North Dakota Tax Schedule ND-1FA - 3-year averaging method for elected farm income Instructions

General Informations 

Eligibility

You are eligible to use Schedule ND-1FA to calculate your tax for 2008 if you used Schedule J (Form 1040) to calculate your 2008 federal income tax.

The use of Schedule ND-1FA is elective. You do not have to use it even though you used Schedule J (Form 1040) to calculate your federal income tax for 2008.

IMPORTANT: It is possible for the tax calculated using Schedule ND-1FA to be higher than the tax calculated on all of your income using the regular method (without Schedule ND-1FA). Complete and attach Schedule ND-1FA to your Form ND-1 only if you are electing to pay the tax that results from using Schedule ND-1FA.

Copies of 2005, 2006, and 2007 returns

You will need copies of your 2005, 2006, and 2007 North Dakota income tax returns to complete the 2008 Schedule ND-1FA. If you do not have a copy of any of these returns, see the back cover of the 2008 Form ND-1 instruction booklet for information on how to obtain one.

If you filed an amended North Dakota income tax return or our offi ce made changes to your North Dakota income tax return for 2005, 2006, or 2007, you must use the corrected amounts when completing Schedule ND-1FA.

Specific line instructions

Line 2

Enter your elected farm income from the 2008 Schedule J (Form 1040), line 2. However, if you claimed an exclusion on line 7 of your 2008 Form ND-1 attributable to a net long-term capital gain included in your federal elected farm income, subtract that portion of the exclusion from your federal elected farm income and enter the result on this line.

Lines 5, 9, and 13

For purposes of completing lines 5, 9, and 13 of the 2008 Schedule ND-1FA, your North Dakota taxable income may be a negative number. If your North Dakota taxable income for a base year is mathematically less than zero, use the negative number for purposes of completing these lines.

No filing requirement for base year. If you were not required to file a North Dakota income tax return for one or more of the base years, you must complete the applicable North Dakota return for each base year for which a return was not filed. You may use either Form ND-1 or Form ND-2. Complete the return through the line on which the tax is calculated. If you were a part- year resident or full-year nonresident for the base year, Schedule ND-1NR (Form ND-1) or Schedule 3 (Form ND-2) also must be completed. Use the figures from the return completed for the base year to complete the applicable lines of the 2008 Schedule ND-1FA.