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On January 31, 2019, the New Jersey Tax Court issued its ruling on whether a taxpayer must add-back intercompany payments to its parent, estimated payments based on tax sharing agreements, as tax payments made to other states. The payments were to reimburse the parent corporation for taxes it paid on behalf of the combined group in non-separate reporting states. On its separate New Jersey return, the taxpayer did not add-back the intercompany payments and treated the payments as deductible business expenses. However, the New Jersey Division of Taxation denied this deduction and argued it was an “indirect payment of tax.” Although the court agreed with the taxpayer that the intercompany payments were not “taxes paid or accrued” to a state, but contractual obligations, the court concluded that the taxpayer must add-back the pro rata share of its tax liability paid by the parent in combined reporting jurisdictions. The court further found that the taxpayer would be entitled to a reduction in CBT related to any overpayment of CBT made by the parent on the taxpayer’s behalf. Daimler Investments US Corporation v. Director, Division of Taxation, No. 008165-2016, 2019 WL 409433 (NJ Tax Ct. Jan. 31, 2019).