New Jersey A 4629: Allows exclusion of certain small business income from taxation under gross income tax and corporation business tax.

Bill Text

(Sponsorship Updated As Of: 2/10/2025)
ASSEMBLY, No. 4629
STATE OF NEW JERSEY
221st LEGISLATURE

INTRODUCED JUNE 25, 2024

Sponsored by:
Assemblyman MICHAEL INGANAMORT
District 24 (Morris, Sussex and Warren)
Assemblyman ALEX SAUICKIE
District 12 (Burlington, Middlesex, Monmouth and Ocean)

Co-Sponsored by:
Assemblymen Scharfenberger, Kanitra, Assemblywomen Swift, Fantasia,
Matsikoudis, Assemblymen Clifton and Azzariti Jr.

SYNOPSIS
Allows exclusion of certain small business income from taxation under gross
income tax and corporation business tax.

CURRENT VERSION OF TEXT
As introduced.

A4629 INGANAMORT, SAUICKIE
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EXPLANATION – Matter enclosed in bold-faced brackets [thus] in the above bill is
not enacted and is intended to be omitted in the law.

Matter underlined thus is new matter.

AN ACT allowing the exclusion of certain small business income 1
from taxation under the gross income tax and corporation 2
business tax, revising various parts of the statutory law, and 3
supplementing Title 54A of the New Jersey Statutes. 4
5
BE IT ENACTED by the Senate and General Assembly of the State 6
of New Jersey: 7
8
1. Section 4 of P.L.1945, c.162 (C.54:10A-4) is amended to 9
read as follows 10
4. For the purposes of this act, unless the context requires a 11
different meaning: 12
(a) "Commissioner" or "director" shall mean the Director of the 13
Division of Taxation of the State Department of the Treasury. 14
(b) "Allocation factor" shall mean the proportionate part of a 15
taxpayer's net worth or entire net income used to determine a 16
measure of its tax under this act. 17
(c) "Corporation" shall mean any corporation, joint-stock 18
company or association and any business conducted by a trustee or 19
trustees wherein interest or ownership is evidenced by a certificate 20
of interest or ownership or similar written instrument, any other 21
entity classified as a corporation for federal income tax purposes, 22
and any state or federally chartered building and loan association or 23
savings and loan association. 24
(d) "Net worth" shall mean the aggregate of the values disclosed 25
by the books of the corporation for (1) issued and outstanding 26
capital stock, (2) paid-in or capital surplus, (3) earned surplus and 27
undivided profits, and (4) surplus reserves which can reasonably be 28
expected to accrue to holders or owners of equitable shares, not 29
including reasonable valuation reserves, such as reserves for 30
depreciation or obsolescence or depletion. Notwithstanding the 31
foregoing, net worth shall not include any deduction for the amount 32
of the excess depreciation described in paragraph (2) (F) of 33
subsection (k) of this section. The foregoing aggregate of values 34
shall be reduced by 50% of the amount disclosed by the books of 35
the corporation for investment in the capital stock of one or more 36
subsidiaries, which investment is defined as ownership (1) of at 37
least 80% of the total combined voting power of all classes of stock 38
of the subsidiary entitled to vote and (2) of at least 80% of the total 39
number of shares of all other classes of stock except nonvoting 40
stock which is limited and preferred as to dividends. In the case of 41
investment in an entity organized under the laws of a foreign 42
country, the foregoing requisite degree of ownership shall effect a 43
like reduction of such investment from the net worth of the 44
taxpayer, if the foreign entity is considered a corporation for any 45

A4629 INGANAMORT, SAUICKIE
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purpose under the United States federal income tax laws, such as 1
(but not by way of sole examples) for the purpose of supplying 2
deemed paid foreign tax credits or for the purpose of status as a 3
controlled foreign corporation. In calculating the net worth of a 4
taxpayer entitled to reduction for investment in subsidiaries, the 5
amount of liabilities of the taxpayer shall be reduced by such 6
proportion of the liabilities as corresponds to the ratio which the 7
excluded portion of the subsidiary values bears to the total assets of 8
the taxpayer. 9
In the case of banking corporations which have international 10
banking facilities as defined in subsection (n), the foregoing 11
aggregate of values shall also be reduced by retained earnings of the 12
international banking facility. Retained earnings means the earnings 13
accumulated over the life of such facility and shall not include the 14
distributive share of dividends paid and federal income taxes paid 15
or payable during the tax year. 16
If in the opinion of the director, the corporation's books do not 17
disclose fair valuations the director may make a reasonable 18
determination of the net worth which, in his opinion, would reflect 19
the fair value of the assets, exclusive of subsidiary investments as 20
defined aforesaid, carried on the books of the corporation, in 21
accordance with sound accounting principles, and such 22
determination shall be used as net worth for the purpose of this act. 23