Current through Register Vol. 56, No. 6, March 18, 2024
(a) In general, every corporation must file a return for each fiscal or calendar accounting period or part thereof during which it has or had a taxable status in New Jersey. In certain cases, the taxpayer will be required to file a return covering an accounting period of less than 12 months. This may necessitate an adjustment of entire net income.
(b) Some of the circumstances which require the filing of short period returns are:
1. A newly organized corporation whose first accounting period established for Federal income tax purposes is less than 12 months;
2. A foreign corporation that acquires a taxable status in New Jersey subsequent to the commencement of its Federal accounting period, and whose first New Jersey corporation business tax return embraces a period less than the accounting period reported for Federal income tax purposes;
3. Corporations that dissolve, merge, consolidate, withdraw, surrender or otherwise cease to have a taxable status in New Jersey prior to the close of a full 12 months accounting period;
4. A corporation that changes its accounting period.
(c) If a corporation ceases to exist as the result of an action such as a merger or if its New Jersey S status terminates, for example, the short period return for the terminating corporation or corporation losing its New Jersey S status would be due on the 15th day of the 4th month after the close of the short year ending on the date of the merger or on the day before the S corporation disqualifying event.
Example: A corporation had been granted New Jersey S status for the period beginning January 1 of the calendar year. The election terminated on April 6 of the calendar year due to merger. The due date for the return for the short period January 1 to April 6 of the calendar year (that is, through the close of business on the date that the merger occurs) is August 15 of the calendar year which is the 15th day of the 4th month after the close of the period. An automatic six-month extension of the time to file Form CBT-100S is available by making a tentative return and paying the tentative tax on Form CBT-200T by August 15 of the calendar year.
(d) In the case of a combined group filing a New Jersey combined return, in addition to (b)4 above, where the managerial member is changing its accounting period, a short period return is required pursuant to (b)3 above, if the corporation is the managerial member of the combined group, or in the case of (b)2 above, when the combined group first gains taxable status with New Jersey. A short period return would only be required pursuant to (b)1 above, if the new corporation is designated the managerial member by the combined group; in which case the previous managerial member of the combined group, would file a short period return for the applicable period and then the new corporation that is designated the managerial member will file a short period return beginning the month that the new corporation was formed.
1. For a combined group that files combined returns in New Jersey, where the managerial member remains part of the combined group, the accounting period of the managerial member remains the same, and the managerial member is not required to file a short period return for Federal purposes, the combined group does not need to file a short period combined return.
2. A taxpayer that was a member of a combined group filing a New Jersey combined return for part of the group privilege period and subsequently departs the combined group must report its income for the months prior to its departure on the combined group return. The departing taxpayer shall report the income for the months subsequent to departing the combined group on a short period separate return, unless the member joined a second combined group that files a New Jersey combined return. The taxpayer that joined a second combined group that files a New Jersey combined return would report on the second group's return, the income for the months the member was part of the second combined group. To determine the amount of income that is attributable to the periods before and after departing a combined group, the taxpayer must prorate their income/losses and receipts.
i. In a group privilege period where all of the members depart from the combined group (resulting in the combined group no longer existing for the remaining portion of the period), the managerial member shall file a short period New Jersey combined return for the portion of the group privilege period where the combined group existed, and all of the taxpayers (former members of the group) shall file short period separate returns (if the taxpayer is a separate filer) for the remaining portion of the period. Where a taxpayer (former member of the group) has joined a second combined group that files a New Jersey combined return, such taxpayer would only report on the second group's return the income for the months the member was part of the second combined group. After separating from a combined group, a taxpayer must prorate its income, losses, and receipts between the return of its former combined group and its new combined group return, separate entity return, or other appropriate return.
3. For a taxpayer that is a member of a combined group filing a New Jersey combined return, and that member properly dissolves and receives a tax clearance during the group privilege period, the income and tax liabilities of that member for the part of the group privilege period the member existed must be reported on the combined return and no short period combined return is required, unless the member had been the managerial member of the combined group. If the taxpayer was the managerial member, a short period combined return must be filed for the short period and the combined group will designate a new managerial member and the new managerial member shall file a short period combined return for the combined group for the remaining months in the 12-month period after the previous managerial member departed the group.
4. Where the combined group loses its taxable status with New Jersey, the managerial member of the combined group must file a short period return for the part of the group privilege period that the combined group had taxable status in New Jersey.
(e) For transitionary short period returns for banks switching accounting periods, see N.J.S.A. 54:10A-34.1 for more information.
