New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 35 - NEW JERSEY GROSS INCOME TAX › Subchapter 5 - NEW JERSEY SOURCE INCOME OF NONRESIDENTS › Section 18:35-5.1 - Compensation received by nonresident professional athletes

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The New Jersey
				source income of a nonresident individual who is a member of a professional athletic
				team includes that portion of such individual's total compensation for services
				rendered as a member of a professional athletic team during the taxable year which
				the number of duty days spent within New Jersey rendering services for the team in
				any manner during the taxable year bears to the total number of duty days spent both
				within and without New Jersey during the taxable year.
(b) For purposes of this section:
1. "Professional athletic team" includes, but is
				not limited to, any professional baseball, basketball, football, soccer, or hockey
				team.
2. "Member of a professional
				athletic team" includes those employees who are active players, players on the
				disabled list, and any other persons required to travel and who do travel with and
				perform services on behalf of a professional athletic team on a regular basis. This
				includes, but is not limited to, coaches, managers, and trainers.
3. "Duty days" means, except as provided in
				(b)3iii and iv below, all days occurring during the taxable year from the beginning
				of the professional athletic team's official preseason training period through the
				last game in which the team competes or is scheduled to compete.
i. Duty days shall also include days on which a
				member of a professional athletic team renders a service to a team on a date which
				does not fall within the period described in this paragraph (for example,
				participation in instructional leagues, the Pro Bowl or promotional caravans).
				"Rendering a service" includes conducting training and rehabilitation activities,
				but only if conducted at the facilities of the team.
ii. Included within duty days shall be game days,
				practice days, days spent at team meetings, promotional caravans and pre-season
				training camps, and days served with the team through all post-season games in which
				the team competes or is scheduled to compete.
iii. For any person who joins a team during the
				season, total duty days shall begin on the day such person joins the team. For any
				person who leaves a team during the season, total duty days shall end on the day
				such person leaves the team. When a person switches teams during a taxable year, a
				separate duty day calculation shall be made for the period such person was with each
				team.
iv. Days for which a member of a
				professional athletic team is not compensated and is not rendering services for the
				team in any manner, including days when such member of a professional athletic team
				has been suspended without pay and prohibited from performing any services for the
				team, shall not be treated as duty days.
v. Days for which a member of a professional
				athletic team is on the disabled list and does not conduct rehabilitation activities
				at facilities of the team shall not be considered duty days spent in New Jersey.
				However, all days that a team member is on the disabled list are considered to be
				included in total duty days spent within and without New Jersey.
vi. Travel days that involve a game, required
				practice, meeting, or other service in this State shall be considered duty days
				spent in New Jersey. Travel days that do not involve a game, practice, team meeting,
				promotional caravan, or other similar team event in this State shall not be
				considered duty days spent in New Jersey. However, such travel days shall be
				included in total duty days spent inside and outside New Jersey.
vii. The provisions of this paragraph are
				illustrated by the following examples:
Example 1: Player A, a member of a professional athletic team, is
				  a nonresident of New Jersey. Player A's contract for such team requires A to report
				  to the team's training camp and to participate in all exhibition, regular season,
				  and playoff games. Player A has a contract which covers seasons that occur during
				  year 1/year 2 and year 2/year 3. Player A's contract provides that A receive $
				  500,000 for the year 1/year 2 season and $ 600,000 for the year 2/year 3 season.
				  Assuming Player A receives $ 550,000 from such contract during taxable year 2 ($
				  250,000 for one-half the year 1/year 2 season and $ 300,000 for one-half the year
				  2/year 3 season), the portion of such compensation received by Player A for taxable
				  year 2, attributable to New Jersey, is determined by multiplying the compensation
				  Player A receives during the taxable year ($ 550,000) by a fraction, the numerator
				  of which is that total number of duty days Player A spends rendering services for
				  the team in New Jersey during taxable year 2 (attributable to both the year 1/year 2
				  season and the year 2/year 3 season) and the denominator of which is the total
				  number of Player A's duty days spent both within and without New Jersey for the
				  entire taxable year.
Example 2: Player B, a member of a professional athletic team, is
				  a nonresident of New Jersey. During the season, B is injured and is unable to render
				  services for B's team. While B is undergoing medical treatment at a clinic in New
				  Jersey, B's team travels to New Jersey for a game. The number of days B's team
				  spends in New Jersey for practice, games, and meetings while B is present at such
				  clinic in New Jersey shall not be considered duty days spent in New Jersey for
				  Player B for that tax year, but such days are considered to be included within total
				  duty days spent within and without New Jersey.
Example 3: Player C, a member of a professional athletic team, is
				  a nonresident of New Jersey. During the season, C is injured and is unable to render
				  services for C's team. C performs rehabilitation exercises at the facilities of C's
				  team in New Jersey as well as at personal facilities in New Jersey. The days C
				  performs rehabilitation exercises in the facilities of C's team are considered duty
				  days spent in New Jersey for Player C for that tax year for purposes of this
				  section. However, days Player C spends in private facilities in New Jersey shall not
				  be considered duty days spent in New Jersey for Player C for that tax year, but such
				  days are included within total duty days spent within and without New Jersey.
Example 4: Player D, a member of a professional athletic team, is
				  a nonresident of New Jersey. During the season, D travels to New Jersey to
				  participate in the annual all-star game as a representative of D's team. The number
				  of days D spends in New Jersey for practice, the game, meetings, and other services
				  for the team, shall be considered duty days spent in New Jersey for Player D for
				  that tax year, as well as included in total duty days spent within and without New
				  Jersey.
Example 5: Assume the same facts as given in Example 4, except
				  that Player D is not participating in the all-star game and is not rendering
				  services for D's team in any manner. Player D is traveling to and attending such
				  game solely as a spectator. The number of days Player D spends in New Jersey for
				  such game shall not be considered duty days spent in New Jersey. However, because
				  the all-star game occurs during the regular season, such days are included in total
				  duty days spent both within and without New Jersey.
Example 6: A nonresident member of a New Jersey professional
				  athletic team has a season beginning with training camp on July 1. The season ends
				  with the last regular season game on December 24. If the season is extended by
				  playoff games after December 31, the additional duty days during the next calendar
				  year will be duty days inside and outside New Jersey for the subsequent tax
				  year.
4. "Total
				compensation for services rendered as a member of a professional athletic team"
				means:
i. The total compensation received during
				the taxable year for services rendered:
(1) From
				the beginning of the official pre-season training period through the last game in
				which the team competes or is scheduled to compete during that taxable year;
				and
(2) During the taxable year, on a
				date which does not fall within the period described in (b)4i(1) above (for example,
				participation in instructional leagues, the "Pro Bowl" or promotional
				caravans).
ii. Total
				compensation shall include, but is not limited to, salaries, wages, bonuses (as
				described in (b)4iv below), and any other type of compensation paid during the
				taxable year to a member of a professional athletic team for services performed in
				that year.
iii. Total compensation shall
				not include strike benefits, severance pay, termination pay, contract or option year
				buy-out payments, expansion or relocation payments, or any other payments not
				related to services rendered for the team.
iv.For purposes of (b)4ii above, bonuses to be
				included in total compensation for services rendered as a member of a professional
				athletic team subject to the apportionment described in (a) above are:
(1) Bonuses earned as a result of play (that is,
				performance bonuses) during the season, including bonuses paid for championship,
				playoff or bowl games played by a team, or for selection to all-star league or other
				honorary positions; and
(2) Bonuses paid
				for signing a contract, unless all of the following conditions are met:
(A) The payment of the signing bonus is not
				conditional upon the signer playing any games for the team, or performing any
				subsequent services for the team, or even making the team;
(B) The signing bonus is payable separately from
				the salary and any other compensation; and
(C) The signing bonus is nonrefundable.