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Division of Taxation

Allocation of Business Income

An unincorporated business that has business activities both inside and outside New Jersey, can allocate its business income to determine the amount from New Jersey sources. The business is not required to maintain a regular place of business outside New Jersey in order to allocate its income. The business must complete the Business Allocation Schedule, Form NJ-NR-A and allocate income, gains, losses, and expenses in accordance with N.J.A.C. 18:35-1.1(e) and N.J.A.C. 18:35-1.3(d)4.

Taxpayers can request a substitute method of allocation if the taxpayer believes that the Business Allocation Schedule does not provide an equitable allocation of income, gains, losses, expenses, and the business activities of the entity at issue. N.J.A.C. 18:35-1.1(e) and 18:35-1.3(d)(4). Taxpayers must submit their in writing. The submission must include the basis for the request and the substitute method of allocation the taxpayer wants to use.

Last Updated: Monday, 12/04/23