Form 305 - Manufacturing Equipment And Employment Investment Tax Credit

Additionally, except when the property is damaged or destroyed by

PART IV

fire, flood, storm or other casualty, or is stolen, the taxpayer shall

Combined Credit Calculation - Current Year

redetermine the amount of credit allowed for the tax year of the

This section combines the amounts computed in Parts I, II and

credit by reducing the investment credit base by the cost of the

III with any existing carryover to determine the credit available

amount of the disposed or disqualified equipment.

If the

in the current year.

redetermination of the credit results in an increase in tax liability for

any period in which the credit was applied, then the amount of

PART V

unpaid liability shall be considered a deficiency.

The taxpayer

Calculation of the Allowable Credit Amount

would then be required to file an amended return.

a) The total and allowable Manufacturing Equipment and

Specific Instructions for Form 305

Employment Investment Tax Credit for the current year is

calculated in PART V. The amount of this credit in addition

COMPUTATION OF CREDIT

to the amount of any other tax credits taken is limited to

PART I

50% of the taxpayer’s total tax liability and cannot exceed

an amount which would reduce the total tax liability below

Credit Calculation for Investment in Qualified Equipment

the statutory minimum.

in New Jersey in the Current Year

b) The minimum tax is assessed based on the New Jersey

The tax credit computed in this section applies to purchases of

Gross Receipts as follows:

qualified manufacturing equipment made during the current tax

year.

New Jersey Gross Receipts

Minimum Tax

Line 2 - Refer to the Manufacturing Equipment Tax Credit

Less than $100,000

$500

Instruction on page 1 for information regarding the use of 2%

$100,000 or more but less than $250,000

$750

or 4%.

$250,000 or more but less than $500,000

$1,000

$500,000 or more but less than $1,000,000

$1,500

PART II

$1,000,000 or more

$2,000

Employment Investment Tax Credit Calculation for

provided however that for a taxpayer that is a member of an

Investment in Qualified Equipment in New Jersey made

affiliated or controlled group which has a total payroll of

1 Year Prior to the Current Tax Year

$5,000,000 or more for the return period, the minimum tax

The tax credit computed in this section is based on the average

shall be $2,000. Tax periods of less than 12 months are

increase in New Jersey residents employed by the taxpayer at

subject to the higher minimum tax if the prorated total

New Jersey locations subject to a limitation of 3% of the cost

payroll exceeds $416,667 per month.

of the qualified manufacturing equipment purchased in the

c) The priorities set forth in this tax form follow Regulation

prior tax year.

N.J.A.C. 18:7-3.17.

Line 4 - Enter the average number of full-time New Jersey

residents employed in the current year.

PART VI

Line 5 - Enter the average number of full-time New Jersey

Manufacturing Equipment and Employment Investment

residents employed in the tax year prior to the year that

Tax Credit Carryover

qualified equipment was placed in service in New Jersey (two

Complete this schedule if the allowable tax credit is less than

years prior to the current tax year).

the total credit available for the current year or if a tax credit

has been carried forward from a previous tax year.

PART III

Line 1 - Enter the tax credit calculated for each applicable tax

Employment Investment Tax Credit Calculation for

year excluding the amount of any credit carried over from a

Investment in Qualified Equipment in New Jersey made

prior tax year. This is the amount from Part IV, line 18 of the

2 Years Prior to the Current Tax Year.

manufacturing equipment and employment investment tax

The tax credit computed in this section is based on the average

credit form filed for the applicable tax year.

increase in New Jersey residents employed by the taxpayer at

Line 2(a) - (h) - Enter the allowable tax credit amount from Part

New Jersey locations subject to a limitation of 3% of the cost

V, line 28 of the manufacturing equipment and employment

of the qualified manufacturing equipment purchased two years

investment tax credit form filed for the applicable tax year.

prior to the current tax year.

Apply the allowable credit amount for each year to the earliest

Line 11 - Enter the average number of full-time New Jersey

calculation year until line 3 for that particular column equals

residents employed in the prior tax year.

zero. This credit can only be carried forward for seven years

Line 12 - Enter the average number of full-time New Jersey

at which time any remaining amount is forfeited.

residents employed in the tax year prior to the year that

Line 3 - Subtract the amount(s) reported on lines 2(a) through

qualified equipment was placed in service in New Jersey (three

2(h) from the amount reported on line 1 for the appropriate tax

years prior to the current tax year).

year listed in columns A through H. The amount calculated on

Line 13 - Subtract line 12 from line 11 (if zero or less, enter

line 4 represents the total tax credit carryover to be reported on

zero on line 17). The number of employees on line 13 should

line 19, Part IV of next year’s form.

be equal to the number of employees reported on line 6, Part

II of the prior year.

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Form 305 - Manufacturing Equipment And Employment Investment Tax Credit - 2011 Page 5

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