N.J.A.C. 18:7-21.16 - World-wide Group Election

(a) A worldwide election shall be made by the managerial member of the combined group. The election shall be made on an original, timely filed return or as otherwise required, in writing, by the Director. A return shall be considered timely if it is filed on or before the original due date or extended due date for the filing of the managerial member's return. No return filed after this date, whether filed with an application for abatement or otherwise, shall constitute a valid worldwide election. The election, to be valid, must indicate in the manner required by the Director that every corporation that is a member of the combined group has agreed to be bound by such election, including an agreement by each member of the group that such election shall apply to any member that subsequently enters the group and an agreement that each member continues to be bound by the election in the event that such member is subsequently the subject of a reverse acquisition as described at U.S. Treas. Reg. § 1.1502-75(d)(3).

(b) A worldwide election shall be binding for, and applicable to, the group privilege period for which it is made and for the next five group privilege periods. Any corporation entering the unitary combined group after the year of the election shall be deemed to have consented to the application of the election and to have waived any objection thereto. Reverse acquisition rules based on the Federal rules set forth at U.S. Treas. Reg. 1.1502-75(d)(3) shall be applied in determining whether a corporation is bound by a worldwide election.

(c) The renewal of an election shall be made on an original, timely filed return by the combined group's managerial member. A renewal shall be effective for the first privilege period after the completion of the six privilege periods for which the prior election was in place. If a prior worldwide election is not affirmatively renewed after six privilege periods, the election shall terminate for the subsequent privilege period, but a new worldwide election may be made thereafter by election.

(d) If either the water's-edge method or affiliated group method was used to account for the combined group members' income and allocation data in the preceding privilege period and the worldwide method is to be used for the combined group's combined return for the current privilege period, adjustments to the income and allocation data of the group members shall be made to prevent income and allocation data from being omitted or duplicated.

(e) A managerial member may not make a worldwide election and an affiliated group election for the same group privilege period and may not make a worldwide election for any year in which an affiliated group election is in effect.

(f) An election shall constitute consent to the production of documents or other information that the Director reasonably requires. The documents shall be provided in language and forms acceptable to the Director.

(g) For changes in the composition of the combined group, the members shall notify the Director as set forth at N.J.A.C. 18:7-21.29.

(h) For a world-wide group, pursuant to N.J.S.A. 54:10A-4(kk), the combined group shall include all of the income and attributes of such members regardless of how or whether such members file Federal returns or report or include such income in Federal taxable income for Federal purposes and without regard to any exemption or exclusion from Federal taxable income pursuant to the terms of a tax treaty; provided, however, any deductions allowed pursuant to the Federal Internal Revenue Code that are allowable pursuant to the Corporation Business Tax Act (1945), P.L. 1945, c. 162 (N.J.S.A. 54:10A-1 et seq.) that would apply to a U.S. corporation, but for which a non-U.S. corporation is prohibited for Federal corporation income tax purposes because said income was either not included in Federal taxable income for any reason or because said corporation is a non-U.S. corporation, shall be allowed for such non-U.S. corporation members of the combined group for New Jersey Corporation Business Tax purposes as though said non-U.S. corporation members were U.S. corporations.

(i) The election can be revoked prior to the expiration of the binding period by written request to the Director of Taxation for reasonable cause including, but not limited to, a substantial change in ownership, members of the combined group or principal business, or changes in tax law, regulation, or policy.