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Tax Law

New Jersey regulations provide guidance on GILTI and FDII apportionment

The New Jersey Division of Taxation (Division) quietly issued special regulations addressing the inclusion and apportionment of global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) for purposes of the Corporation Business Tax (CBT).

Taking advantage of special authority granted by the New Jersey Legislature in conjunction with 2018 amendments to the CBT,1 the Division issued the regulations without complying with the notice and comment requirements of New Jersey’s Administrative Procedure Act (APA).2 The regulations are effective beginning April 8, 2020 and expire on October 5, 2020, by which time it is expected that the Division will promulgate replacement regulations consistent with the APA’s procedures.

For the most part, the regulations track the Division’s recent guidance posted on its website on the treatment of GILTI and FDII. The regulations also provide new guidance on the circumstances when a taxpayer may have to include net GILTI or FDII amounts in the numerator of the New Jersey allocation factor.

Read our full legal alert here.