Definition of NJ Gross Receipts

If you sold rental property, it is most likely a capital gain. You should consult your own CPA/tax advisor.

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-----> real address on hobokeni or hobokenx

Ben, I am the CPA, my question concerns the minimum tax for the CBT-100S.

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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. Adm "(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!

Katie in San Diego

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"?

No, no negatives, and losses don't offset gains for this purpose. Too lazy go back and look up the cite, but it's in the reg . Actually I think it's a sentence that immediately follows the quote above from N.J. Admin. Code

NJ certainly doesn't make it easy to find these answers, unless there is something obvious that I missed!

Katie

Not lazy, just thinking out loud. I tried entering a negative amount in Proseries and it did not gereate an error message. I don't believe NJ wants taxpayers to know, all they want is more money.

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I didn't mean YOU were too lazy to look it up; I meant *I* was too lazy!

Katie