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Part III Alternative Simplified Credit (ASC) election can be made on an amended
Complete Part III if you used the regular method to calculate your federal return for a tax year only if you have not previously claimed the research
corporate income tax credit. Otherwise, complete Part IV. credit on an original return or amended return for that tax year. An extension
of time to make the ASC election will not be granted.
Credit Calculation for Qualified Research Expenses
Lines 5 through 8 pertain to qualified research expenditures paid or in- Credit Calculation for Qualified Research Expenses Us-
curred. See I.R.C. § 41.
ing the Alternative Simplified Credit Method
Do not include expenses and payments that were taken as part of the feder- Line 16 through 20 pertain to qualified research expenditures paid or in-
al Orphan Drug Credit to calculate the New Jersey R&D Credit. curred in New Jersey. See I.R.C. § 41.
Note: Amounts included in the calculation of the Research and Develop- Do not include expenses and payments that were taken as part of the feder-
ment Tax Credit are not permitted to be included in the calculation of al Orphan Drug Credit to calculate the New Jersey R&D Credit.
the Recycling Equipment Tax Credit, the Manufacturing Equipment
and Employment Investment Tax Credit, the New Jobs Investment Note: Amounts included in the calculation of the Research and Develop-
Tax Credit, or the Angel Investor Tax Credit. ment Tax Credit are not permitted to be included in the calculation of
the Recycling Equipment Tax Credit, the Manufacturing Equipment
Line 8 – Use the applicable percentage. This is the percentage that would and Employment Investment Tax Credit, the New Jobs Investment
apply for federal purposes based on the amounts paid or incurred for qual- Tax Credit, or the Angel Investor Tax Credit.
ified research performed on the taxpayer’s behalf in New Jersey. Prepaid
tract research expenses are considered paid in the year the research is Line 21 through 24 – Use the applicable percentage. This is the percent-
actually done. age that would apply for federal purposes based on the amounts paid or
incurred for qualified research performed on the taxpayer’s behalf in New
Line 10 – The fixed-base percentage depends on whether you are an ex- Jersey. Prepaid tract research expenses are considered paid in the year the
isting company or a start-up company. The fixed-base percentage for all research is actually done.
companies (existing and start-up) must be rounded to the nearest 1/100th
of 1% (i.e., four decimal places) and cannot exceed 16%. Any subsequent Part V – Total Research and Development Tax Credit
change to the federal fixed based percentages will also be reflected here. This is the portion where the actual credit amount is calculated. Unlike the
Start-Up Company federal corporate income tax credit, which has percentage rates that vary
A start-up company is a taxpayer that had both gross receipts and qualified depending on the credit method, the New Jersey credit is fixed at 10%.
research expenses either: You must report the credit you carried over from prior privilege periods or
• For the first time in a tax year beginning after 1983, or tax years on line 29. Do not recompute your tax credit for previous privilege
• For fewer than 3 tax years beginning after 1983 and before 1989. periods or tax years on this form. All credit carryovers must be calculated
using the laws that were in effect for that tax period. Previous versions of
For start-up companies with qualified research expenses for tax years be- the form are available on the Division of Taxation’s website (njtaxation.org).
ginning after 1993, the fixed-base percentage for a start-up company is
figured as follows: PART VI – Calculation of the Allowable Credit Amount
• For the first 5 tax years, the percentage is 3%.
and Carryover (for CBT-100, CBT-100S, and BFC-1 Filers
• For the 6th tax year, divide the aggregate qualified research expenses only)
for the 4th and 5th tax years by the aggregate gross receipts for those For CBT-100, CBT-100S, and BFC-1 filers, the allowable Research and
tax years, then divide the result by 6. Development Tax Credit for the current year is calculated in Part VI. Com-
• For the 7th tax year, divide the aggregate qualified research expenses bined return filers do not complete Part VI, and must complete Part VII in-
for the 5th and 6th tax years by the aggregate gross receipts for those stead. The amount of the credits applied cannot reduce the tax liability to an
tax years, then divide the result by 3. amount less than the statutory minimum.
• For the 8th tax year, divide the aggregate qualified research expenses Line 32 – The minimum tax is assessed based on the New Jersey Gross
for the 5th, 6th, and 7th tax years by the aggregate gross receipts for Receipts as follows:
those tax years, then divide the result by 2.
• For the 9th tax year, divide the aggregate qualified research expenses New Jersey Gross Receipts CBT-100/
for the 5th, 6th, 7th, and 8th tax years by the aggregate gross receipts BFC-1 CBT-100S
for those tax years, then divide the result by 1.5. Less than $100,000 $ 500 $ 375
• For the 10th tax year, divide the aggregate qualified research expenses $100,000 or more but less than $250,000 750 562
for the 5th through 9th tax years by the aggregate gross receipts for $250,000 or more but less than $500,000 1,000 750
those tax years, then divide the result by 1.2.
$500,000 or more but less than $1,000,000 1,500 1,000
• For the 11th and later tax years, divide the aggregate qualified research
expenses for any 5 of the 5th through 10th tax years by the aggregate $1,000,000 or more 2,000 1,500
gross receipts for those tax years. If a taxpayer is filing a separate return and is a member of an affiliated or
Existing Company controlled group that has a total payroll of $5,000,000 or more for the re-
The fixed-base percentage for an existing company (any company that is turn period, the minimum tax is $2,000. Tax periods of less than 12 months
not a start-up company) is figured by dividing the aggregate qualified re- are subject to the higher minimum tax if the prorated total payroll exceeds
search expenses for the tax years beginning after 1983 and before 1989 by $416,667 per month.
the aggregate gross receipts for those tax years. Line 34 – Taxpayers claiming multiple credits must list any credits already
Line 11 – Enter the average annual gross receipts (reduced by returns and applied to the tax liability to ensure accuracy of the calculation for maximum
allowances) for the 4 tax years preceding the tax year for which the credit is credit allowable.
being determined. You may be required to annualize gross receipts for any Carryover Time Frame. Although there is a limitation of the amount of
short tax year. This is determined by using Line 1 (less returns and allow- credit allowed in any one privilege period or tax year, generally the amount
ances) from Schedule A of the 4 preceding tax years. of unused tax credit may be carried forward to each of the seven (7) ac-
For a tax year that the credit terminates, the average annual gross receipts counting years following the credit’s privilege period or tax year (N.J.S.A.
for the 4 tax years preceding the termination tax year is prorated for the Sec. 54:10A-5.24). A taxpayer that has been allowed a Research and De-
number of days the credit is applied during the tax year. velopment Credit for the fiscal or calendar accounting period (privilege peri-
od or tax year) in which the qualified research expenses have been incurred
and basic research payments have been made for research conducted in
Part IV New Jersey in the fields of advanced computing, advanced materials, bio-
Complete Part IV if you used the alternative simplified credit method to cal-
culate your federal corporate income tax credit. Otherwise, use Part III. An technology, electronic device technology, environmental technology, and
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