Glossary

Affiliated Business - an entity which directly or indirectly owns or controls 5% or more of the voting rights or 5% more of the value of all classes of stock of both the taxpayer receiving the benefits and a corporation surrendering the benefits.

Allowable Expenditures – The proceeds of the sale of the tax benefit certificate must be used to fund all expenses incurred in connection with the operation of the new or expanding emerging technology or biotechnology company in the State, including, but not limited to, the expenses of fixed assets, such as the construction, acquisition and development of real estate, materials, startup, tenant fit-out, working capital, salaries, research and development expenditures and any other expenses determined by the NJEDA to be necessary to carry out the purposes of the New Jersey Emerging Technology and Biotechnology Financial Assistance Program.

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

Biotechnology Company - An emerging corporation that has a headquarters or base of operations located in New Jersey and that is engaged in the research, development, production or provision of biotechnology for the purpose of developing or providing products or processes for specific commercial or public purposes, including, but not limited to, medical, pharmaceutical, nutritional, and other health-related purposes, agricultural purposes, and environmental purposes; or a corporation that has a headquarters or base of operations located in New Jersey and that is engaged in providing services or products necessary for such research, development, production or provision.

Buying Business – A business with the financial ability to purchase the Unused Net Operating Loss Carryover and/or Research and Development Tax Credits from an unaffiliated selling business. For the purpose of this definition, the test of affiliation is whether the same entity directly or indirectly owns or controls 5% or more of the voting rights or 5% or more of the value of all classes of stock of both the selling and buying businesses.

Certificate – The certificate issued by the Division of Taxation certifying to the selling business amounts of unused net operating loss carryover and/or unused research and development tax credits carryovers.

Net Operating Loss – The excess of the deductions over the gross income used in computing entire net income in a specific year without regard to the net operating loss carry over to that year and the dividend exclusion. Reference is made to NJSA 54:10A-4(k)(6).

Selling Business – A technology and/or Biotechnology Company that has Unused Net Operating Loss Carryover and/or Unused Research and Development Tax Credits which it wishes to "sell".

Technology Business – An emerging corporation that has a headquarters or base of operations located New Jersey, and that employs some combination of the following: highly educated and/or trained managers and workers employed in New Jersey who use sophisticated scientific research service or production equipment, processes or knowledge to discover, develop, test, transfer or manufacture a product or service.

Research and Development Tax Credits – A tax credit against Corporation Business Tax liabilities for taxpayers who have performed qualified research activities in New Jersey. It is calculated in the same manner as the Federal tax credit for increasing research activities. The credit is base on qualified expenditures in New Jersey beginning on or after January 1, 1994. It provides a credit of 10% of the excess qualified research expenses over a base amount plus 10% of the basic research payments. Taxpayers must complete Form 306 to claim their credit. The amount of credit claimed for any single tax year cannot exceed 50% of that year’s tax liability prior to the consideration of this credit and it cannot reduce the tax liability below the statutory minimum. Reference is made to NJSA 54:10A-5.24.

Unused Net Operating Loss Carryover – Net operating loss for any tax year ending after June 30, 1984 shall be a net operating loss carry over to each of sever years following the loss. The amount of net operating loss for any taxable year (the "loss year") shall be carried to the earliest taxable year. The portion of loss which shall be carried is the excess, if any, of the amount of the loss over the sum of the entire net income, computed without regard to the dividend exclusion. Reference is made to NJSA 54:10A-4(k)(6)(B).

Unused Research and Development Tax Credits – The amount of tax credit otherwise allowable which can not be applied because it would reduce the tax liability below 50% of the liability prior to consideration of the credit or it reduces the tax below the statutory minimum. If necessary, the unused loss may be carried over to the seven accounting years following a credit’s tax year. Reference is made to NJSA. 54:10A-5.24(b).
 

Home |  Selling Losses | Buying Losses | ProvenResults   
  The Law | Contact Us  | About Us |  Glossary

Copyright © 1999-2006 Tax Transfer Corporation of New Jersey All Rights Reserved.
Revised: 2/08/2006