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Division of Taxation

Pass-Through Business Alternative Income Tax (PTE/BAIT )

For New Jersey tax purposes, income and losses of a pass-through entity are passed through to its members. However, pass-through entities may elect to pay a Pass-Through Business Alternative Income Tax due on the sum of each of the member's share of distributive proceeds. The members may then claim a refundable tax credit for the amount of tax paid by the pass-through entity on their share of distributive proceeds.

All PTE payments and returns must be filed electronically. An entity must first register with the New Jersey Division of Revenue and Enterprise Services to take advantage of PTE. Once the entity is registered, it also must file an Election Form to submit payments and returns.

We have made several important updates to the 2021 New Jersey Pass-Through Business Alternative Income Tax Return (Form PTE-100) and instructions.

The draft 2021 forms and instructions are being finalized and will be posted once available. The FAQ will also be updated shortly.

Distributive Proceeds. To make the 2021 PTE-100 easier to complete, we modified our interpretation of "distributive proceeds" to mirror the reporting of partnership income and S corporation income for New Jersey Gross Income Tax purposes. The pass-through entity will complete its Members Directory using each member's NJK-1 New Jersey sourced income amounts. In addition, for Tax Year 2021, CBT-100S filers may choose to calculate their distributive proceeds using Form NJ-NR-A (Business Allocation Schedule). Additional instructions will be provided once the 2021 forms and instructions are finalized.

This change does not affect TY 2020. Taxpayers still need to follow the 2020 return and instructions, including when filing an amended 2020 PTE-100.

Credit Forward. The 2021 PTE-100 provides for a credit forward option to the 2022 PTE-100. Pass-through entities must file a 2022 Pass-Through Business Alternative Income Tax election before claiming a credit to 2022.

Consolidated Return. The 2021 PTE-100 form and instructions provide additional directions for entities choosing to file an optional consolidated return.

Estimated Payments/ Installment Interest. Schedule PTE-160, Underpayment of Estimated Pass-Through Business Alternative Income Tax, must be included if the entity calculated an interest charge on an underpayment of installment payments or an exception to the imposition of interest.

An entity that does not have a prior year tax liability will not be penalized under the safe harbor provisions in N.J.S.A. 54A:9-6 for the failure to file or make estimated payments.


Last Updated: Monday, 12/27/21