CCH Axcess Tax

Introduction to the New Jersey Partnership Return

The New Jersey partnership and composite returns are prepared when New Jersey is the home state or any entry is made on a New Jersey worksheet.

The following forms and schedules are prepared:

Form PART-200-T, Corporation Business Tax - Return and Application For Extension of Time to File
Form PART-200-T Worksheet
Form NJ-1065 EST, Nonresident Partners Estimate Worksheet
Form NJ-1065-V, Partnership Payment Voucher
Form NJ-1065, Partnership Return
Form NJ-NR-A, Gross Income Tax Business Allocation Schedule
Form Schedule A, Tiered Partnerships
Form Schedule B, Sheltered Workshop Tax Credit
Form Schedule J, Corporation Allocation Schedule
Form Schedule L, Complete Liquidation
Form 501-GIT, New Jersey Gross Income Tax Domestic Production Activities Deduction
Form GIT-DEP, Gross Income Tax Depreciation Adjustment Worksheet
Form NJK-1, Partner's Share of Income
Form NJ-1080-E, Election to Participate in a Composite Return
Form NJ-1065E, Nonresident Corporate Partner's Statement Of Being An Exempt Corporation
Form CBT-V, Corporation Business Tax - Partnership Payment Voucher
Form CBT-206, Partnership Application for Extension to File NJ-CBT-1065
Form CBT, New Jersey Corporation Business Tax - Partnership Return
Form CBT-160-P, Underpayment of Estimated N.J. Partnership Tax
Form Sch T (CBT-1065), Tiered Partnership Schedule
Form NJ-1040-ES, Estimate Payment Vouchers and Worksheet (Composite Return)
Form NJ-630-V, Payment Voucher and Application for Extension of Time to File (Composite Return)
Form NJ-1080-C, Income Tax - Nonresident Composite Return
Form NJ-1080-C, Schedule A - Participant Directory
Form NJ-1080-C, Schedule B - Nonparticipant Directory
Form NJ-2210, Underpayment of Estimated Tax

Pages 1 through 5 of federal Form 1065 (or Pages 1 through 5 of Form 1065-B) are attached to the government copy of Form NJ-1065. Schedule D is attached if there is a net gain or loss from disposition of property.

Return Print Options for Form NJ-1065 and Form NJ - CBT

Both returns are printed by default (NJ-CBT-1065 only if required). If an overpayment is carried to NJ-CBT-1065 it will print regardless of whether there is any nonresident tax on the form. If one or the other returns is not to be printed, make an entry in New Jersey > CBT General Information > New Jersey CBT Basic Data > Return print option (see Tax Prep Help in that field).

Tiered Partnerships

Form NJ-1065, Schedule A, must be completed if the partnership is a member of, or holds an ownership interest in, another partnership. Use New Jersey > Other > Tiered Partnerships to complete Schedule A.

Application for Extension

If an extension is required for the New Jersey partnership return, the state will accept a copy of the federal extension Form 7004.

If the federal extension is produced on the federal return and an extension is required for New Jersey, make the appropriate entry on Extensions.

If requesting a New Jersey Extension PART-200-T or CBT-206 without a balance due, make an additional entry in Other > Extensions > New Jersey, File zero balance due PART-200-T field or CBT-206.

The above is not the case for extending the New Jersey composite return. A federal extension does not extend this return. Use Form NJ-630-V.

Interest Rate Change (Composite Return)

Use Interest Rate Overrides to override the late payment interest rate for the composite return.

Federal Notes and Features

New Jersey income is computed from federal information. All income and expenses included in the federal return carry to the "Amount from All Sources" column of Form NJ-1065. FS codes are not used to compute New Jersey income. They are used only for footnotes.

Automatic Transfers. The following items from the federal return carry to the New Jersey return:

Interest on federal obligations
Municipal bond interest from states other than New Jersey
State taxes based on income
50% of meals and entertainment expense
Section 179 expense deduction
Section 754 depreciation

Interest on Federal Obligations

Interest on obligations of the United States is reported as tax-exempt interest income on Form NJ-1065.

Municipal Bond Interest

New Jersey includes municipal bond interest from sources outside the state in New Jersey income. Be sure to enter the source of municipal bond interest. If no source is entered, interest is assumed to originate in the home state of the return.

Capital Gains and Other Gains

Real Property. Real property is assumed for Section 1250 property. No assumption is made for capital assets. Use New Jersey Income/Deductions > Deductions to override.

For real property only, enter "NJ" as the "State" on federal worksheets to indicate that the gain or loss is derived from real property located in New Jersey. If no entry is made for the "State," New Jersey status is assumed only if New Jersey is the home state of the return.

Rents and Royalties

Enter "NJ" as the "State" on Rent and Royalty to indicate that the net rental income was derived from real property located in New Jersey. If no entry is made for the "State," New Jersey status is assumed only if New Jersey is home state of the return.

Any gain from Section 1250 property on Form 8825 is included on Form NJ-1065, Line 18.

Use New Jersey Income/Deductions to override.

Income from Passthrough Entities

If "NJ" is entered as the "State," or if New Jersey is the home state of the return, any rental real estate income from a pass-through entity is assumed to be derived from real property located in New Jersey. No assumption is made for dispositions of real property from a pass-through entity. Use New Jersey Income/Deductions to override.

Form NJ-1065, Schedule A, must be completed if this partnership is a member of, or holds an ownership interest in another partnership. Use New Jersey Other > Tiered Partnerships to complete Schedule A. Be sure to enter information from the Schedule NJK-1 received from another partnership.

State Income Taxes

New Jersey does not allow a deduction for state taxes based on income. Therefore, all entries for state income taxes are added to partnership income on the New Jersey return. State income taxes that accrue to the federal return are also added to New Jersey partnership income.

Meals and Entertainment Expense

New Jersey allows 100% of meals and entertainment expense as a deduction from partnership income. The amount disallowed on the federal return is reported as an "other subtraction" from New Jersey income on Form NJ-1065.

Section 179 Expense and Depreciation

For assets placed in service after 2003, the Section 179 expense deduction is limited to $25,000. The federal 50% bonus depreciation is not allowed.

For dispositions of post-2003 assets with New Jersey Section 179 expense and depreciation differences from federal amounts, the different New Jersey amounts must be entered.

For automatic sales (i.e., when a Sale Number is entered), the New Jersey accumulated depreciation should be entered in State Depreciation. Accumulated New Jersey regular depreciation (not including Section 179 expense or bonus depreciation) should be entered as Accumulated Depreciation. New Jersey Section 179 expense and bonus depreciation should be entered as Section 179/Bonus.

For non-automatic sales (i.e., when no Sale Number is entered), separate federal and state entries should be made with "F" and "S" as the respective FS indicators. In a multi-state return, the "S" entry should also include "NJ" as the State.

For non-automatic cash dispositions, the total New Jersey depreciation — including New Jersey Section 179 expense and bonus depreciation — should be entered on the "S" (or "S NJ") line as Total Depreciation. (Do not enter the New Jersey Section 179 expense on this line as Section 179 Expense Deduction.) On the "S" or "S NJ" line, the total federal depreciation (including federal Section 179 expense and bonus depreciation) should be entered as State Use 1. Enter the total federal 179 expense in State Use 2.

For non-automatic installment sales, the total New Jersey depreciation — including New Jersey Section 179 expense and bonus depreciation — should be entered on the "S" (or "S NJ") sheet as Total Depreciation.

For non-automatic like-kind exchanges, federal and New Jersey amounts for Adjusted Basis of Like Property Given Up should be entered on separate "F" and "S" (or "S NJ") sheets.

State Information

New Jersey uses the following fields in Generic State K-1 Information:

Capital Percentage Before Change or Termination
Partner's K-1 Final
Partner's K-1 Amended
State Use Date 1. Overrides the "Date partner's interest in the partnership began"
State Use Code. Overrides the partner's code for the Partners Directory
State Use 1. Guaranteed payments to retired partners
State Use 2. Non-New Jersey corporation partner's code
State Use 3. Nonresident partnership partner's code
State Use 4. Nonresident other partner's code
State Use 5. "1" indicates that a nonresident partner has physical nexus with New Jersey
X Box 1 . Include partner in Form NJ-1080-C
X Box 2. Print Form NJ-1080-E for this partner