New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 5 - ENTIRE NET INCOME; DEFINITION, COMPONENTS AND RULES FOR COMPUTING › Section 18:7-5.22 - Application of Internal Revenue Code Section 163(j)

Current through Register Vol. 56, No. 14, July 15, 2024
(a) For privilege periods beginning after December
				31, 2017, the interest deduction limitation in subsection (j) at I.R.C. § 163
				shall apply on a pro-rata basis to interest paid to both related and unrelated
				parties, regardless of whether the related parties are subject to
				N.J.A.C.
				18:7-5.18.
(b) The limitation will be applied based on the
				Federal rules and guidance for I.R.C. § 163(j).
(c) The I.R.C. § 163(j) limitation is applied
				first, before applying the related party add backs at
				N.J.A.C.
				18:7-5.18.
(d) Members of a Federal consolidated group that
				did not file one Federal consolidated return together, which also file separate New
				Jersey tax returns, must follow the Federal rules for I.R.C. § 163(j), applying
				the limitation to those members as each separate taxpayers, and then apply the
				limitations at
				N.J.A.C.
				18:7-5.18.
(e) If members of a Federal consolidated group
				file a Federal consolidated return, the Federal rules treating the taxpayers as one
				entity for the purposes of applying the limitation at I.R.C. § 163(j) shall
				apply when determining the limitation, even though the taxpayers file a separate New
				Jersey return. The Federal regulations, as amended for the changes to the Internal
				Revenue Code, governing the application of the limitation at I.R.C. § 163(j) to
				Federal consolidated returns shall apply. However, such members are still subject to
				the limitations set forth at
				N.J.A.C.
				18:7-5.18, if otherwise applicable.
(f) For members of a combined group filing a New
				Jersey combined return, the members included on the combined return shall be treated
				as one single taxpayer for the purposes of applying the limitation at I.R.C. §
				163(j) as though the members of a combined group were members of a Federal
				consolidated group that filed a consolidated return, regardless of whether such
				members had filed a Federal consolidated return. For more information on combined
				groups and combined reporting, see N.J.A.C. 18:7-21.
(g) If members of a combined group filing a New
				Jersey combined return are part of a Federal consolidated group with taxpayers that
				are not included on a New Jersey combined return and the Federal consolidated group
				files one Federal consolidated return, for the purposes of applying the limitation
				at I.R.C. § 163(j), all of the members of the Federal consolidated group filing
				a single Federal consolidated return will be treated as one taxpayer, even though
				some of the taxpayers were not included in the New Jersey combined return and filed
				separate New Jersey returns. For more information on combined groups and combined
				reporting, see N.J.A.C. 18:7-21.
(h) For
				corporation business tax purposes, New Jersey conforms to the CARES Act amendments
				and any other subsequent amendments at I.R.C. § 163(j).