New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 3 - COMPUTATION OF TAX › Section 18:7-3.21 - Manufacturing equipment and employment investment tax credit

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The following words
				and terms, as used in this section, shall have the following meanings unless the
				context clearly indicates otherwise:
"Base year" means the tax year immediately preceding the year in
				  which a qualified investment was placed in service.
"Cost of qualified equipment" means, and is determined according
				  to, the following criteria:
1. With respect
				to self-constructed equipment, the term means the cost amount properly charged to
				the capital account for depreciation in accordance with Federal income tax law. This
				includes all charges incurred to produce a particular manufacturing piece of
				equipment. Costs include engineering designs, drafting, and other consultations
				required, as well as the physical construction costs associated with the finished
				product.
2. With respect to purchased
				equipment, the term is determined to be the net cost or net monetary consideration
				provided for acquisition of title and/or ownership of the subject
				property.
3. With respect to equipment
				acquired by written lease, the term is the minimum amount required by the agreement
				to be paid over the term of the lease, provided that the minimum amount shall not
				include any amount required to be paid after the expiration of the useful life of
				the equipment. Property which a taxpayer leases, rents, or licenses to another
				person is not qualified equipment.
4.
				The cost of qualified equipment shall not include the value of equipment given in
				trade or exchange for the equipment purchased for business relocation or expansion.
"Credit allowable" means the credit available after applying
				  limitations listed under (b)2i and ii below.
"Credit available" means the credit earned plus any unused
				  carryover from prior years.
"Credit earned" means the manufacturing equipment portion of the
				  credit plus the employment investment portion of the credit in a given tax
				  year.
"Employee equivalents" means the aggregate hours of qualified
				  part-time employees who worked for the taxpayer for at least 20 hours per week for
				  at least six months. This amount is used to determine the total number of full-time
				  employees and equivalents necessary when calculating the employment investment
				  portion of the credit. The employees must be New Jersey residents domiciled in this
				  State who are working at locations in New Jersey.
"Measurement year" means the tax year immediately following the
				  year in which a qualified investment was placed in service.
"Placed in service," with respect to qualified equipment, means
				  and occurs in the earlier of the following tax years:
1. The tax year in which, under the taxpayer's
				  depreciation practice, the period for depreciation with respect to such property
				  begins; or
2. The tax year in which the
				  property is placed in a condition or state of readiness and availability for a
				  specifically assigned function.
"Qualified equipment" means machinery, apparatus, or equipment
				  acquired by purchase for use or consumption by the taxpayer directly and primarily
				  in the production of tangible personal property by manufacturing, processing,
				  assembling, or refining, as defined pursuant to N.J.S.A. 54:32B-8.13a, having a
				  useful life of four or more years, and placed in service in this State. Qualified
				  equipment does not include tangible personal property which the taxpayer contracts
				  or agrees to lease or rent to another person or licenses another person to use.
				  Lease renewals, subleases, or assignments shall not be considered as qualified
				  equipment. See N.J.A.C. 18:24-4.2.
"Useful life" used to distinguish three-year property from all
				  other property, is determined in accordance with I.R.C. § 168.