Schedule O - Nonoperational Activity Packet For Taxable Years Ending On Or After July 31, 2007 Page 2
Download a blank fillable Schedule O - Nonoperational Activity Packet For Taxable Years Ending On Or After July 31, 2007 in PDF format just by clicking the "DOWNLOAD PDF" button.
Open the file in any PDF-viewing software. Adobe Reader or any alternative for Windows or MacOS are required to access and complete fillable content.
Complete Schedule O - Nonoperational Activity Packet For Taxable Years Ending On Or After July 31, 2007 with your personal data - all interactive fields are highlighted in places where you should type, access drop-down lists or select multiple-choice options.
Some fillable PDF-files have the option of saving the completed form that contains your own data for later use or sending it out straight away.
ADVERTISEMENT
1
2
3
4
5
6
7
8Purpose of Packet
The schedules contained in this packet must be completed and made part of the Corporation Business Tax Return (either Form
CBT-100 or CBT-100S) filed by any corporation seeking to treat income, expenses or assets as nonoperational pursuant to
N.J.S.A. 54:10A-6.1 and not subject to apportionment using the business allocation factor.
Schedule O - Part I details the items of nonoperational income and expenses and computes the net adjustment
required to eliminate the effect of the nonoperational activity on allocable net income.
Schedule O - Part II allows corporations to declare nonoperational assets or report the reclassification of assets pre-
viously deemed operational.
Schedule O - Part III allows the aggregate nonoperational activity to be broken down into separate and discrete
activities. If any of these separate activities have nexus with New Jersey, the schedule computes the amount of New
Jersey Corporation Business Tax due.
General Provisions
Nonoperational Income Explained
Nonoperational income is derived from tangible and intan-
Pursuant to U.S. Supreme Court decisions, New Jersey has
gible property where either the acquisition, management, use, or
made statutory changes to the New Jersey Corporation Business
disposition did not constitute an integral part of the taxpayer’s
Tax Act (N.J.S.A. 54:10A-6.1). This legislation recognizes that
trade or business operations.
a Constitutional distinction based upon the Due Process and
Nonoperational assets are not acquired, managed, used, or
Commerce Clauses exists which restricts states from apportion-
disposed of in the normal or ordinary course of business. They
ing income, gains, losses or expenses from activities that have no
also do not generate operational expenses or income during their
rational relationship with this State. The terminology used by
holding period.
New Jersey classifies these activities and/or assets as being either
operational or nonoperational.
In making the operational or nonoperational determination,
the Division will classify income as being operational if it meets
Generally activities of a multi-jurisdictional corporation
either the transactional, functional, or operational test.
which are operational in nature are apportioned to a taxing juris-
diction by the use of a business allocation formula. New Jersey
The transactional test will determine whether the acquisi-
tion, management, use, or disposition of property is in the regu-
uses a three factor formula based on property, receipts and pay-
roll. Activities which are deemed to be nonoperational are not
lar course of the corporation’s trade or business. A transaction or
apportioned by general formula but are specifically assigned to
activity can occur in the regular course of business even though
the taxpayer has not regularly engaged in such transactions if it
the jurisdiction where the nonoperational activity has nexus.
is reasonable to conclude that transactions or activities of that
Where the trade or business of the taxpayer is directed or
type are customary for the kind of business being conducted.
managed in New Jersey, all nonbusiness income will be specifi-
The determination of operational income under the transactional
cally assigned to New Jersey to the extent permitted by the
test requires not only knowledge of how often the taxpayer’s
United States Constitution.
trade or business has engaged in transactions of the type at issue,
In all cases, whether assigned to New Jersey or another
but also whether such transactions are likely to occur at all in that
jurisdiction, nonbusiness income will not be subject to alloca-
trade or business.
tion.
The functional test will determine whether property or
There is a presumption, which must be overcome by the tax-
activities that do not rise to the level of constituting a trade or
payer by clear and convincing evidence, that all the activities of
business would still be deemed operational if that property from
a separate corporate entity are operational in nature. It is the
which income and expenses are derived is or was an integral or
intention of the New Jersey Division of Taxation to consider
functional component to or a part of the taxpayer’s regular trade
activities to be operational to the maximum extent permitted by
or business operations.
the United States Constitution. However, for corporations mak-
Income and expenses derived from activities occurring
ing nonunitary, nonbusiness, or nonoperational claims to this
infrequently, including transactions made in liquidation, are
State, or to other jurisdictions, if it is determined that the nonop-
operational if that property was used in the business operations.
erational activity has nexus to New Jersey, the resulting assign-
The functional test focuses on the function played by the proper-
ment of income may exceed the New Jersey tax liability which
ty in the corporation’s trade or business, and it applies similarly
would otherwise have been due had a nonoperational claim not
to tangible as well as intangible property. Income, gains, losses
been made.
- 1 -
ADVERTISEMENT
0 votes
Related Articles
Related forms
Schedule-o - Nonoperational Activity Packet For Taxable Years Ending On Or After July 31, 2007
Financial
Schedule G-2 - Claim For Exceptions To Disallowed Interest And Intangible Expenses And Costs For Taxable Years Ending On Or After July 31, 2007
Financial
Form 319 - Urban Transit Hub Tax Credit For Taxable Periods Ending On And After July 31, 2008 - 2012
Financial
Form 312 - Effluent Equipment Tax Credit For Taxable Periods Ending On And After July 31, 2008
Financial
Form 301 - Urban Enterprise Zone Investment Tax Credit And Credit Carry Forward For Taxable Periods Ending On And After July 31, 2013
Financial
Form 400 - New Jersey Receipts Factor Throw Out For Periods Ending On And After July 31, 2007
Financial
Form 400 - New Jersey Receipts Factor Throw Out For Periods Ending On And After July 31, 2007
Financial
Related Categories
Parent category: Financial