Trust account

1. An organization shall maintain all trust accounts at financial institutions located in North Dakota. If an organization only conducts a calcutta, raffle, sports pool, paddlewheel described by subsection 1 of section 99-01.3-11-01, or poker or a combination of these games, or is involved in conducting no more than two events during a fiscal year and each event lasts no more than fourteen calendar days, an organization is not required to maintain a separate trust account and may use the gaming account for the disbursement of eligible uses. Trust accounts are used only to disburse net proceeds to eligible uses and must receive only funds from a gaming account, except to reimburse the account as required by section 99-01.3-03-05 and as provided by subsections 5 and 13 of section 99-01.3-14-01. Interest earned and service fees, including fees for ordering checks, incurred by trust checking and savings accounts must be reported as adjustments to the trust account on a tax return. A transfer of net proceeds to another trust account or to a closely related organization is not a disbursement of net proceeds. Net proceeds cannot be pledged as collateral for any loan. 2. An organization shall disburse net proceeds within a reasonable time period. 3. An organization may not transfer funds from a trust account to any other bank account, except for transferring funds to another trust account or to reimburse its general account for compensation that qualifies as an eligible use. A reimbursement must be documented by a supporting schedule. If a disbursement of net proceeds is for an expense item that includes both nongaming (an eligible use) and gaming functions, only the nongaming eligible use portion may be paid with net proceeds. The organization shall maintain complete, accurate, and current documentation detailing the proration of the expense between nongaming and gaming. A disbursement must be payable directly to the ultimate use or recipient. However, an organization may make a payment directly to a credit card company for charges on a credit card provided that an organization can identify purchases that qualify as an eligible use from other purchases. A payment may be made by electronic transfer. 4. If an organization invests net proceeds in a certificate of deposit, bond, stock, mutual fund, or other marketable securities, all income earned, including interest, dividends, and capital gains, must be reported each quarter as a positive adjustment on a tax return and be disbursed to an eligible use. If the net effect of the investment in marketable securities results in an actual loss, the organization may not deduct the loss on a tax return. A service fee is an adjustment to the account's balance. 5. For reporting purposes, an organization may elect to report the gain in market value of the accounts outlined in subsection 4. Adjustments may be made for decreases in market value; however, decreases cannot reduce the account's value below its adjusted basis. Electing to report securities at market value must be consistently applied each quarter.