Understanding New Jersey CBT-100S Tax Calculation

[tccpg289]

Taxpayer is an S-Corp filing in New Jersey.

The form for NJ is CBT 100S.

On the form, it states the tax is calculated is based on "Taxable income subject to federal corporate taxation" on line 5.

This tax appears to be $0 for regular operating income taxation at the entity, meaning with $0 federal income tax on the Federal 1120-S, there is only a minimum tax due in New Jersey as well.

I wanted to confirm I was reading this correctly as it seems somewhat ambiguous. Ultimately, it seems that if there is only operating income at the entity, then none of that income is going to be taxed in New Jersey, with the exception of the minimum tax due.

Is there a location in the software to toggle this and ensure it is being calculated properly?

[IRonMaN]

I don't do New Jersey so I don't know anything about that form, but have you reviewed the form instructions to see if the number flow makes sense?

[Accountant-Man]

If it is an S corp for federal then there wouldn't be any federal income tax.

[tccpg289]

Perfect, just wanted to confirm. The instructions are a bit odd / unconventional

[Terry53029]

I don't do NJ, but from 2024 instructions you seem to be correct. This is from 2024 instructions. Here is link: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.nj.gov/treasury/taxation/pdf/current/cbt/cbt100sins.pdf

"In general, an S corporation that files Form CBT-100S pays only the statutory minimum tax. However, if it has income that is taxed for federal purposes, the S corporation will owe the greater of the tax based on taxable income or the statutory minimum tax. See Page 1 Line-by-Line instructions for more information."

[Accountant-Man]

Not sure what you mean, but a federal S corp needs to separately elect NJ S corp status.

In other words, you can be a federal S and NOT a NJ S. Since NJ S's have a minimum tax, using NJ S status means that the NJ taxable income passes to the owner's NJ 1040, potentially creating more income tax.

NJ S corp minimum plus NJ 1040 income tax on the passthrough income.

[tccpg289]

New Jersey no longer requires a separate S-Corp election:

https://business.nj.gov/recent/new-jersey-s-corporation-elections-have-been-eliminated#:~:text=A%20r....

They also allow PTE deductions, so I would think it is best to make the S-Corp election if looking to take advantage of the PTE.