54:8A-6.2. Minimum taxable income
(a) The minimum taxable income shall be the sum of the items of tax preference, as described in subsection (b) of this section, reduced (but not below zero) by the aggregate of the following:
(1) The applicable specific deduction described in subsection (c) of this section;
(2) The tax determined under subsection (c) of section 6 of P.L.1961, c. 32 (C. 54:8A-6) for the taxable year, reduced by the sum of the credits allowable under subsection b. of section 7 of P.L.1978, c. 131 (C. 54:8A-15.1); and
(3) To the extent that the sum of the items of tax preference exceeds the applicable specific deduction described in subsection (c) of this section plus the tax described in paragraph 2 above, the amount of any net operating loss of the taxpayer, determined as provided in subsection (b)(5) of section 35 (C. 54:8A-35), which remains as a net operating loss carryover to a succeeding taxable year. In such case, however, the amount of such net operating loss used to reduce the sum of the items of tax preference shall be treated as an item of tax preference in the next succeeding taxable years, in order of time, to the extent that such net operating loss carryover reduces taxable income.
(b) For purposes of this act, the term "items of tax preference" shall mean the federal items of tax preference, as defined in the laws of the United States, derived from or connected with New Jersey sources, for the taxable year, with the modifications as may be prescribed by regulations of the Division of Taxation which relate to income derived from or connected with New Jersey sources.
(1) The federal items of tax preference for amortization of certified pollution control facilities shall be excluded from the computation of items of tax preference with respect to industrial waste treatment facilities and air pollution control facilities which qualify.
(2) The federal items of tax preference with respect to depletion shall be excluded from the computation of items of tax preference.
(3) The federal item of tax preference for capital gains shall be computed by subtracting from such tax preference item an amount sufficient (if necessary) to reduce such tax preference item to 60% of net capital gains.
(4) The federal item of tax preference for adjusted itemized deductions shall be computed as if the required reduction of federal adjusted gross income by the amount of the taxpayer's federal deduction for state and local taxes did not include any amount includible as a modification reducing federal itemized deductions pursuant to subparagraph (A) of paragraph (2) of subsection (b) of section 37 of P.L.1961, c. 32 (C. 54:8A-37).
(c) Specific deduction. An amount which bears the same ratio to $5,000.00, or $2,500.00 in the case of a married individual filing a separate return, as his items of tax preference computed under subsection (b) of this section bear to his total federal items of tax preference.
(d) (Deleted by amendment; P.L.1972, c. 12, section 3.)
L.1970, c. 304, s. 10. Amended by L.1972, c. 12, s. 3; L.1973, c. 244, s. 4, eff. Nov. 21, 1973; L.1978, c. 131, s. 4, eff. Oct. 18, 1978; L.1981, c. 374, s. 5, eff. Dec. 30, 1981.
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Last modified: October 11, 2016