly allocated to this state, plus the amount of business income attributable to this state constitutes the amount of the taxpayer's entire net income which is subject to tax by this state. 2. Business and nonbusiness income. For definitions, rules, and examples for determining business and nonbusiness income, see sections 81-03-09-03 through 81-03-09-06. 3. Apportionment of business income. a. In general. The property factor shall be determined in accordance with sections 81-03-09-15 through 81-03-09-2l, inclusive, the payroll factor in accordance with sections 81-03-09-22 through 81-03-09-25, and the sales factor in accordance with sections 81-03-09-26 through 81-03-09-31, inclusive, except as modified in this regulation. b. The property factor. (1) Property valuation. Owned property shall be valued at its original cost and property rented from others shall be valued at eight times the net annual rental rate in accordance with North Dakota Century Code section 57 -38.1-11 and article IV(11) of North Dakota Century Code section 57 -59-01 and sections 81 -03-09-19 and