New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 24 - SALES AND USE TAX ACT
Subchapter 28 - RACE HORSES
Section 18:24-28.4 - Compensating use tax

(a) A race horse purchased outside of New Jersey is subject to the compensating use tax on the use of a race horse within this State if the race horse would have been subject to the sales tax if purchased in this State. The compensating use tax will not be imposed on the use of a race horse within this State if the horse was purchased by the user while a nonresident of this State. (See 18:24-28.5 regarding the term resident)

(b) The amount of the compensating use tax due is computed by multiplying the purchase price of the race horse by seven percent. If such horse was used outside of this State for more than six months prior to its first use in this State, the compensating use tax is computed on the fair market value (not to exceed cost) of the race horse. Upon submission of proof that sales tax legally due another state has been paid to that state, New Jersey will allow a credit in that amount against any taxes due this State; but only if a similar credit is allowed by the other state for taxes paid in New Jersey.