reglab/statecodes huggingface dataset:
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 3A - URBAN ENTERPRISE ZONES ACT › Section 18:7-3A.1 - General

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The New Jersey Urban Enterprises Zones Act,
				P.L. 1983, c. 303 (N.J.S.A. 52:27H-60 et seq.), approved
				August 15, 1983, provides for the establishment of up to 10 urban enterprise zones
				in urban areas suffering from high unemployment and economic distress. P.L. 1985, c.
				391, made certain changes to eligibility requirements for designation as a zone.
				P.L. 1988, c. 93, modified the definition of a qualified business, made adjustments
				to the eligibility requirements for the employee tax credit, and provided for an
				alternative investment tax credit. P.L. 1993, c. 367, further modified the
				definition of a qualified business and provided for the designation of 10 additional
				enterprise zones. Zones are designated by an Urban Enterprise Zone Authority. The
				Authority may grant certain corporation tax and other benefits to businesses
				existing in, or formed in, enterprise zones, which have met the definition of a
				qualified business. This subchapter of the corporation tax rules sets forth the
				possible benefits, the necessary definitions, and the procedures for qualifying for
				any or all of these corporation tax benefits. Rules on the sales and use tax and
				urban enterprise zones are in N.J.A.C. 18:24-31. For Urban Enterprise Zone Authority
				rules and policies, see N.J.A.C. 5:120.
(b) No business can obtain tax benefits under this
				subchapter unless it meets the definition of a "qualified business" in
				18:7-3A.2.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 3A - URBAN ENTERPRISE ZONES ACT › Section 18:7-3A.5 - Qualification for benefits

Current through Register Vol. 56, No. 14, July 15, 2024
There is no formal procedure for registration as a qualified
				  business for the purpose of obtaining the corporation tax benefits. However, each
				  annual CBT-100 Corporation Business Tax Return which claims any urban enterprise
				  zone corporation tax benefits must include proof that it is a qualified business.
				  This proof may consist of a certificate or other proof of status as a qualified
				  business for sales tax purposes under N.J.A.C. 18:24-31. If a sales tax certificate
				  or some other form of proof has not been obtained, the taxpayer should attach a
				  statement setting forth how it qualifies as a "qualified business" as defined in
				  18:7-3A.2, with sufficient detail to
				  permit verification by the Division of Taxation.
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 18:7-5.1 - Entire net income; definition

Current through Register Vol. 56, No. 14, July 15, 2024
(a) "Entire net income"
				means total net income from all sources, whether within or outside the United
				States, and includes:
1. The gain derived from the
				employment of capital or labor, or from both combined, as well as
2. Profit gained through a sale or conversion of
				capital assets.
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 18:7-5.2 - Entire net income; how computed

Current through Register Vol. 56, No. 14, July 15, 2024
(a) "Taxable income
				before net operating loss deduction and special deductions," hereinafter referred to
				as "Federal taxable income," is the starting point in the computation of the entire
				net income. After determining Federal taxable income, it must be adjusted as
				follows:
1. Add to Federal taxable income:
i. The amount of any exemption or credit allowed
				in any law of the United States imposing any tax on or measured by the income of
				corporations, where such exemption or credit has been deducted in computing Federal
				taxable income.
(1) All income that is exempt
				under any provision of the Federal law must be included in the entire net income for
				New Jersey corporation business tax purposes, unless there is a provision of the
				Corporation Business Tax Act that exempts or excludes such item of income;
(2) New Jersey shall follow the Federal
				government's treatment of the related expenses paid with Paycheck Protection Program
				(PPP) loans and forgiven loans will be excluded from entire net income. A taxpayer,
				pursuant to the Corporation Business Tax Act, P.L. 1945, c. 162 (N.J.S.A. 54:10A-1
				et seq.), shall not be denied a deduction for ordinary and necessary business
				expenses paid for with the proceeds of a Federal Paycheck Protection Program loan by
				reason of the exclusion from entire net income, pursuant to P.L. 1945, c. 162, of
				such loan, or portion thereof, forgiven pursuant to § 1106 of the Federal CARES
				Act, P.L. 116-136, or any subsequent
				expansion of the Federal Paycheck Protection Program, including the provision of
				second draw loans pursuant to § 311 of Division N of the "Consolidated
				Appropriations Act, 2021,"
				P.L.
				116-260; and
(3) Items of income excluded from Federal taxable
				net income pursuant to the specific terms of a treaty do not have to be added back
				to entire net income;
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 18:7-5.3 - Tax paid to foreign country or United States possession; when deductible from net income

Current through Register Vol. 56, No. 14, July 15, 2024
(a) With respect to foreign taxes required to be
				included in income as dividends received under I.R.C. § 78, no deduction from
				Federal taxable income is permitted if 100 percent of the dividend received amount
				is deductible therefrom under
				N.J.A.C.
				18:7-5.2(a)  2i.
1. However, if 100 percent of the foreign tax
				amount is not deductible from Federal taxable income as dividends received under
				18:7-5.2(a)  2i, then
				the percentage which is taxed may be deducted from Federal taxable income. No other
				foreign taxes are deductible.
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 18:7-5.4 - Factors not adjustable to Federal taxable income

Current through Register Vol. 56, No. 14, July 15, 2024
(a) No adjustment to
				Federal taxable income is permitted under this rule for:
1. Gains or losses not recognized for Federal
				income tax purposes under I.R.C. § 351 or similar sections but only to the
				extent that recapture or other provisions of the Code are not paramount to these
				sections.
2. The general business credit
				allowed or allowable for Federal income tax purposes under I.R.C. § 38.
i. This may not be taken as a deduction in
				computing the New Jersey net income tax base, nor as a credit, in any manner, in
				computing tax liability under the Corporation Business Tax Act.
ii. Upon disposition of assets which qualified for
				a general business credit under I.R.C. § 38, taxpayer must use the same basis
				for computing gain or loss for New Jersey net income tax purposes as employed for
				Federal income tax purposes.
3. Depreciation attributable to a decrease in the
				basis of depreciable property for Federal income tax purposes, as a result of the
				general business credit allowed or allowable under I.R.C. § 38.
i. This depreciation may not be taken as a
				deduction in computing the New Jersey net income tax base.
ii. Depreciation taken for New Jersey net income
				tax purposes must be reported at the same amount as reported for Federal income tax
				purposes for the same period.
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 18:7-5.5 - Entire net income; determining stock ownership

Current through Register Vol. 56, No. 14, July 15, 2024
(a) In determining
				the percent ownership of investment for purposes of computing the dividend
				exclusion, a taxpayer can aggregate its ownership of stock by basing its computation
				on its ownership equity in the payor. No part of such investment may be determined
				with reference to loans or advances but must be based upon investment in capital
				stock.
Example 1: Corporation A received a dividend from Corporation B
				  and a dividend from Corporation C. Corporation A owns 90 percent of Corporation B.
				  Corporation A owns 20 percent of Corporation C. Corporation B owns 70 percent of
				  Corporation C. The remaining shares of Corporation B and Corporation C are owned by
				  unrelated persons.
By literal terms of the Act, the dividend received by Corporation
				  A from its 90 percent owned Corporation B is excludible from entire net
				  income.
Since the equity of Corporation A in Corporation C is 80 percent
				  or more ownership, it may also exclude the dividends received from Corporation C
				  from entire net income.
OWNERSHIP EQUITY OF CORPORATION A IN CORPORATION C: --
Click
				  here to view image
.
Example 2: Corporation D received a dividend from Corporation E
				  and a dividend from Corporation F. Corporation D owns 90 percent of Corporation E.
				  Corporation D owns 20 percent of Corporation F. Corporation E owns 60 percent of
				  Corporation F. The remaining shares of Corporation E and Corporation F are owned by
				  unrelated persons.
By literal terms of the Act, the dividend received by Corporation
				  D from its 90 percent owned Corporation E is excludible from entire net
				  income.
Since the equity of Corporation D in Corporation F is less than
				  80 percent ownership, it may only exclude 50 percent of the dividend received from
				  Corporation F from entire net income.
OWNERSHIP EQUITY OF CORPORATION D IN CORPORATION F: --
Click
				  here to view image
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 18:7-5.6 - Adjustment of entire net income to period covered by return; how computed

Current through Register Vol. 56, No. 14, July 15, 2024
(a) If the
				entire net income required to be reported is for a period other than a period
				covered by the taxpayer's Federal income tax return, the taxpayer shall compute its
				net income as follows:
1. Its Federal taxable
				income is first adjusted in the manner set forth on
				18:7-5.1 through 5.4;
2. The result is then divided by the number of
				calendar months or parts thereof covered by the Federal income tax return;
3. The result is then multiplied by the number of
				the calendar months or parts thereof covered by the return under the Corporation
				Business Tax Act. A part of a month shall be deemed to be a month.
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 18:7-5.7 - Right of Director to independently determine net income

Current through Register Vol. 56, No. 14, July 15, 2024
If in the opinion of the Director the method employed in
				  18:7-5.6 does not properly reflect the
				  taxpayer's net income properly apportionable to New Jersey under the Act for the
				  period covered by its New Jersey return, the Director may determine entire net
				  income solely on the basis of the taxpayer's income during such period.
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 18:7-5.8 - Calculation of gain in certain instances

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A selling parent
				corporation in an I.R.C. § 338(h)(10) transaction does not recognize gain on
				the sale of target stock for New Jersey purposes for acquisition dates occurring on
				or after January 14, 1992.
(b) Where a
				target corporation recognizes gain as the result of an I.R.C. § 338(h)(10)
				election, the target reports and pays tax on such gain pursuant to
				N.J.A.C.
				18:7-5.1(a).
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 18:7-5.12 - Net operating loss deduction

Current through Register Vol. 56, No. 14, July 15, 2024
For privilege periods ending before July 31, 2019, a taxpayer may
				  deduct a New Jersey net operating loss carryover as defined at
				  N.J.A.C.
				  18:7-5.13 in computing its entire net income
				  before exclusions and before the net operating loss deduction. For privilege periods
				  ending on and after July 31, 2019, net operating loss deductions will be determined
				  pursuant to N.J.A.C. 18:7-5.21.
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 18:7-5.14 - Limitations to the right of a net operating loss carryover

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The net operating
				loss carryover automatically becomes zero when the cumulative effect of all of the
				corporation's capital stock redemptions and sales after June 30, 1984, is a
				50-percentage-point change in the ownership of its voting stock and the corporation
				changes from the business giving rise to the loss. For this purpose, the exchange of
				stock is a sale. Further, solely for this purpose and no other purpose in the Act, a
				business is defined in terms of the economic factors of production. The sequence in
				change of ownership and change in the business and the taxability of an exchange for
				Federal income tax purposes are irrelevant. The economic substance of the
				transaction is, however, paramount and may indicate forfeiture of a net operating
				loss carryover.
(b) The Director may
				disallow the carryover in those instances where the facts support the premise that a
				corporation was acquired for the primary purpose of the use of its net operating
				loss carryovers. In this context, to prevent the trafficking in loss corporations,
				the Director will consider the following facts:
1.
				Whether the physical location or other fixed assets of the loss corporation were
				used in a new business;
2. The extent of
				the termination of the existing work force of the loss corporation;
3. A price paid for the loss corporation in excess
				of the market value of the assets; and 4. Any other material factor deemed
				appropriate to the determination.
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 18:7-5.15 - Net operating loss

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A net operating loss is the excess of
				allowable deductions over gross income used in computing entire net income. For
				privilege periods ending on and after July 31, 2019, see N.J.A.C.
				18:7-5.21.
(b) Neither a net operating
				loss deduction nor any exclusion from entire net income is an allowable deduction in
				computing a net operating loss.
(c)
				There is no net operating loss for any year that a New Jersey corporation business
				tax return is not filed or if filed does not report entire net income as a negative
				amount.
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 18:7-5.16 - Effect of audit adjustments

Current through Register Vol. 56, No. 14, July 15, 2024
An audit adjustment to entire net income shall serve to revise
				  the amount of any net operating loss for the year of the change and the net
				  operating loss carryover to which it relates.
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 18:7-5.18 - Related party transactions

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Interest paid,
				accrued, or incurred to a related member shall not be deducted in calculating entire
				net income, except that a deduction may be permitted:
1. To the extent that the taxpayer establishes
				that:
i. A principal purpose of the transaction
				giving rise to the payment of the interest was not to avoid tax otherwise
				due;
ii. The interest is paid pursuant
				to arm's length contracts at an arm's length rate of interest; and
iii. The related member was subject to a tax on
				its net income or receipts in this State or another state or possession of the
				United States or in a foreign nation, a measure of the tax includes the interest
				received from the related member, and the rate of tax applied to the interest
				received by the related member is equal to or greater than a rate three percentage
				points less than the rate of tax applied to taxable interest by this
				State;
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 18:7-5.20 - Previously taxed subsidiary dividends received by a taxpayer

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A taxpayer may exclude previously taxed
				subsidiary dividends from entire net income in a tax year that:
1. The taxpayer receives and includes in entire
				net income, in the current tax year, dividends from the same subsidiary for which
				the taxpayer had included, as paid or deemed paid dividends, in entire net income in
				a previous tax year; and
2. The taxpayer
				filed, and paid, an amount greater than the minimum tax to New Jersey in that
				previous tax year.
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 18:7-5.21 - Net operating losses for privilege periods ending on and after July 31, 2019

Current through Register Vol. 56, No. 14, July 15, 2024
(a) For privilege
				periods ending on and after July 31, 2019, unused unexpired net operating losses
				incurred in a privilege period ending prior to July 31, 2019, are converted to a
				post-allocation basis (prior net operating loss conversion carryovers) pursuant to
				N.J.S.A. 54:10A-4(u). Net operating losses incurred in a privilege period ending
				prior to July 31, 2019, are converted from pre-allocation net operating losses to
				prior net operating loss conversion carryovers, as follows:
1. Terms used in calculating the prior net
				operating loss conversion carryover are, as follows:
i. "Base year" means the last privilege period
				ending prior to July 31, 2019.
ii. "Base
				year BAF" means the taxpayer's business allocation factor as provided in sections 6
				through 10 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-6 through 54:10A-10) for purposes
				of calculating entire net income for the base year, as such section was in effect
				for the last privilege period ending prior to July 31, 2019. The base year BAF is
				the allocation factor reported on the taxpayer's Schedule J of its respective New
				Jersey corporation business tax return.
iii. "UNOL" means the unabsorbed portion of a net
				operating loss, as calculated at N.J.S.A. 54:10A-4(k)(6), that was in effect for the
				base year, the last privilege period ending prior to July 31, 2019. The UNOL is the
				amount that was not deductible in previous privilege periods and was eligible for
				carryover on the last day of the base year subject to the limitations for deduction
				pursuant to this paragraph, including any net operating loss sustained by the
				taxpayer during the base year. The UNOL is the amount reported on Form
				500;
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 18:7-5.23 - Application of Federal stock ownership attribution rules

Current through Register Vol. 56, No. 14, July 15, 2024
Except as otherwise provided either in this chapter or for
				  specific purposes in certain sections of the Corporation Business Tax Act, the
				  Federal stock ownership attribution rules apply for New Jersey corporation business
				  tax purposes, except as set forth in this section. However, if a provision of the
				  Internal Revenue Code regarding stock ownership attribution rules or subsequent
				  amendments to any provision of the Internal Revenue Code result in less favorable
				  treatment of a non-U.S. business entity than a U.S. domestic business entity, such
				  provision shall not apply, and the same rules that otherwise would apply to a U.S.
				  domestic business entity shall apply to that non-U.S. business entity for New Jersey
				  corporation business tax purposes. For more information on combined groups and
				  combined reporting, see N.J.A.C. 18:7-21.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 7 - ALLOCATION › Section 18:7-7.1 - General instructions regarding allocation of net income

Current through Register Vol. 56, No. 14, July 15, 2024
(a) No corporation,
				foreign or domestic (other than a corporation entitled and electing to report as an
				investment company, regulated investment company or real estate investment trust) is
				entitled to allocate any part of its entire net income outside New Jersey unless
				during the period covered by the return it maintained a regular place of business
				outside the State. Notwithstanding the foregoing, for privilege periods beginning on
				or after July 1, 2010, a corporation is not required to maintain a regular place of
				business outside New Jersey in order to allocate any part of its entire net income
				outside New Jersey.
(b) In the absence
				of a regular place of business, 100 percent of its entire net income must be
				allocated to New Jersey.
(c) The mere
				ownership of assets outside New Jersey does not constitute a basis for allocating
				less than 100 percent of the taxpayer's net income to New Jersey.
(d) Where the taxpayer does not maintain a regular
				place of business outside New Jersey and its allocation factor is 100 percent and
				the taxpayer in fact pays a tax based on or measured by income to another state, see
				18:7-8.3 which provides for the
				eligibility and method in computing a reduction in the tax for such
				taxpayer.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 7 - ALLOCATION › Section 18:7-7.3 - Allocating and non-allocating companies; definition

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A taxpayer that
				allocates a portion of its entire net income outside this State is referred to as an
				"allocating" taxpayer.
(b) A taxpayer
				that does not allocate any part of its entire net income outside this State is
				referred to as a "non-allocating" taxpayer.
(c) A taxpayer that maintains a regular place of
				business outside New Jersey for less than 50 percent of the period of time covered
				by a return is referred to as a "part year allocating" taxpayer.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 7 - ALLOCATION › Section 18:7-7.4 - Allocation factor; definition

Current through Register Vol. 56, No. 14, July 15, 2024
"Allocation factor" means the proportionate part of a taxpayer's
				  entire net income used to determine a measure of its tax under the Act.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 7 - ALLOCATION › Section 18:7-7.5 - Allocation factor; application

Current through Register Vol. 56, No. 14, July 15, 2024
(a) If the taxpayer had
				a regular place of business outside New Jersey during the period covered by the
				return, its tax liability under the New Jersey Corporation Business Tax Act is
				measured by that part of its entire net income allocated to New Jersey according to
				a formula called the business allocation factor.
(b) If the taxpayer is deemed to be a "part year
				allocating" taxpayer because it had a regular place of business outside New Jersey
				for less than 50 percent of the period of time covered by the return, it will
				determine its overall business allocation factor by prorating the overall business
				allocation factor computed by the number of months, or part thereof, that a regular
				place of business was maintained and adding this to 100 percent prorated by the
				number of months, or part thereof, a regular place of business was not maintained.
Example: Corporation X establishes its only regular place of
				  business outside New Jersey on November 16 of its 12 month calendar year. The
				  overall business allocation factor computed on Schedule J for the entire period was
				  62.2424 percent. The prorated allocation factor would be 93.7071 percent computed as
				  follows:
62. 2424 x 2) + (100 x 10)
--------------------------------
12
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 7 - ALLOCATION › Section 18:7-7.6 - Corporate partners and partnerships

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A foreign
				corporation that is a general partner in a general or limited partnership or is
				deemed to be a general partner in a limited partnership doing business in New Jersey
				satisfies the subjectivity requirements set forth at
				N.J.S.A.
				54:10A-2. A foreign corporation that is a general
				partner of a general or limited partnership doing business in New Jersey is subject
				to filing a corporation business tax return in New Jersey and paying the applicable
				tax under the terms of the Corporation Business Tax Act to New Jersey. Such a
				corporation is also deemed to be employing, or owning capital or property in New
				Jersey, or maintaining an office in New Jersey, if the partnership does
				so.
(b) Subsection (a) above may apply
				to foreign corporations, otherwise not subject to the New Jersey corporation
				business tax, whose only connection to this State is restricted to owning one or
				more limited partnership interests in one or more limited partnerships doing
				business in New Jersey, provided the taxpayer's connection with this State is
				sufficient to give this State jurisdiction to impose the tax under the Constitution
				and statutes of the United States. See
				N.J.A.C.
				18:7-1.6.
(c) A foreign corporate limited partner of a
				limited partnership doing business in New Jersey is considered exercising its
				franchise to do business in this State, doing business in this State or employing
				capital in this State, and, therefore, is subject to tax under
				N.J.S.A.
				54:10A-2 and filing a corporation business tax
				return, if:
1. The limited partner is also a
				general partner of the limited partnership;
2. The foreign corporate limited partner, in
				addition to the exercise of its rights and powers as a limited partner, takes an
				active part in the control of the partnership business;
3. The foreign corporate limited partner meets the
				criteria set forth in
				N.J.A.C.
				18:7-1.9 or 1.6; or 4. The business of the
				partnership is integrally related to the business of the foreign
				corporation.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.1 - Business allocation factor; computation

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The business
				allocation factor is computed on the basis of the average percentage resulting from
				the following three fractions:
1. Average value of
				real and tangible personal property in New Jersey over the average value of such
				property both within and outside New Jersey (this is usually referred to as the
				property fraction);
2. Receipts
				allocable to New Jersey over receipts both within and outside New Jersey (this is
				usually referred to as the receipts fraction in this subchapter but may also be
				referred to as the sales fraction. The terms may be used interchangeably for fiscal
				periods beginning on or after July 1, 1996);
3. Payroll allocable to New Jersey over payroll
				within and outside New Jersey (this is usually referred to as the payroll
				fraction).
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.2 - Method of arithmetic computation required

Current through Register Vol. 56, No. 14, July 15, 2024
In computing allocation percentages, division must be carried to
				  six decimal places, for example, .201614 or 20.1614 percent.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.3 - Right of Director to independently compute allocation factor

Current through Register Vol. 56, No. 14, July 15, 2024
(a) If it appears that
				the business allocation factor computed on the basis of all or any of the
				property-receipts-payroll fractions does not properly reflect the activity,
				business, receipts, capital, entire net worth, or entire net income of the taxpayer
				in New Jersey, the Director may adjust or the taxpayer may request an adjustment of
				the business allocation factor.
(b)
				Reduction in tax for income duplicated on a return filed with another State pursuant
				to
				N.J.S.A.
				54:10A-8 and this rule--100 percent allocation
				factor:
1. Eligibility:
i. Where the business allocation factor under
				N.J.S.A. 54:10A-6 is
				100 percent and the taxpayer in fact paid a tax based on or measured by income to a
				foreign state, resulting in a duplication of income being taxed, the taxpayer may,
				under
				N.J.S.A.
				54:10A-8, apply for a reduction in the amount of
				its tax. The reduction is available only where the taxpayer in its own right
				acquired a taxable status in the foreign state by reference to at least one of the
				criteria described at
				N.J.A.C.
				18:7-1.6.
Example: Corporation A does not maintain a regular place of
				  business outside New Jersey, other than a statutory office. Corporation A was not a
				  domestic corporation in State X, nor did Corporation A meet any of the other
				  criteria described at
				  N.J.A.C.
				  18:7-1.6 in State X which would have created a
				  taxable status in New Jersey. Although it was not itself doing business in State X,
				  Corporation A was a member of an affiliated group of corporations which conducted a
				  unitary business in State X and as such is permitted or required to join in filing a
				  combined or consolidated return in State X. In fact, Corporation A did so.
Any duplication of income being reported to New Jersey and to
				  State X may not form the basis for a reduction in the tax.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.4 - Property fraction; "tangible personal property"; definition and scope; special situations

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The term "tangible personal property" shall
				mean corporeal personal property, such as machinery, fixtures, tools, implements,
				goods, wares, and merchandise, and does not mean money, deposits in banks, shares of
				stock, bonds, notes, credits or evidence of an interest in property, and evidences
				of debt.
(b) Tangible personal property
				within New Jersey.
1. Tangible personal property
				is within New Jersey if and so long as it is physically situated or located here,
				even though it may be stored in a bonded warehouse in this State.
2. Property of the taxpayer held in New Jersey by
				an agent, consignee, or factor is (and property held outside New Jersey by an agent,
				consignee, or factor is not) situated or located within New Jersey.
3. Mobile or movable property, such as
				construction equipment or trucks, is within New Jersey based on the ratio of time
				the property is used within the State to the time the property is used everywhere
				during the period covered by the return.
4. Ships are within New Jersey based on the ratio
				of time the vessels are in operation in New Jersey to the time the vessels are in
				operation everywhere, and including all sailing days, days in port for loading,
				unloading, ordinary repairs, refueling, or provisioning as operation.
5. Aircraft used by airlines are within New Jersey
				based on the ratio of takeoffs in regular scheduled or charter flights that occur
				during revenue service from points in New Jersey to the total of all such takeoffs
				everywhere. Aircraft used other than by airlines in revenue service are within New
				Jersey based on the ratio of takeoffs from points in New Jersey to the total of all
				takeoffs everywhere when the aircraft are in use.
6. Consistent with
				54:10A-6(b),
				satellites used in the communications industry are included in the denominator of
				the property fraction but the numerator shall include a portion of such property
				based upon the ratio of ground stations serviced in New Jersey to the number of all
				such ground stations.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.5 - Business allocation factor; property fraction derived from average values

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The
				percentage of the taxpayer's real and tangible personal property within New Jersey
				is determined by dividing the average value of such property within New Jersey by
				the average value of real and tangible personal property within and outside New
				Jersey.
1. Average values in both the numerator
				and denominator shall be determined without deduction of any encumbrance.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.6 - Average value; computation period

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Average value is
				generally computed on a quarterly basis where the taxpayer's usual accounting
				practice permits such computation.
(b)
				At the option of the taxpayer or the Director, a more frequent basis (monthly,
				weekly, or daily) may be used. Where the taxpayer's usual accounting practice does
				not permit computation of average value on a quarterly or more frequent basis, a
				semi-annual or annual basis may be used where no distortion of average value
				results. If any basis other than quarterly is used on the return, such basis and the
				reasons therefor must be fully explained on a separate rider.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.7 - Business allocation factor; determination of receipts fraction

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The percentage of
				the taxpayer's receipts within New Jersey is determined by ascertaining the
				taxpayer's receipts allocable to New Jersey during the period covered by the return
				and dividing the sum of the receipts by the taxpayer's total receipts within and
				outside New Jersey during such period.
(b) The receipts of the taxpayer are to be
				computed on the cash, accrual, or other method of accounting used in computation of
				its net income for Federal income tax purposes. However, the numerator and
				denominator of the receipts fraction must, in any event, relate to the entire net
				income recognized during the period covered by the return.
Example 1:
Taxpayer is engaged in long-term construction contracting. It has
				  elected to recognize income for tax purposes on the completed contract method of
				  accounting whereby it recognizes the net income on its contracts in their entirety
				  in the year of completion.
The composition of the receipts fraction must be determined in
				  harmony with the entire net income to which it relates. The numerator and
				  denominator of the receipts fraction must reflect the entire contract revenues on
				  completed contracts recognized in entire net income during the period covered by the
				  return.
Example 2:
Taxpayer recognizes income on a sale for tax purposes on the
				  installment method.
The numerator and denominator of the receipts fraction should
				  include the same proportion of the sale as is prorated as recognized income to the
				  year covered by the return.
(c)
				Entire net income shall be included or excluded, as follows:
1. All income which is included in entire net
				income enters into the numerator and denominator of the receipts fraction.
2. Any income that is excluded from entire net
				income is also excluded from the numerator (New Jersey receipts) and denominator of
				the receipts fraction, except for banking corporations with international banking
				facilities as provided at P.L. 1983, c. 422. See N.J.S.A. 54:10A-6.
Example:
Dividends recognized as income for purposes of determining Federal
				  income tax but which are excluded from entire net income under N.J.S.A.
				  54:10A-4(k)(1) must also be excluded in computing the receipts fraction.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.8 - Scope of allocable receipts

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Unless otherwise
				noted herein, receipts from the following are allocable to New Jersey:
1. Sales of tangible personal property where
				shipments are made to points in New Jersey. Delivery of goods to a purchaser in this
				State is a shipment made to a point in New Jersey regardless of the F.O.B. point or
				the fact that the goods may subsequently be resold and trans-shipped to a point
				outside this State.
i. The sale of goods shipped
				to a New Jersey customer where possession is transferred in New Jersey results in a
				receipt allocable to New Jersey.
Example:
Taxpayer, a manufacturer located outside of New Jersey,
				  transports goods directly to a customer's location in New Jersey. Since possession
				  of the goods is transferred in New Jersey, shipment is deemed to be in this State
				  resulting in receipts allocable to this State.
ii. The sale of goods shipped to a non-New Jersey
				customer where possession is transferred in New Jersey results in a receipt
				allocable to New Jersey.
Example:
Taxpayer, a manufacturer located outside of New Jersey, transports
				  goods into New Jersey where such goods are picked up by a non-New Jersey customer or
				  a customer's representative in New Jersey for further transportation outside of this
				  State. Since possession of the goods passed between the taxpayer and its customer in
				  New Jersey, the sale results in receipts allocable to New Jersey.
iii. The sale of goods shipped by a taxpayer from
				outside New Jersey to a New Jersey customer by a common carrier results in a receipt
				allocable to New Jersey. The common carrier is deemed an agent of the seller
				regardless of the F.O.B. point.
Example:
Taxpayer, a manufacturer located outside New Jersey, transports
				  goods by a common carrier to a New Jersey facility where the customer takes
				  possession of the goods. Since the common carrier is deemed to be an agent of the
				  taxpayer, the common carrier's transportation of the goods into the possession of
				  the customer in New Jersey results in receipts allocable to New Jersey.
iv. The sale of goods shipped from
				outside New Jersey to a New Jersey location where the goods are picked up by a
				common carrier and transported to a customer outside New Jersey results in receipts
				that are not allocable to New Jersey.
Example:
Taxpayer, a non-New Jersey manufacturer, transports goods from
				  outside New Jersey to a New Jersey location by either a common carrier or a private
				  transporter. The goods are picked up in New Jersey by a common carrier and
				  transported further to a customer outside New Jersey. Since the common carrier is
				  deemed an agent of the seller regardless of the F.O.B. point, the shipment by the
				  common carrier from a point in New Jersey to a point outside New Jersey results in
				  receipts not allocable to New Jersey.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.9 - Receipts from sales of capital assets; when includible

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The gross
				receipts from sales of capital assets (property not held by the taxpayer for sale to
				customers in the regular course of business) either within or outside New Jersey
				should not be included in either the numerator or denominator of the receipts
				fraction. The net gains from such sales that are included in entire net income are
				the amounts that are properly to be included in the computation of the receipts
				fraction. For the purposes of the numerator in the computation of the receipts
				fraction, a net loss should not offset a net gain. Click here for image
ILLUSTRATION FACTS
Selling Price
Cost
Net Gain
Net Loss
Property #1
$ 1,000
$ 600
$ 400
Property #2
2,000
2,200
$ 200
Property #3
3,000
2,900
100
$ 500
$ 200
(200)
Amount of gain appearing on Schedule A
$ 300
The $ 300 net gain is includable in the denominator of the
				  receipts fraction in all cases. The computation to arrive at the amount to be
				  included in the numerator is given in the following examples:
Example 1:
At the time of sale, Property #1 was located within New Jersey,
				  whereas Property #2 and #3 were located outside New Jersey.
Amount of N.J. Gains
$400
= 80% x $ 300 (net gain) = $ 240
Total Gains
$500
The amount of $ 240 is to be included in the numerator of the
				  receipts fraction.
Example 2:
At the time of sale, Property #1 and #3 were located outside New
				  Jersey, whereas Property #2 was located within New Jersey.
Amount of N.J. Gains
-0-
= 0% x $ 300 (net gain) = -0-
Total Gains
$500
There is nothing attributable to this transaction that will affect
				  the numerator of the receipts fraction.
Example 3
At the time of sale, Property #1 and #3 were located within New
				  Jersey, whereas Property #2 was located outside New Jersey.
Amount of N.J. Gains
$500
= 100% x $ 300 (net gain) = $300
Total Gains
$500
(b) Where
				the taxpayer's business is the buying and selling of real estate or the buying or
				selling of securities for trading purposes, these assets are not deemed to be
				capital assets and the gross receipts from the sales thereof are included in the
				same manner as other includable receipts.
1. If a
				taxpayer is trading for its own account, the proceeds of such trades would be
				treated on a net basis.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.10 - Receipts; compensation for services; allocation for certain special industries

Current through Register Vol. 56, No. 14, July 15, 2024
(a)
				For privilege periods ending before July 31, 2019, receipts from service
				transactions shall be allocated to New Jersey in accordance with this section.
1 The numerator of the receipts fraction developed
				in accordance with this section includes receipts from services not otherwise
				apportioned under this section if the service is performed within this State. If the
				service is performed both within and outside this State, the numerator of the
				receipts fraction includes receipts from services based upon the cost of performance
				or amount of time spent in the performance of such services or by some other
				reasonable method that should reflect the trade or business practice and economic
				realities underlying the generation of the compensation for services. "Cost of
				performance" is defined as all direct costs incurred in the performance of the
				service, including direct costs of subcontractors.
1. All amounts received by the taxpayer in payment
				for such services are allocable, regardless of whether such services were performed
				by employees or agents of the taxpayer, by subcontractors, or by any other persons
				and regardless of whether the receipt is accounted for as an item of income or a
				reduction in expense.
2. It is
				immaterial where the amounts were payable or where they actually were received.
Example 1: Taxpayer derives advertising revenues in the course of
				  broadcasting television or radio programs. It sets its advertising rates based upon
				  the listening audience it has succeeded in reaching. The appropriate method of
				  assigning the portion of its advertising revenues attributable to services performed
				  in New Jersey is based upon the proportion of its listening audience in New
				  Jersey.
Example 2: Taxpayer earns income from the sale of long distance
				  telephone communications service. It bills the originators of long distance
				  telephone calls directly and for all calls placed by them. The appropriate method of
				  allocating its long distance toll revenues attributable to services performed in New
				  Jersey is based upon billings for calls originating in New Jersey.
New Jersey Administrative Code › Title 18 - TREASURY - TAXATION › Chapter 7 - CORPORATION BUSINESS TAX ACT › Subchapter 8 - BUSINESS ALLOCATION FACTOR › Section 18:7-8.11 - Receipts; rents and royalties

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Receipts from
				rentals of real and personal property situated in New Jersey, and royalties from the
				use in New Jersey of patents or copyrights, are allocable to New Jersey.
1. Receipts from rentals include all amounts
				received by the taxpayer for the use or occupation of property, whether or not such
				property is owned by the taxpayer.
2.
				Receipts from royalties include all amounts received by the taxpayer for the use of
				patents or copyrights, whether or not such patents or copyrights were originally
				issued to or are owned by the taxpayer.
3. A patent or copyright is used in New Jersey to
				the extent that activities thereunder are carried on in New Jersey.