Interest Income from Obligations of StatesOther than North Carolina.
Enter the amount of interest received from notes, bonds, and other obligations of states and political subdivisions other than North Carolina if not included in federal adjusted gross income. This includes exempt interest dividends received from regulated investment companies (mutual funds) to the extent such dividends do not represent interest from obligations of North Carolina or its political subdivisions.
Deferred Gains Reinvested into an Opportunity Fund under IRC Section 1400Z-2.
North Carolina did not conform to the temporary deferral of income for certain gains timely invested in a qualified Opportunity Fund under Internal Revenue Code section 1400Z-2. These gains are not deferred for North Carolina tax purposes and must be included in determining your state tax payable. Therefore, an addition to federal adjusted gross income is required for gains reinvested into a qualified Opportunity Fund under IRC section 1400Z-2. Note: If you were required to include a gain in federal adjusted gross income under IRC section 1400Z-2 in tax year 2020, you may deduct the gain to the extent the same income was included in the calculation of N.C. taxable income during a prior year.
North Carolina did not adopt the 50% bonus depreciation provisions in IRC sections 168(k) or 168(n) for property placed in service for tax year 2019. Therefore, you must add 85% of the amount of bonus depreciation deducted on your federal return to your state return. Note: If you are required to addback bonus depreciation in tax year 2019, you may deduct 20% of the amount added back in the first five taxable years beginning with tax year 2020.
IRC Section 179 Expense.
North Carolina did not conform to the increased federal expense deduction or increased investment limitations for tax year 2019. N.C. dollar and investment limitations are $25,000 and $200,000, respectively. Therefore, you must add 85% of the difference between the IRC section 179 expense deduction using federal limitations and the deduction using N.C. limitations to your state return. Note: If you are required to addback IRC section 179 expenses in tax year 2019, you may deduct 20% of the amount added back in the first five taxable years beginning with tax year 2020.
Other Additions to Federal Adjusted Gross Income. Enter the total amount of the following other additions. Make sure you attach an explanation or schedule of the item(s) to Form D-400.
(1) The amount by which your basis of property under federal law exceeds your basis of property for state purposes must be added to your adjusted gross income in the year that you dispose of the property.
(2) If you carry over a net operating loss from another year to the 2019 federal return, an addition is required for the amount of net operating loss carried to the 2019 year that is not absorbed and will be carried forward to subsequent years. (For more information on net operating losses, refer to the Department’s bulletins for individual income tax.)
(3) Effective for taxable years beginning on or after January 1, 2006 and repealed effective for taxable years beginning on or after January 1, 2014, certain contributions made to North Carolina’s National College Savings Program (“N.C. 529”) were deductible for state tax purposes. If you took a state tax deduction for contributions made to the N.C. 529 Plan while the deduction was in effect, and in tax year 2020, you withdrew funds from the Plan, you must add to federal adjusted gross income the amount deducted in the prior tax year to the extent the funds withdrawn were not used for a purpose allowed under IRC section 529.
(4) The amount by which a shareholder’s share of S Corporation income is reduced under IRC section 1366(f)(2) for the taxable year by the amount of built-in gains tax imposed on the S Corporation under IRC section 1374.