ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 447

STATE OF NEW JERSEY

DATED: NOVEMBER 6, 1997

      The Assembly Appropriations Committee reports favorably Senate Bill No. 447.

      Senate Bill No. 447 extends the carryforward period for utilizing the net operating loss deduction allowed under the corporation business tax for certain companies with advanced technology research expenditures in New Jersey. These taxpayers contributing to advanced technology research in New Jersey will be able to carry forward their net operating loss deduction for up to 15 years instead of the seven years allowed for other corporate taxpayers.

      This bill is identical to Assembly Bill No. 1506.

FISCAL IMPACT:

      The Division of Taxation in the Department of Treasury has observed that any tax revenue loss would not begin to occur until eight years following enactment of this bill (expected FY 2005). That would be the first fiscal year following the end of the maximum seven-year net operating loss carryforward period currently allowed. According to the division, the revenue loss would slowly increase after this point and reach a plateau of $12 million per year in FY 2012 and thereafter, depending on the future levels of net operating losses. The division calculates that approximately $12 million in unused operating loss deductions will be available each year to be carried forward from the eighth through the 15th year following the tax year in which the loss is actually incurred.