SENATE, No. 447

STATE OF NEW JERSEY

INTRODUCED JANUARY 18, 1996

By Senators SINGER and McGREEVEY

An Act extending for certain taxpayers the carryforward of the net operating loss deduction under the corporation business tax, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. a. Notwithstanding the provisions of paragraph (6) of subsection k. of section 4 of P.L.1945, c.162 (C.54:10A-4) to the contrary, a taxpayer that has for the fiscal or calendar accounting period (referred to hereafter as the "tax year"), qualified research expenses as defined in section 41 of the federal Internal Revenue Code of 1986, 26 U.S.C. § 41, as in effect on June 30, 1992, paid or incurred for research conducted in this State, in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, environmental technology, or medical device technology, shall be allowed to carry over a net operating loss for that tax year to each of the 15 tax years following the year of the loss.

    b. As used in this section:

    "Advanced computing" means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment;

    "Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials;

    "Biotechnology" means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge ;

    "Electronic device technology" means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, or data and digital communications and imaging devices;

    "Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, or the development of alternative energy sources; and

    "Medical device technology" means a technology involving any medical equipment or product (other than a pharmaceutical product) that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration.

    2. This act shall take effect immediately and section 1 shall apply to tax years beginning on or after January 1 next following enactment.

STATEMENT

    This bill extends for certain companies with advanced technology research expenditures in New Jersey the carryforward of the net operating loss deduction under the corporation business tax.

    Taxpayers contributing to advanced technology research in New Jersey will be able, under this bill, to carry forward their net operating loss deduction for up to 15 years instead of the seven years allowed for other taxpayers. High technology, research intensive companies typically do not show a profit during their early years and often cannot fully utilize the carryforward of the net operating loss deduction during the first seven years following a net operating loss.

Provides 15 year net operating loss deduction carryforward under corporation business tax for certain high-technology companies.