Form 305 - Manufacturing Equipment And Employment Investment Tax Credit - 2013 Page 4
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5The cost of leased equipment to the lessee is the minimum amount
not less than the State or Federal minimum wage. In calculating the
required by the lease agreement to be paid over the term of the
average, part-time employee hours may be aggregated to
lease, excluding amounts to be paid after the expiration of the
determine full-time equivalents (140 hours equals one full-time
useful life of the equipment.
Lease renewals, subleases or
employee equivalent) provided the part-time employee has worked
assignments shall not be considered.
for the taxpayer for at least 20 hours per week for at least six
months during the tax year, as defined in N.J.S.A. 54:10A-5.17
EMPLOYMENT INVESTMENT TAX CREDIT
The calculations in Parts II and III of Form 305 are based on
The Employment Investment portion is valid for each of the two
the increase in the average number of full-time employees and
tax years next succeeding the tax year for which the Manufacturing
employee equivalents residing and domiciled in New Jersey
Equipment credit is allowed, but is limited to 3% of the investment
employed at work locations in New Jersey from the employment
credit base, not to exceed a maximum allowed amount for each of
base year to the employment measurement year.
the two tax years of $1,000 multiplied by the increase in the average
number of qualified employees.
Base Year - the tax year immediately preceding the year in which
the qualified investment was made.
EMPLOYEES AND EMPLOYEE EQUIVALENTS
Full-time employee means a New Jersey domiciled resident
Measurement Year - the tax year immediately following the year
working for the taxpayer for at least 140 hours per month at a wage
in which the qualified investment was made.
EXAMPLE:
2005
2006
2007
2008
•
•
•
•
Average of 150 employees and
Average of 160 employees and
Average of 125 employees
Average of 140 employees and
equivalents
and equivalents
equivalents
equivalents
•
•
•
Investment of $2,000,000
No new investment
Investment of $3,000,000
•
•
•
•
Not an eligible year for credit
Complete Part I for $2,000,000
Part I not applicable
Complete Part I for $3,000,000
investment made in 2007
investment made in 2006
•
Complete Part II for increase in
•
•
Complete Part II for increase in
Part II not applicable
employment due to 2007
employment due to 2006
investment
•
Part III not applicable
investment
•
Average employee increase of
•
Average employee increase of 25
20 pertaining to 2007
pertaining to 2006 investment*
investment**
•
•
Part III not applicable
Complete Part III for increase in
employment due to 2006
investment
•
Average employee increase of
25 pertaining to 2006
investment*
* For 2007 Part II and 2008 Part III the Base Year is 2005 (the year preceding the 2006 investment) and the Measurement Year is
2007 (the year following the 2006 investment).
** For 2008 Part II the Base Year is 2006 (the year preceding the 2007 investment).
CREDIT CARRYOVER
(3) its useful depreciation life;
The amount of credit that cannot be applied for the tax year due to
(4) the month and tax year in which it was placed in service;
the applicable limitations may be carried over to the seven tax years
(5) the amount of credit taken; and
following a credit’s tax year. Note, however, that a taxpayer may not
(6) the date it was disposed of or otherwise ceased to be qualified
carry over any amount of unused credit to a tax year during which a
equipment.
corporate acquisition, with respect to which a taxpayer was a target
corporation, occurred or during which the taxpayer was a party to a
CREDIT RECAPTURE
merger or a consolidation.
Complete Part VI to compute the
carryover amount.
Credit attributable to property that is disposed of or ceases to be
qualified equipment prior to the end of its categorized useful life shall
RECORD KEEPING
be calculated based on the following ratios:
A taxpayer that claims credit under this act shall maintain sufficient
records to establish the following facts for each item of qualified
equipment:
3-YEAR PROPERTY
ALL OTHER PROPERTY
(1) its identity;
Number of months of qualified use
Number of months of qualified use
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(2) its actual or reasonably determined cost;
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Form 305-A (09-13, R-01)
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