17 NCAC 06B .4103. ORDINARY DIVIDENDS

(a)  Interest received in the form of dividends from regulated investment companies is deductible from an individual's federal taxable income to the extent the distributions represent interest on direct obligations of the United States Government.  The fund must furnish the taxpayer a statement verifying the amount of interest paid to him which accrued from direct obligations of the United States Government.  Interest earned on obligations that are merely backed or guaranteed by the United States Government will not qualify for the deduction.  Further, this deduction does not apply to distributions which represent gain from the sale or other disposition of the securities nor to interest paid in connection with repurchase agreements issued by banks and savings and loan associations.

(b)  The taxpayer may not deduct mutual fund dividends on the basis of a percentage of investments held by the fund (i.e., a fund has 75 percent of its investments in United States Treasury Notes).  The statement to support the deduction must specify the amount received by the taxpayer which represents interests on direct obligations of the United States Government.

(c)  The procedure in this Rule will also apply with respect to interest on obligations of the State of North Carolina and any of its political subdivisions to the extent included in federal taxable income.

 

History Note:        Authority G.S. 105‑134.6(b)(1); 105‑262;

Eff. June 1, 1990;

Amended Eff. June 1, 1993; December 1, 1990.