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Division of Taxation

NOTICE: CBT-100U Schedule R

The Division has become aware of instances where a combined group could have an issue with their Allocated Dividend Exclusion. If a combined group has a member with a zero allocation factor, that member's dividend exclusion is not being subtracted from post-allocated income on Form CBT-100U for 2019. This results in a "trapped dividend exclusion" scenario. The discrepancy has been identified and a series of amendments were made and recently signed into legislation that rectify the statutory ambiguity for privilege periods ending on and after July 31, 2019*.

As a result, the following adjustment must be made when calculating the Allocated Dividend Exclusion on the 2019 Form CBT-100U:

If Schedule R (Dividend Exclusion), Part I is applicable to the combined group, then for Part I, line 1(a) each member must enter the total dividends and deemed dividends reported, and not eliminated on Schedule A, of all the members of the combined group. Each member will compute the dividend exclusion as though it were a group level exclusion in each member's column. Each member of the group will continue to use their respective allocation factor from Schedule J.

Or

If Schedule R (Dividend Exclusion), Part III is applicable to the combined group, then for Part III, line 1(a) each member must enter the total dividends and deemed dividends reported, and not eliminated on Schedule A, of all the members of the combined group. Each member will compute the dividend exclusion as though it were a group level exclusion in each member's column. Each member of the group will continue to use their respective allocation factor from Schedule J.

Note: If a combined group is affected by this "trapped dividend exclusion" scenario and has already filed their 2019 return, the managerial member may amend the group's 2019 Form CBT-100U and Schedule R as described above.


* The law also further simplified the application of N.J.S.A. 54:10A-4(k)(5) for combined groups for privilege periods ending on and after July 31, 2020.


Last Updated: Thursday, 11/05/20