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The Technology Business Tax Certificate Transfer Program enables approved Technology and Biotechnology Businesses with Net Operating Losses to sell their Unused Net Operating Loss Carryover (NOL) and Unused Research and Development Tax Credits (R&D Tax Credits) for at least 80% of the value of the tax benefits to a profitable corporate taxpayer in the State of New Jersey that is not an Affiliated Business.  This allows Technology and Biotechnology Businesses with Net Operating Losses to turn their tax losses and credits into cash to buy equipment or facilities, or for other Allowable Expenditures.  The New Jersey Economic Development Authority (NJEDA) determines eligibility, and the New Jersey Division of Taxation determines the value of the tax benefits (NOL and R&D Tax Credits). The maximum company lifetime value of surrendered tax benefits has been increased from $10m to $15m. Applications are due June 30 of each year.

Eligibility Requirements

  • Applicant cannot show positive net operating income in any of the two previous full years of ongoing operations, as determined on its financial statements
  • That the applicant cannot be directly or indirectly 50% or more owned or controlled by another company that has demonstrated positive net operating income in any of the two previous full years of ongoing operations, as determined on its financial statements OR
  • The applicant's primary business is the provision of a scientific process, product or service and the applicant owns, has filed for, or has a license to use protected, proprietary intellectual property.

Tax Benefit Calculation (Example)

Net Operating Loss                                                             $3,000,000

Corporate Business Tax                                                       @9%

Tax Benefit Available for sale                                                $270,000

Assume 100% Allocation Factor

Minimum Sale Price                                @80%                    $216,000 

Applications will not be approved in which the new or expanding Technology or Biotechnology business:

  • Has demonstrated positive net operating income in any of the two previous full years of ongoing operations as determined on its financial statements
  • Is  directly or indirectly at least 50% owned or controlled by another corporation that has demonstrated positive net operating income in any of the two previous full years of ongoing operations as determined on its financial statements, or is part of a consolidated group of affiliated corporations, as filed for Federal income tax purposes, that in the aggregate has demonstrated positive net operating income in any of the two previous full years of ongoing operations as determined on its combined financial statements
  • Does not meet the following employment requirements on June 30 and at time of sale of NOL and/or R&D Tax Credits.  To close on any approved tax benefit allocations, the applicant must certify that it still satisfies the requirements regarding the number of U.S. employees and New Jersey Full-Time Employees on the date the applicant receives the Tax Credit Certificate.   
    • The applicant must have less than 225 full-time employees in the U.S.  (Who work at least 35 hours a week) on a total corporate basis (including parent company and all subsidiaries), and
    • The applicant must have the following minimum Full-Time Employees in New Jersey based on the number of years     since earliest incorporation (including predecessor entities):

Less than three years                                                           1 Full-Time Employee in NJ

More than three years, less than five years                              5 Full-Time Employees in NJ

More than five years                                                           10 Full-Time Employees in NJ

 

ACCESS THE APPLICATION HERE