New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 7 - CORPORATION BUSINESS TAX ACT
Subchapter 21 - COMBINED RETURNS
Section 18:7-21.18 - Net deferred tax liability deduction

(a) There shall be allowed as a deduction an amount computed, in accordance with N.J.S.A. 54:10A-4(k)(16) for publicly traded companies. Affiliated corporations participating in the filing of a publicly traded company's financial statements prepared, in accordance with generally accepted accounting principles, shall also be eligible for this deduction. The deduction shall be allowed beginning with the combined group's first privilege period beginning on or after January 1, 2023, that is, the fifth year after the effective date of combined reporting pursuant to N.J.S.A. 54:10A-4(k) (16)(E).

(b) A combined group claiming this deduction shall also be allowed the credit at N.J.A.C. 18:721.14, since the alternative minimum assessment credit pursuant to N.J.A.C. 18:7-21.14is intended for all combined groups filing combined returns in New Jersey, not just publicly traded companies.

(c) A combined group claiming the deduction shall file the claim by July 1, 2020.

(d) The Division of Taxation will only accept U.S. Generally Accepted Accounting Principles (U.S. G.A.A.P.) and International Financial Reporting Standards (I.F.R.S.).

(e) Only taxpayers that are publicly traded companies, or their affiliates (subsidiaries), included in the financial statements filed with the U.S. regulatory authorities or the financial statements filed with the regulatory authorities of a foreign nation with which the U.S. has a reciprocal agreement will qualify, so long as the financial statements are prepared, in accordance with U.S. G.A.A.P. or in accordance with the I.F.R.S.

(f) A publicly traded company is a company that is listed on a stock exchange or traded on over-the-counter markets.

(g) To qualify for the purposes of N.J.S.A. 54:10A-4(k)(16), a U.S. stock exchange or U.S. over-the-counter market must be regulated by a U.S. regulatory authority, and a foreign stock exchange or foreign over-the-counter market must be regulated by a regulatory authority of the foreign nation (so long as there is a reciprocal agreement with the U.S. government or U.S. regulatory authority).

(h) Financial statements are statements that are required to be filed annually, quarterly, etc. such as, but not limited to, the 10-K, 10-Q, or 8-K filings with the U.S. Securities and Exchange Commission (S.E.C.).

(i) The terms "net deferred tax liability" and "net deferred tax asset," as defined at N.J.S.A. 54:10A-4(k)(16), shall otherwise have the same meaning as prescribed by the Financial Accounting Standards Board (F.A.S.B.) or International Accounting Standards Board (I.A.S.B.) and calculated in accordance with U.S. G.A.A.P. or I.F.R.S., as applicable.

(j) The surtax imposed at N.J.S.A. 54:10A-5.41 shall be taken into account by the combined group when computing the deduction.

(k) Only the changes resulting from a change to filing combined returns apply for the purposes of computing the deduction.

(l) Where U.S. subsidiaries are required to file a mandatory unitary combined return with New Jersey and are included in the non-U.S. parent corporation's financial statements filed with the regulatory authorities of a foreign nation, the combined group filing a New Jersey return shall be eligible for the deduction if the parent corporation files its financial statements, in accordance with I.F.R.S. and is listed on a foreign stock exchange of a foreign nation that has a reciprocal agreement with the U.S. government.

(m) Where a publicly traded U.S. parent corporation is not unitary with its subsidiaries that constitute the combined group required to file a New Jersey combined return for New Jersey corporation business tax purposes, the combined group shall be eligible for the deduction where the combined group is included in the parent corporation's financial statements that are filed with the S.E.C.

(n) A combined group that is privately held does not qualify for the deduction. Only publicly traded companies that file financial statements, in accordance with U.S. G.A.A.P. or I.F.R.S. are eligible. Privately held combined groups are not eligible for the Net Deferred Tax Liability Deduction.

(o) A taxpayer that files a gross income tax return that is the owner of a closely held group of companies that is not a publicly traded group of companies is not eligible for the deduction.