New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 7 - CORPORATION BUSINESS TAX ACT
Subchapter 1 - CORPORATIONS SUBJECT TO TAX UNDER THE ACT
Section 18:7-1.17 - Application of the tax to licensees pursuant to the Casino Control Act; casino business consolidated return

Universal Citation: NJ Admin Code 18:7-1.17

Current through Register Vol. 56, No. 18, September 16, 2024

(a) Pursuant to N.J.S.A. 5:12-148.b, any business conducted by an individual, partnership, corporation, or any other entity, or any combination thereof, holding a license pursuant to the Casino Control Act shall, in addition to all other taxes imposed by that act, file a consolidated corporation business tax return pursuant to the Corporation Business Tax Act and pay the taxes indicated thereon.

(b) The consolidated return to be filed under the Casino Control Act is in addition to, and not in lieu of, any return due under the Corporation Business Tax Act. Provided, however, that where any corporation is a licensee under the Casino Control Act, it may exclude from the return due under the corporation business tax any item of income, loss, or deduction appearing on its consolidated return, but which would have been reported on its own separate return under the Corporation Business Tax Act for the year for which that item would otherwise have been reported. Provided further, that where any corporation is a partner in a licensee under the Casino Control Act, it may similarly exclude its share of distributable income or loss attributable to its partnership interest in the licensee which would otherwise have been reported by it on its own separate return under the Corporation Business Tax Act.

1. In no event may the tax reduction arising out of any such exclusion exceed the portion of the tax paid with the consolidated return which is clearly attributable to the net effect of the existence of the amount which is duplicated in entire net income on the separate return filed under the Corporation Business Tax Act.

2. The return filed under the Corporation Business Tax Act shall reflect taxable income before net operating loss deduction and special deductions which is required to be reported to the United States Treasury Department for the purposes of computing its Federal income tax. Claims for exclusion for any duplication shall be separately identified in computing entire net income and be documented and reconciled on the return due under the Corporation Business Tax Act.

3. The amount of net worth reported on the separate return filed under the Corporation Business Tax Act by a corporate member of a consolidated group may be reduced by an amount also reported on the consolidated corporation business tax return of the casino business to the extent that such net worth would have been duplicated on both returns.

(c) The principles of consolidation are determined by regarding each casino hotel as though it were a single corporation reporting in its own right pursuant to the Corporation Business Tax Act. The business conducted by each casino hotel shall give rise to an obligation to file a separate consolidated corporation business tax return based on all the business activities conducted with respect to that casino hotel. All licensees and all other entities subject to common effective control, without respect to their form of organization or the form of license held, except for licenses issued to individuals in their capacity as employees, must join in filing the consolidated return. All transactions between, or among, them are to be eliminated in consolidation and shall not appear on the consolidated return. Accordingly, where the same licensee or entity subject to common effective control is a participant in the business conducted by more than one casino hotel, it must join in filing a consolidated return with each such business. A change in common effective control terminates the fiscal year for purposes of filing the consolidated return.

1. Common effective control is the power exercisable by any person or entity arising out of ownership or a contractual arrangement which joins more than one licensee or other entity or entities and permits domination in the management of more than one licensee or other entity or entities for the purpose of engaging in a single casino hotel business. Common effective control also occurs where a contractual arrangement permits more than one licensee or other entity or entities to operate jointly a single casino hotel business. For example, where the same persons or entities simultaneously control voting stock, boards of directors, or serve as or nominate managing partners, or are employed as managers or executives in more than one licensee or other entity or entities which participates in the business activities conducted by the same casino hotel, or where a licensee or other entity or entities executes a sale and leaseback of its property with another licensee or other entity or entities and reserves by contract the option to recover its property, all such licensees or other entity or entities subject to common effective control shall join in filing the consolidated return. Notwithstanding an absence of common ownership, licensees and all other entities subject to common effective control joined in the operation of the business conducted by a casino hotel by management contract or partnership arrangement shall join in filing the return.

2. Casino licensees shall file a combined return in order to satisfy the requirements of both the Corporation Business Tax Act and Casino Control Act and shall be taxable members along with their unitary affiliates that are not casino licensees. See N.J.A.C. 18:7-21 for more information on combined groups and combined reporting.

3. Corporations that are not casino licensees, but are under common ownership together with casino licensees, are required to be included as members of the mandatory combined return if the noncasino licensee corporations are unitary with the casino licensees. See N.J.A.C. 18:7-21.3.

4. For purposes of this section and notwithstanding any other provision, all divisions, components, or entities that comprise the casino hotel business are required to be included in the casino consolidated return. This includes, without limitation thereto, entities known as "qualifiers." The term "qualifiers" means entities that have officially qualified to participate in the casino industry in New Jersey pursuant to 5:12-84 or 5:12-85.c or similar statute, but that are not licensed under the Casino Control Act.

(d) Where a licensee is engaged in a business wholly unrelated to the casino hotel, or is engaged in the operation of more than one casino hotel, common costs must be apportioned in a reasonable manner consistently applied. The method of apportionment shall be disclosed on the consolidated return and may be adjusted by the Director where it shall appear to him or her to result in a distortion of tax liability.

(e) Where the licensees joining in filing the consolidated return do not have a common fiscal year, the return may be based upon the fiscal year of the casino operator as defined at N.J.A.C. 19:54-1.2 where all licensees join in making such an election. The other licensees may then include their respective financial condition and operations on the basis of their own fiscal years within which the consolidated year ends. Separate schedules reconciling timing differences in elimination of balance sheet items and items of entire net income attributable to the lack of a common fiscal year must be submitted as part of any such consolidated return. In the absence of this election, the return shall be based on a calendar year ending December 31. The reporting method, once adopted, is effective for all future returns unless prior consent of the Director is obtained for a change.

(f) A legend shall be prominently displayed on the face of any return filed under this section identifying the return as a casino business consolidated return.

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