New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 21 - COMBINED RETURNS › Section 18:7-21.18 - Net deferred tax liability deduction

Current through Register Vol. 56, No. 14, July 15, 2024
(a) There
				shall be allowed as a deduction an amount computed, in accordance with
				N.J.S.A. 54:10A-4(k)(16)
				 for publicly traded companies. Affiliated
				corporations participating in the filing of a publicly traded company's financial
				statements prepared, in accordance with generally accepted accounting principles,
				shall also be eligible for this deduction. The deduction shall be allowed beginning
				with the combined group's first privilege period beginning on or after January 1,
				2023, that is, the fifth year after the effective date of combined reporting
				pursuant to
				N.J.S.A. 54:10A-4(k)
				(16)(E).
(b) A combined group claiming this deduction shall
				also be allowed the credit at N.J.A.C. 18:721.14, since the alternative minimum
				assessment credit pursuant to N.J.A.C. 18:7-21.14is intended for all combined groups
				filing combined returns in New Jersey, not just publicly traded companies.
(c) A combined group claiming the deduction shall
				file the claim by July 1, 2020.
(d) The
				Division of Taxation will only accept U.S. Generally Accepted Accounting Principles
				(U.S. G.A.A.P.) and International Financial Reporting Standards
				(I.F.R.S.).
(e) Only taxpayers that are
				publicly traded companies, or their affiliates (subsidiaries), included in the
				financial statements filed with the U.S. regulatory authorities or the financial
				statements filed with the regulatory authorities of a foreign nation with which the
				U.S. has a reciprocal agreement will qualify, so long as the financial statements
				are prepared, in accordance with U.S. G.A.A.P. or in accordance with the
				I.F.R.S.
(f) A publicly traded company
				is a company that is listed on a stock exchange or traded on over-the-counter
				markets.
(g) To qualify for the purposes
				of
				N.J.S.A.
				54:10A-4(k)(16), a U.S. stock
				exchange or U.S. over-the-counter market must be regulated by a U.S. regulatory
				authority, and a foreign stock exchange or foreign over-the-counter market must be
				regulated by a regulatory authority of the foreign nation (so long as there is a
				reciprocal agreement with the U.S. government or U.S. regulatory
				authority).
(h) Financial statements are
				statements that are required to be filed annually, quarterly, etc. such as, but not
				limited to, the 10-K, 10-Q, or 8-K filings with the U.S. Securities and Exchange
				Commission (S.E.C.).
(i) The terms "net
				deferred tax liability" and "net deferred tax asset," as defined at
				N.J.S.A.
				54:10A-4(k)(16), shall otherwise
				have the same meaning as prescribed by the Financial Accounting Standards Board
				(F.A.S.B.) or International Accounting Standards Board (I.A.S.B.) and calculated in
				accordance with U.S. G.A.A.P. or I.F.R.S., as applicable.
(j) The surtax imposed at
				N.J.S.A.
				54:10A-5.41 shall be taken into account by the
				combined group when computing the deduction.
(k) Only the changes resulting from a change to
				filing combined returns apply for the purposes of computing the deduction.
(l) Where U.S. subsidiaries are required to file a
				mandatory unitary combined return with New Jersey and are included in the non-U.S.
				parent corporation's financial statements filed with the regulatory authorities of a
				foreign nation, the combined group filing a New Jersey return shall be eligible for
				the deduction if the parent corporation files its financial statements, in
				accordance with I.F.R.S. and is listed on a foreign stock exchange of a foreign
				nation that has a reciprocal agreement with the U.S. government.
(m) Where a publicly traded U.S. parent
				corporation is not unitary with its subsidiaries that constitute the combined group
				required to file a New Jersey combined return for New Jersey corporation business
				tax purposes, the combined group shall be eligible for the deduction where the
				combined group is included in the parent corporation's financial statements that are
				filed with the S.E.C.
(n) A combined
				group that is privately held does not qualify for the deduction. Only publicly
				traded companies that file financial statements, in accordance with U.S. G.A.A.P. or
				I.F.R.S. are eligible. Privately held combined groups are not eligible for the Net
				Deferred Tax Liability Deduction.
(o) A
				taxpayer that files a gross income tax return that is the owner of a closely held
				group of companies that is not a publicly traded group of companies is not eligible
				for the deduction.