There are two situations in which dividends are tax exempt in North Carolina.
The codes and the corresponding descriptions are as follows:
- Code (4) The amount of dividends received from sources outside the United States as determined under Section 862 of the Internal Revenue Code, to the extent included in federal taxable income.
- Code (23) The amount of a dividend received from a captive REIT, as defined by G.S. 105-130.12.
For more information on North Carolina additions and deductions from federal gross income, along with the codes, please see Computation of Net Income.