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Instructions for Schedule G-2
For definitions of a related member, intangible expenses and If claiming this exception for more than one related member, com-
costs, intangible interest expenses and costs, and intangible plete Exception 3 for each related member, and enter the total for
property, see the instructions for Schedule G of Form CBT-100, all related members in the Total Exceptions Chart for Part I.
CBT-100U, CBT-100S, or BFC-1.
If an exception to the disallowance of the interest expense was
For tax years beginning on or after January 1, 2018, the treaty determined under Exception 1 and/or 2, an exception under this
exceptions are limited pursuant to P.L. 2018, c. 48. provision for that related member is not available.
Note: If there are transactions between members of a com- Exception 4
bined group that are included on the same New Jersey Complete the schedule if the taxpayer included any interest ex-
combined return, and those amounts are reported on pense on Schedule G, Part I of the CBT-100, CBT-100U, or CBT-
Schedule A, they are also eliminated on Schedule A. No 100S (or the BFC-1, if applicable) that was directly or indirectly
exception is required. paid, accrued, or incurred to an independent lender, and the tax-
payer filing this return guarantees the debt on which the interest
is required.
Part I
Exception 1
Complete the schedule if the taxpayer included any interest ex-
pense on Schedule G, Part I of the CBT-100, CBT-100U or Part II
CBT-100S (or the BFC-1, if applicable) that was directly or indi- Exception 1
rectly paid, accrued, or incurred to a related member in a foreign Complete the schedule if the taxpayer included any intangible ex-
nation that has in force a comprehensive income tax treaty with penses and costs including intangible interest expenses and costs
the United States pursuant to P.L. 2018, c. 48 and: on Schedule G, Part II of the CBT-100, CBT-100U, or CBT-100S
(or the BFC-1, if applicable) that were directly or indirectly paid,
(1) The related member was subject to tax in the foreign nation accrued, or incurred to a related member in a foreign nation that
on a tax base that included the payment paid, accrued, or has in force a comprehensive income tax treaty with the United
incurred; and States and:
(2) The related member’s income received from the transaction (1) The related member was subject to tax in the foreign nation
was taxed at an effective tax rate equal to or greater than a on a tax base that included the payment paid, accrued, or
rate of three percentage points less than the rate of tax ap- incurred; and
plied to taxable interest by the State of New Jersey.
(2) The related member’s income received from the transaction
Exception 2 was taxed at an effective tax rate equal to or greater than
Complete the schedule if the taxpayer included any interest ex- a rate of three percentage points less than the rate of tax
pense on Schedule G, Part I of the CBT-100, CBT-100U, or CBT- applied to taxable interest by the State of New Jersey.
100S (or the BFC-1, if applicable) that was directly or indirectly
paid, accrued, or incurred to a related member and for which the Exception 2
payment of such interest: Complete the schedule if the taxpayer included any intangible ex-
penses and costs including intangible interest expenses and costs
(1) Was not to avoid taxes otherwise due under Title 54 of the on Schedule G, Part II of the CBT-100, CBT-100U, or CBT-100S
Revised Statutes of Title 54A of the New Jersey Statutes; (or the BFC-1, if applicable) that were directly or indirectly paid,
accrued, or incurred to a related member that is a corporation that
(2) Was paid pursuant to arm’s length contracts at an arm’s files a Corporation Business Tax return in New Jersey, and such
length rate of interest; and member has included those amounts in its entire net income.
(3) (a) The related member was subject to a tax on its net income If claiming this exception for more than one related member, com-
or receipts in this State or another state or possession of plete Exception 2 for each related member, and enter the total for
the United States or in a foreign nation; all related members in the Total Exceptions Chart for Part II.
(b) A measure of the tax includes the interest received from
the related member;
Notes:
(c) The rate of tax applied to the interest received by the Any other exceptions cannot be made on the return. The amounts
related member is equal to or greater than a rate three paid to related members as reported on line (a) of Schedule G,
percentage points less than the rate of tax applied to tax- Part I and/or Part II, must be included in the amount reported on
able interest by this State. line (c) of Schedule G, Part I and/or Part II.
A copy of the return from the state, possession, or foreign nation A separate Claim for Refund (Form A-3730) stipulating all the facts
on which the related member reported interest income must be and providing all applicable evidence to support the taxpayer’s
submitted with the taxpayer’s return. claim, must be submitted in order to request any other exception.
Exception 3
Complete the schedule if the taxpayer included any interest expense
on Schedule G, Part I of the CBT-100, CBT-100U, or CBT-100S
(or the BFC-1, if applicable) that was directly or indirectly paid, ac-
crued, or incurred to a related member that is a corporation that
files a Corporation Business Tax return in New Jersey, and such
member included those amounts in its entire net income.
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