N.J. Admin. Code § 18:7-3.28
Current through Register Vol. 56, No. 21, November 4, 2024
Section 18:7-3.28 - Tiered Subsidiary Dividend Pyramid Tax Credit(a) Pursuant to N.J.S.A. 54:10A-5.46, for privilege periods ending on and after July 31, 2020, a taxpayer shall be allowed a credit against the tax imposed by subsection c. of section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) to the extent a subsidiary of the taxpayer received dividends and deemed dividends from other subsidiaries and included those dividends in its entire net income for the purposes of determining its tax liability pursuant to section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) and paid tax on those dividends and deemed dividends to the State on a timely filed New Jersey corporation business tax return; provided, however, the taxpayer received those same dividends and deemed dividends from the subsidiary that paid tax to the State.(b) For purposes of this section, the members of a combined group filing a New Jersey combined return shall be treated as one taxpayer.(c) For purposes of this section, "paid tax" means the amount that the subsidiary paid to the State, or would have paid but for the use of other tax credits, or but for subsections (u) and (v) of section 4 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-4), or, for a combined group filing a combined return, but for subsections g and h of section 18 at P.L. 2018, c. 48 (N.J.S.A. 54:10A-4.6).(d) In order for a taxpayer to qualify for the Tiered Subsidiary Dividend Pyramid Tax Credit, the taxpayer must have received the same dividends and deemed dividends from a subsidiary that paid tax to the State. Such subsidiary must have received the same dividends and deemed dividends from other subsidiaries and included those dividends and deemed dividends in its entire net income for the purposes of determining its tax liability pursuant to section 5 at P.L. 1945, c. 162 (N.J.S.A. 54:10A-5) and paid tax on those dividends and deemed dividends to the State on a timely filed New Jersey corporation business tax return.(e) The Tiered Subsidiary Dividend Pyramid Tax Credit is a credit for: 1) dividends and deemed dividends from non-combined group subsidiaries that file separate New Jersey returns and paid the corporation business tax on dividends and deemed dividends from other subsidiaries; and 2) dividends and deemed dividends from a separate lower-tier combined group that files a New Jersey combined return separate and apart from another (dividend paying) combined group and that paid the corporation business tax on dividends and deemed dividends from other subsidiaries.(f) A member of a combined group cannot receive a Tiered Subsidiary Dividend Pyramid Tax Credit for taxes paid by another member because the members of a combined group are one taxpayer. However, intercompany dividends and deemed dividends are 100 percent eliminated between combined group members filing a New Jersey combined return together. For purposes of the Tiered Subsidiary Dividend Pyramid Tax Credit, a combined group is entitled to the credit for dividends and deemed dividends from the non-combined group member subsidiaries that filed New Jersey corporation business tax returns and paid the tax on the dividends and deemed dividends regardless of whether it was a separate return subsidiary or another subsidiary combined group (filing a separate New Jersey combined return), so long as those separate subsidiaries received the dividends and deemed dividends from other subsidiaries and included those dividends and deemed dividends in entire net income.(g) The Tiered Subsidiary Dividend Pyramid Tax Credit can only reduce the regular tax liability of the taxpayer. However, the Tiered Subsidiary Dividend Pyramid Tax Credit cannot exceed the regular tax liability and is not refundable. The Tiered Subsidiary Dividend Pyramid Tax Credit does not contain a provision permitting the credit to be carried forward.(h) The credit allowed pursuant to this section shall be claimed on Form 332 on a timely filed New Jersey corporation business tax return.(i) The tax credit cannot be used against the surtax.N.J. Admin. Code § 18:7-3.28
Reserved by 49 N.J.R. 1694(a), effective 6/19/2017Adopted by 54 N.J.R. 1819(a), effective 9/19/2022