Bill Text: NJ A254 | 2010-2011 | Regular Session | Introduced
Bill Title: Allows for certain capital asset loss and capital asset loss carryforward deductions under the New Jersey gross income tax.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-01-12 - Introduced, Referred to Assembly Appropriations Committee [A254 Detail]
Download: New_Jersey-2010-A254-Introduced.html
STATE OF NEW JERSEY
214th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Sponsored by:
Assemblywoman CHARLOTTE VANDERVALK
District 39 (Bergen)
SYNOPSIS
Allows for certain capital asset loss and capital asset loss carryforward deductions under the New Jersey gross income tax.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act allowing for certain capital asset loss and capital asset loss carryforward deductions under the New Jersey gross income tax, amending N.J.S.54A:5-2.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. N.J.S.54:5-2 is amended to read as follows:
54A:5-2. [Losses] a. Except as provided in subsection b., losses which occur within one category of gross income may be applied against other sources of gross income within the same category of gross income during the taxable year. However, a net loss in one category of gross income may not be applied against gross income in another category of gross income.
b. A net loss from the sale of a capital asset in one category of gross income during a taxable year may be applied against a net gain from the sale of a capital asset in any other category of gross income during the taxable year. If losses from the sales of capital assets in all categories of gross income during the taxable year exceed the gains from the sales of capital assets in all categories of gross income during the taxable year, the net loss from the sales of capital assets during the taxable year may be carried forward to the any subsequent taxable year, and may be applied as a loss as otherwise provided in this subsection. A net loss from the sale of a capital asset in one category of gross income during a taxable year not otherwise applied as allowed in this subsection, and a net loss carryover allowed from any prior taxable year pursuant to this subsection, may be deducted in an amount of the loss or loss carryforward not to exceed $3,000 against any other source of gross income within any category of gross income. As used in this subsection, "capital asset" means
(1) common stock in a C corporation that is a subchapter C corporation for federal income tax purposes, including common stock of a foreign corporation if the stock is regularly traded on an established securities market, provided further, that an American depository receipt for common stock in a foreign corporation shall be treated as common stock in such corporation, provided further, however, that a capital asset shall not include: (i) stock in a foreign investment company within the meaning of section 1246 (b) of the federal Internal Revenue Code of 1986 (26 U.S.C.s.1246), stock in a passive foreign investment company as defined in section 1296 of the federal Internal Revenue Code of 1986 (26 U.S.C.s.1296), stock in a foreign corporation held by a United States person who meets the requirements of section 1248 (a)(2) of the federal Internal Revenue Code of 1986 (26 U.S.C.s.1248), and stock in a foreign holding company as defined in section 552 of the federal Internal Revenue Code of 1986 (26 U.S.C.s.552); and
(2) tangible property,
which is a capital asset pursuant to section 1221 of the federal Internal Revenue Code of 1986 (26 U.S.C.s.1221).
(cf: N.J.S.54A:5-2)
2. This act shall take effect immediately but section 1 shall apply to taxable years beginning on or after January 1 following the date of enactment.
STATEMENT
This bill allows for capital asset loss deductions under the New Jersey gross income tax against capital asset gains during the taxable year among any of the categories of gross income under the New Jersey gross income tax. The bill allows for the carry-forward of any unused capital asset losses that exceed any capital asset gains realized in the same taxable year. Also this bill allows for up to $3,000 of capital asset losses that exceed capital asset gains during a taxable year, or that have been carried forward from the prior taxable year, to be deducted from any form of gross income. The bill mirrors some of the provisions of the federal personal income tax that allow for individuals' capital losses to be used to reduce taxable income up to certain limits, beyond which the loss may be carried forward to reduce future taxable income.
The New Jersey gross income tax does not incorporate the substantive provisions of the federal individual income tax relating to capital gains and losses or different rates of tax on long term or short term capital gains And while this bill does not incorporate all the substantive provisions, this bill does incorporate those capital loss provisions that will help to minimize the impact upon individual taxpayers of the recent increase in investment losses, especially in the stock market in recent periods, being experienced by many with popular forms of capital assets such as stocks, mutual funds and certain property holdings.
