Schedule QEC: Schedule QEC - Qualified Endowment Fund Tax Credit (2025)
North Dakota · ND Tax Commissioner · Used for tax years 2025
North Dakota Schedule QEC calculates the qualified endowment fund tax credit for businesses and fiduciaries. It reports contributions to qualified endowment funds, the credit on current-year contributions, and any allowable unused credit carried over from prior years.
Who files this form
Schedule QEC is for partnerships, corporations, estates, and trusts claiming a North Dakota income tax credit for charitable contributions to a qualified endowment fund. Attach it to Form 38, 40, 58, or 60.
Estates, trusts, and C corporations also use the schedule to claim eligible unused credits carried over from prior years. If you are only carrying over unused credit from 2022, 2023, or 2024 to 2025, skip lines 1 through 5 and start with line 6.
What you'll need
- Your taxpayer name as shown on the return and federal employer identification number.
- The name, address, and total 2025 contributions for each qualified endowment fund.
- A copy of a letter or other documentation from each fund showing its name, the dates and amounts of contributions, and a statement that it meets the qualified endowment fund criteria under N.D.C.C. § 57-38-01.21. Attach these copies.
- For an estate, trust, or C corporation claiming a carryover, the allowable unused credit amounts from contributions made in 2022 through 2024.
How to file
Attach Schedule QEC and the required fund documentation to Form 38, 40, 58, or 60.
- In Part 1, list each fund's name, address, and total contributions for 2025. Mark column (c) if the fund is held by a qualifying border state organization. Add the contributions on line 2.
- On line 4, enter the smaller of your total contributions or the $25,000 maximum on line 3. Multiply line 4 by 40% to calculate the current-year credit on line 5.
- On line 6, estates, trusts, and C corporations enter their allowable unused credit carryover. Partnerships and S corporations enter zero.
- Add lines 5 and 6, then report line 7 on the applicable return:
- Form 38: Schedule 38-TC, line 12a.
- Form 40: Schedule TC, line 15, or Schedule CR, Part III, line 15.
- Form 58: Schedule K, line 14a.
- Form 60: Schedule K, line 11a.
Partnerships also report line 4 on Form 58, Schedule K, line 14b. S corporations report it on Form 60, Schedule K, line 11b.
The supplied text does not give a mailing address or e-file directions.
Common mistakes
- Using the same contribution for another credit. A contribution used for this credit cannot also be used for another income tax credit.
- Missing the income addback. If the contribution was deducted for federal income tax purposes, it must be added to North Dakota taxable income to the extent it reduced federal taxable income. This applies in any tax year in which it reduced federal taxable income. Estates, trusts, and C corporations should follow the line 4 reminder and the referenced Form 38 or Form 40 instructions.
- Leaving out fund documentation. Attach the required letter or other documentation from each qualified endowment fund.
- Missing the border state indicator. Fill in the circle in column (c) when the fund is held by a qualifying border state organization.
- Entering a carryover for a partnership or S corporation on line 6. These entities must enter zero.
Questions people ask
What is a qualified endowment fund?
It is a permanent, irrevocable fund held by a qualified nonprofit organization. It must consist of cash, securities, mutual funds, or other investment assets and be established for a specific religious, educational, or other charitable purpose. It may spend only the income generated by, or the increase in value of, the contributed assets.
How much is the credit?
The credit is 40% of eligible contributions, with no more than $25,000 in contributions used in the calculation. The maximum credit on an entity's direct contributions during a tax year is $10,000.
Can unused credit be carried forward?
Yes. The unused portion of an otherwise allowable credit may be carried over for up to three tax years. For 2025, estates, trusts, and C corporations use line 6 for allowable credits from contributions made in 2022 through 2024. For an estate or trust, this applies only to its own allocated portion. Partnerships and S corporations enter zero on line 6.
How is the credit shared with owners or beneficiaries?
A partnership or S corporation determines the credit at the entity level and passes it through to partners or shareholders based on their respective interests. An estate or trust also determines the credit at the entity level, then allocates it between the entity and its beneficiaries in proportion to the income allocated among them.