N.J. Admin. Code § 18:7-8.9 - Receipts from sales of capital assets; when includible

(a) The gross receipts from sales of capital assets (property not held by the taxpayer for sale to customers in the regular course of business) either within or outside New Jersey should not be included in either the numerator or denominator of the receipts fraction. The net gains from such sales that are included in entire net income are the amounts that are properly to be included in the computation of the receipts fraction when the gains are derived from operational income (income derived from operations of the taxpayer that are integrated with the business of the taxpayer). If the gains are derived from non-operational income (income derived from activities of the taxpayer that are not integrated with the business of the taxpayer), such gains would be sourced or specifically assigned to the state of corporate domicile. For the purposes of the numerator in the computation of the receipts fraction, a net loss should not offset a net gain.

ILLUSTRATION FACTS

Selling Price	Cost	Net Gain	Net Loss
Property #1	$ 1,000	$ 600	$ 400
Property #2	2,000	2,200	$ 200
Property #3	3,000	2,900	100
$ 500	$ 200
(200)
Amount of gain appearing on Schedule A	$ 300

The $ 300 net gain is includable in the denominator of the receipts fraction in all cases. The computation to arrive at the amount to be included in the numerator is given in the following examples:

Example 1:

At the time of sale, Property #1 was located within New Jersey, whereas Property #2 and #3 were located outside New Jersey.

Amount of N.J. Gains	$400	= 80% x $ 300 (net gain) = $ 240
Total Gains	$500

The amount of $ 240 is to be included in the numerator of the receipts fraction.

Example 2:

At the time of sale, Property #1 and #3 were located outside New Jersey, whereas Property #2 was located within New Jersey.

Amount of N.J. Gains	-0-	= 0% x $ 300 (net gain) = -0-
Total Gains	$500

There is nothing attributable to this transaction that will affect the numerator of the receipts fraction.

Example 3

At the time of sale, Property #1 and #3 were located within New Jersey, whereas Property #2 was located outside New Jersey.

Amount of N.J. Gains	$500	= 100% x $ 300 (net gain) = $300
Total Gains	$500

(b) Where the taxpayer's business is the buying and selling of real estate or the buying or selling of securities, bonds, digital assets, or other financial products/instruments, for trading purposes, these assets are not deemed to be capital assets and the receipts from the sales thereof are included in the same manner in accordance with their accounting methods used for Federal purposes as other categories of includable receipts in the receipts fraction that are not capital assets. The taxpayer must follow a consistent year-to-year application, unless the taxpayer changes their Federal accounting method; however, in the year of the Federal accounting change, the taxpayer must attach an explanation to their New Jersey CBT return explaining the accounting change.

(c) If a taxpayer is trading for its own account, the proceeds of such trades would be treated in accordance with their accounting methods used for Federal purposes, and (b) above would not apply. The taxpayer must follow a consistent year-to-year application, unless the taxpayer changes their Federal accounting method; however, in the year of the Federal accounting change, the taxpayer must attach an explanation to their New Jersey CBT return explaining the accounting change.

Notes

N.J. Admin. Code § 18:7-8.9

Amended by 49 N.J.R. 1694(a), effective 6/19/2017 Amended by 57 N.J.R. 1303(b), effective 6/16/2025