NJ: Guidance issued on treatment of GILTI and FDII; Combined group composition

Recently, the New Jersey Division of Taxation released two technical bulletins that provide guidance on certain recent Corporation Business Tax (CBT) law changes. Technical Bulletin-85 addresses New Jersey’s treatment of FDII and GILTI.  Recall, legislation (Assembly Bill 4495) enacted on October 4, 2018 specifies that the IRC section 250(a) deductions for GILTI and FDII are allowed for New Jersey CBT purposes. However, the bulletin provides that such deductions are allowed only to the specific taxpayer that included the respective GILTI and FDII income on its federal and New Jersey CBT returns, and that actually took the deductions for federal tax purposes. If taxpayers were not allowed the IRC section 250(a) deduction for federal tax purposes, they will not be allowed the deduction for New Jersey CBT purposes.  Technical Bulletin-85 also provides guidance on apportioning GILTI and FDII.  The Division also published Technical Bulletin-86 addressing which entities are included in the combined group and which entities are subject to the $2000 minimum tax that applies to each combined group member with New Jersey nexus. Notably, Technical Bulletin-86 confirms that disregarded entities and partnerships, limited partnerships, and LLCs that are treated as partnerships for federal purposes, are not subject to the $2000 combined group member minimum tax.  Please contact Jim Venere at 973-912-6349 with questions on the recent New Jersey guidance.