An unincorporated business which carries on its business activities both inside and outside New Jersey, may allocate its business income to determine the amount from New Jersey sources. The business is not required to maintain a regular place of business outside of New Jersey in order to allocate its income. The business must complete the Business Allocation Schedule, Form NJ-NR-A and allocate income, gains, losses and expenses in accordance with N.J.A.C. 18:35-1.1(e) and N.J.A.C. 18:35-1.3(d)4.

Taxpayers have had, and continue to have, the opportunity to request a substitute method of allocation if the taxpayer believes that the Business Allocation Schedule does not provide an equitable allocation of income, gains, losses, expenses, and the business activities of the entity at issue. N.J.A.C. 18:35-1.1(e)4 and 18:35-1.3(d)(4)v. Taxpayers must submit their request for an exception from the use of the Business Allocation Schedule in writing, The submission must include the basis for the request and the substitute method of allocation the taxpayer wishes to use.