New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 7 - CORPORATION BUSINESS TAX ACT
Subchapter 8 - BUSINESS ALLOCATION FACTOR
Section 18:7-8.9 - Receipts from sales of capital assets; when includible
Current through Register Vol. 56, No. 6, March 18, 2024
(a) The gross receipts from sales of capital assets (property not held by the taxpayer for sale to customers in the regular course of business) either within or outside New Jersey should not be included in either the numerator or denominator of the receipts fraction. The net gains from such sales that are included in entire net income are the amounts that are properly to be included in the computation of the receipts fraction. For the purposes of the numerator in the computation of the receipts fraction, a net loss should not offset a net gain. Click here for image
ILLUSTRATION FACTS
| Selling Price | Cost | Net Gain | Net Loss |
| Property #1 | $ 1,000 | $ 600 | $ 400 |
| Property #2 | 2,000 | 2,200 | $ 200 |
| Property #3 | 3,000 | 2,900 | 100 |
| $ 500 | $ 200 | ||
| (200) | |||
| Amount of gain appearing on Schedule A | $ 300 |
The $ 300 net gain is includable in the denominator of the receipts fraction in all cases. The computation to arrive at the amount to be included in the numerator is given in the following examples:
Example 1:
At the time of sale, Property #1 was located within New Jersey, whereas Property #2 and #3 were located outside New Jersey.
| Amount of N.J. Gains | $400 | = 80% x $ 300 (net gain) = $ 240 |
| Total Gains | $500 |
The amount of $ 240 is to be included in the numerator of the receipts fraction.
Example 2:
At the time of sale, Property #1 and #3 were located outside New Jersey, whereas Property #2 was located within New Jersey.
| Amount of N.J. Gains | -0- | = 0% x $ 300 (net gain) = -0- |
| Total Gains | $500 |
There is nothing attributable to this transaction that will affect the numerator of the receipts fraction.
Example 3
At the time of sale, Property #1 and #3 were located within New Jersey, whereas Property #2 was located outside New Jersey.
| Amount of N.J. Gains | $500 | = 100% x $ 300 (net gain) = $300 |
| Total Gains | $500 |
(b) Where the taxpayer's business is the buying and selling of real estate or the buying or selling of securities for trading purposes, these assets are not deemed to be capital assets and the gross receipts from the sales thereof are included in the same manner as other includable receipts.
