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Posted by Allan Martin on February 11, 2008, 6:38 pm
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>> A New Jersey S-Corp sold its only asset, rental real estate located in NJ
>> in 2007. For purposes of calculating the minimum tax for the CBT-100S
>> should
>> the sales price of property be classified as all other business receipts
>> earned in New Jersey?
>>
>> Is there any source were the definition for NJ Gross Receipts is given?
>>
> The definition of NJ gross receipts is in N.J. Admin. Code 18:7-18.1,
> and it isn't a lot more detailed than the list on the form. The form
> instructions are no help either. The only place where a sale of real
> (as opposed to tangible personal) property would fit, as you suggest,
> is under "other business receipts earned in New Jersey."
>
> The best reference I found for this is in a Q&A issued by the NJ
> Department of Revenue on January 1, 2004. The response to Question 42
> is that for purposes of the alternative minimum assessment, the
> Corporation Business Tax sales factor numerator rules will be used to
> determine NJ gross receipts. New Jersey Corporation Business Surtax
> and Minimum Tax Changes, 07/11/2006, says the new minimum tax
> definition of NJ gross receipts is the same as for the AMA.
> Sooooo....it appears we should look to the CBT apportionment rules.
> N.J. Admin. Code 18:7-8.12 lists sales of capital assets and sales of
> real property under "other business receipts," so we must be on the
> right track.
>
> For sales of capital assets, that reg refers to N.J. Admin. Code
> 18:7-8.9, which says:
>
> "(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 without New Jersey should not be included
> in either the numerator or denominator of the receipts fraction. The
> net gains from such sales which are included in entire net income are
> the amounts which are properly to be included in the computation of
> the receipts fraction."
>
> "(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."
>
> If the property sold was a capital asset in the hands of the S
> corporation, the net gain, not the gross receipt, is "NJ gross
> receipts." If the corporation's business was buying and selling real
> estate, the gross receipt would be "NJ gross receipts." Either way,
> it goes under Item 5, "Other business receipts earned in New Jersey."
>
> Whew!
Wow, thanks for all the work you put into your answer. The client made a
large profit on the sale of the real estate which still puts them at of
maximum $2,000 level.
Just wondering out loud, what if the taxpaper sold the property at a loss
could they report a negative "Other Gross Receipts earned in New Jersey"?
>
> Katie in San Diego
>
> --
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--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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