New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 21 - COMBINED RETURNS › Section 18:7-21.4 - Mandatory combined returns for unitary combined groups

Current through Register Vol. 56, No. 14, July 15, 2024
(a) In general, a business entity is required to
				file a New Jersey combined return when it is subject to tax pursuant to
				N.J.S.A.
				54:10A-2 and is engaged in a unitary business with
				one or more other business entities that meet the requirements for inclusion as part
				of a combined group. In such cases, if any member of the group has income from the
				activities of the group's unitary business that is taxable in another state, the
				taxable member shall calculate its taxable net income derived from such unitary
				business as its allocated share of the income or loss of the combined group engaged
				in the unitary business, as determined in accordance with such combined return. The
				managerial member shall file a combined return on behalf of the combined group. The
				combined return shall include the income and allocation information of all members
				of the combined group and such other information as required by the Director. The
				composition of the combined group and the computation of the taxable member's income
				and its allocation formula are explained at N.J.A.C. 18:7-21.7 through 21.28. A
				combined return is also required in cases where a corporation is engaged in a
				unitary business with one or more corporations and no member of the combined group
				has income from the activities of the group's unitary business that is taxable in
				another state. In some cases, the managerial member may make an election to treat as
				its combined group all corporations that are members of its New Jersey affiliated
				group, on such terms and in keeping with such requirements of this subchapter. The
				requirement to file a combined return is not dependent upon an evidentiary showing
				that there is a distortion of income between corporations that are related by common
				ownership or that there is a lack of arm's length pricing in transactions between
				such corporations.
1. The business entities that
				are included in a combined group generally retain their separate identities pursuant
				to
				N.J.S.A. 54:10A-1 et seq.
				The combined reporting requirements do not disregard the separate identity of an
				individual taxable member of a combined group. However, the combined group is also
				one taxpayer pursuant to
				N.J.S.A. 54:10A-4(h)
				 and
				54:10A-4(z).
				In determining the corporation business tax liability on such taxable income, the
				rules promulgated pursuant to the Corporation Business Tax Act, P.L. 1945, c. 162
				(N.J.S.A. 54:10A-1 et
				seq.), generally apply to the computation of such income, the allocation formulas,
				tax attributes, and tax rate, as applicable, subject to modifications pursuant to
				N.J.S.A. 54:10A-1 et seq.,
				or this subchapter. A taxable member may have tax attributes or tax consequences
				apart from those determined through the means of a combined return. For example, in
				any case where no affiliated group election is made, a taxable member of a combined
				group may have, in addition to its allocable share of the combined group's unitary
				business income, allocable income from activities that were conducted by the taxable
				member that are not part of the combined group's unitary business. In these cases,
				the taxable member shall be subject to tax on such other income under the general
				rules as set forth in the Corporation Business Tax Act (N.J.S.A.
				54:10A-1 et seq.).
2. Where 100 percent of the activities of the
				member are part of the unitary business of the combined group, the member does not
				have to file an additional separate tax return. The combined return filed by the
				managerial member of the combined group, shall count as the taxpayer's
				return.
3. A member that has any other
				activities and income that are non-unitary with the combined group shall complete
				Schedule X and the managerial member shall attach the member's Schedule X to the
				combined return. The member does not have to file an additional separate tax
				return.