N.D.C.C. § 57-38-04 — Allocation and apportionment of gross income of individuals

The gross income of individuals must be allocated and apportioned as follows:
1. a. Income from personal or professional services performed in this state by
individuals must be assigned to this state regardless of the residence of the
recipients of such income, except that income from such services performed
within this state by an individual who resides and has the individual's place of
abode in another state to which place of abode the individual customarily returns
at least once a month must be excluded from the individual's income for the
purposes of this chapter if such income is subject to an income tax imposed by
the state in which the individual resides, provided that the state in which the
individual resides allows a similar exclusion for income received from similar
services performed in that state by residents of North Dakota.
b. Notwithstanding any other provision of this chapter, the compensation received
from services performed within this state by an individual, who performs services
for a common carrier engaged in interstate transportation and who resides and
has the individual's place of abode to which the individual customarily returns at
least once a month in another state, must be excluded from income to the extent
that the income is subject to an income tax imposed by the state of the
individual's residence; provided, that the state allows a similar exclusion of the
compensation received by residents of North Dakota for similar services
performed therein, or a credit against the tax imposed on the income of residents
of this state that is substantially similar in effect. For purposes of this subdivision,
the term an individual who performs services for a common carrier engaged in
interstate transportation is limited to an individual who performs the services for a
common carrier only during the course of making regular runs into North Dakota
or from within North Dakota to outside North Dakota, or both, on the
transportation system of the common carrier.
2. Income received from personal or professional services performed by residents of this
state, regardless of where such services are performed, and income received by
residents of this state from intangible personal property must be assigned to this state.
3. Income and gains received from tangible property not employed in the business and
from tangible property employed in the business of the taxpayer, if such business
consists principally of the holding of such property and collection of income and gains
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therefrom, must be assigned to this state without regard to the residence of the
recipient if such property has a situs within this state.
4. Income derived from business activity carried on by an individual as a sole
proprietorship, or through a partnership, subchapter S corporation, or other
passthrough entity, must be assigned to this state without regard to the residence of
the individual if the business activity is conducted wholly within this state. Income
derived from gaming activity carried on in this state by an individual must be assigned
to this state without regard to the residence of the individual.
5. Whenever business activity is carried on partly within and partly without this state by a
nonresident of this state as a sole proprietorship, or through a partnership,
subchapter S corporation, or other passthrough entity, the entire income therefrom
must be allocated to this state and to other states, according to the provisions of
chapter 57-38.1 but only according to the apportionment method provided under
subsection 1 of section 57-38.1-09, providing for allocation and apportionment of
income of corporations doing business within and without this state.
6. a. Income and gains received by a resident of this state from tangible property not
employed in the business and from tangible property employed in the business of
the taxpayer, if the business consists principally of the holding of the property and
the collection of income and gains from the business, must be assigned to this
state without regard to the situs of the property.
b. Income derived from business activity carried on by residents of this state,
whether the business activity is conducted as a sole proprietorship, or through a
partnership, subchapter S corporation, or other passthrough entity, must be
assigned to this state without regard to where the business activity is conducted,
and the provisions of chapter 57 -38.1 do not apply. If the taxpayer believes the
operation of this subdivision with respect to the taxpayer's income is unjust, the
taxpayer may petition the tax commissioner who may allow use of another
method of reporting income, including separate accounting.
7. All other items of gross income must be assigned to the taxpayer's domicile.
8. The privileges granted nonresidents apply only when other states grant to the
residents of North Dakota the same privilege.