New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 35 - NEW JERSEY GROSS INCOME TAX
Subchapter 5 - NEW JERSEY SOURCE INCOME OF NONRESIDENTS
Section 18:35-5.1 - Compensation received by nonresident professional athletes

i. Duty days shall also include days on which a member of a professional athletic team renders a service to a team on a date which does not fall within the period described in this paragraph (for example, participation in instructional leagues, the Pro Bowl or promotional caravans). "Rendering a service" includes conducting training and rehabilitation activities, but only if conducted at the facilities of the team.

ii. Included within duty days shall be game days, practice days, days spent at team meetings, promotional caravans and pre-season training camps, and days served with the team through all post-season games in which the team competes or is scheduled to compete.

iii. For any person who joins a team during the season, total duty days shall begin on the day such person joins the team. For any person who leaves a team during the season, total duty days shall end on the day such person leaves the team. When a person switches teams during a taxable year, a separate duty day calculation shall be made for the period such person was with each team.

iv. Days for which a member of a professional athletic team is not compensated and is not rendering services for the team in any manner, including days when such member of a professional athletic team has been suspended without pay and prohibited from performing any services for the team, shall not be treated as duty days.

v. Days for which a member of a professional athletic team is on the disabled list and does not conduct rehabilitation activities at facilities of the team shall not be considered duty days spent in New Jersey. However, all days that a team member is on the disabled list are considered to be included in total duty days spent within and without New Jersey.

vi. Travel days that involve a game, required practice, meeting, or other service in this State shall be considered duty days spent in New Jersey. Travel days that do not involve a game, practice, team meeting, promotional caravan, or other similar team event in this State shall not be considered duty days spent in New Jersey. However, such travel days shall be included in total duty days spent inside and outside New Jersey.

vii. The provisions of this paragraph are illustrated by the following examples:

Example 1: Player A, a member of a professional athletic team, is a nonresident of New Jersey. Player A's contract for such team requires A to report to the team's training camp and to participate in all exhibition, regular season, and playoff games. Player A has a contract which covers seasons that occur during year 1/year 2 and year 2/year 3. Player A's contract provides that A receive $ 500,000 for the year 1/year 2 season and $ 600,000 for the year 2/year 3 season. Assuming Player A receives $ 550,000 from such contract during taxable year 2 ($ 250,000 for one-half the year 1/year 2 season and $ 300,000 for one-half the year 2/year 3 season), the portion of such compensation received by Player A for taxable year 2, attributable to New Jersey, is determined by multiplying the compensation Player A receives during the taxable year ($ 550,000) by a fraction, the numerator of which is that total number of duty days Player A spends rendering services for the team in New Jersey during taxable year 2 (attributable to both the year 1/year 2 season and the year 2/year 3 season) and the denominator of which is the total number of Player A's duty days spent both within and without New Jersey for the entire taxable year.

Example 2: Player B, a member of a professional athletic team, is a nonresident of New Jersey. During the season, B is injured and is unable to render services for B's team. While B is undergoing medical treatment at a clinic in New Jersey, B's team travels to New Jersey for a game. The number of days B's team spends in New Jersey for practice, games, and meetings while B is present at such clinic in New Jersey shall not be considered duty days spent in New Jersey for Player B for that tax year, but such days are considered to be included within total duty days spent within and without New Jersey.

Example 3: Player C, a member of a professional athletic team, is a nonresident of New Jersey. During the season, C is injured and is unable to render services for C's team. C performs rehabilitation exercises at the facilities of C's team in New Jersey as well as at personal facilities in New Jersey. The days C performs rehabilitation exercises in the facilities of C's team are considered duty days spent in New Jersey for Player C for that tax year for purposes of this section. However, days Player C spends in private facilities in New Jersey shall not be considered duty days spent in New Jersey for Player C for that tax year, but such days are included within total duty days spent within and without New Jersey.

Example 4: Player D, a member of a professional athletic team, is a nonresident of New Jersey. During the season, D travels to New Jersey to participate in the annual all-star game as a representative of D's team. The number of days D spends in New Jersey for practice, the game, meetings, and other services for the team, shall be considered duty days spent in New Jersey for Player D for that tax year, as well as included in total duty days spent within and without New Jersey.

Example 5: Assume the same facts as given in Example 4, except that Player D is not participating in the all-star game and is not rendering services for D's team in any manner. Player D is traveling to and attending such game solely as a spectator. The number of days Player D spends in New Jersey for such game shall not be considered duty days spent in New Jersey. However, because the all-star game occurs during the regular season, such days are included in total duty days spent both within and without New Jersey.

Example 6: A nonresident member of a New Jersey professional athletic team has a season beginning with training camp on July 1. The season ends with the last regular season game on December 24. If the season is extended by playoff games after December 31, the additional duty days during the next calendar year will be duty days inside and outside New Jersey for the subsequent tax year.

i. The total compensation received during the taxable year for services rendered:

ii. Total compensation shall include, but is not limited to, salaries, wages, bonuses (as described in (b)4iv below), and any other type of compensation paid during the taxable year to a member of a professional athletic team for services performed in that year.

iii. Total compensation shall not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments, or any other payments not related to services rendered for the team.

iv.For purposes of (b)4ii above, bonuses to be included in total compensation for services rendered as a member of a professional athletic team subject to the apportionment described in (a) above are: