Recently signed legislation (P.L. 2018, c. 48, and P.L. 2018, c. 131) made several changes to the Corporation Business Tax Act that are retroactive to tax years beginning on and after January 1, 2017. New Jersey has decoupled from the deduction and exemptions permitted under the federal Tax Cuts and Jobs Act, Public Law 115-97 (IRC § 965). The legislation reduces the 100% dividend exclusion to 95% for certain taxpayers. However, the law now permits an exclusion of dividends by a taxpayer if the taxpayer’s subsidiary received those same dividends from other lower-tiered subsidiaries that filed and paid tax to New Jersey in the same tax year. The Governor made comments on the signing of P.L. 2018, c. 131 (View Comments).
Businesses affected by the changes must amend their 2017 Form CBT-100 or Form BFC-1 by filing Form CBT-DIV 2017.
Note: On October 16, 2018, the CBT-DIV 2017 Instructions were updated to provide some clarity. Specifically, information was added regarding the due date of the CBT-DIV 2017 for taxpayers filing under extension. Additionally, the Instructions on Page 4 (Tax Computation Schedule Line 9a, Line 9b and tax rate chart) and Page 6 (Tiered Dividend Computation Line 5d) were updated to clarify the applicable tax rates.
The Q&A on Completing Form CBT-DIV 2017 will provide answers to the most common questions about the new form.
Additional information will be posted as it becomes available.