N.J. Admin. Code § 18:7-3.25

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:7-3.25 - Computation of the tax on dividends included in entire net income for privilege periods beginning on and after January 1, 2017, but beginning before January 1, 2019

(a) For privilege periods beginning on and after January 1, 2017, but beginning before January 1, 2019, the tax liability owed for the five percent of dividends paid , or deemed paid , by an 80 percent or more owned subsidiary included in the taxpayer's entire net income must be based on either the three-year average allocation factor for the taxpayer's 2014 through 2016 privilege periods reported on the taxpayer's tax returns, or 3.5 percent, whichever is lower.

(b) Notwithstanding the allocation factor in (a) above, pursuant to N.J.S.A. 54:10A-8, the Director of the Division of Taxation may adjust a taxpayer's allocation factor, as prescribed pursuant to (a) above, if the allocation factor does not properly reflect the activity, business, receipts, capital, entire net worth, or entire net income of a taxpayer reasonably attributed to New Jersey.

(c) In privilege periods beginning on and after January 1, 2019, a taxpayer is not allowed to use the statutory formula provided at (a) above. Dividends included in the entire net income in privilege periods on and after January 1, 2019, must follow the standard allocation formula set forth at N.J.A.C. 18:7-8.7 and 8.12.

N.J. Admin. Code § 18:7-3.25

Reserved by 49 N.J.R. 1694(a), effective 6/19/2017

Adopted by 53 N.J.R. 544(a), effective 4/5/2021