N.J. Admin. Code § 18:35-5.3
Current through Register Vol. 56, No. 23, December 2, 2024
Section 18:35-5.3 - Stock option, stock appreciation rights, and restricted stock allocation(a) A nonresident who has New Jersey source income from compensation received from stock options, stock appreciation rights, or restricted stock if, at any time during the allocation period, the nonresident individual worked in New Jersey or performed services in New Jersey for the employer (grantor) granting such options, rights, or stock. 1. "Allocation period" is defined as taxpayer's workday allocation factors between the date on which the options were granted and the date on which the options were exercised.(b) A nonresident individual's New Jersey source income from compensation received from stock options, stock appreciation rights, or restricted stock is received at the same time the income is realized for Federal income tax purposes. Stock options, stock appreciation rights, and restricted stock are reportable to New Jersey in the same taxable year and in the same manner that the income is included in the individual's Federal adjusted gross income.(c) The New Jersey gross income tax due from a nonresident taxpayer is based on an allocation factor to determine the amount of income attributable to New Jersey sources. The formula for calculating the portion that is allocated to New Jersey is determined by multiplying the gain realized from the sale of the stock option, stock appreciation rights, or restricted stock by a fraction. The numerator of this fraction is the total number of days employed in New Jersey and the denominator is the total number of days employed within and outside New Jersey for the period the stock options were earned.(d) Example 1: The taxpayer lives in New York and works in New Jersey. The taxpayer worked for Company A for one year (2020) during which stock options were exercised for a gain totaling $ 50,000. During 2020, the taxpayer worked a total of 270 days. The taxpayer worked 80 days from his home in New York.
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Example 2:
The taxpayer lives in New York and works in New Jersey. The taxpayer worked for Company A for six years (2013-2019) and worked a total of 1,679 days. During 2013, the taxpayer worked 190 days in New Jersey. On January 1, 2014, the taxpayer is transferred to the employer's business location in New York. Stock options were exercised on March 1, 2020, for a gain totaling $ 100,000.
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(e) For purposes of this section, the following terms shall have the following meanings: 1. "Disposition" means disposition, as defined at 26 CFR 1.424-1(c);2. "Stock and voting stock" means stock and voting stock, as defined at 26 CFR 1.421-1(d);3. "Option price" means option price, as defined at 26 CFR 1.421-1(e); and4. "Incentive stock option" means incentive stock option, as defined at 26 CFR 1.422-2.N.J. Admin. Code § 18:35-5.3
Adopted by 56 N.J.R. 1745(a),effective 8/19/2024