The changes to the New Jersey Corporation Business Tax Act under P.L. 2018, c. 48 and P.L. 2018, c. 131, modified the net operating loss subtraction calculation from a pre-allocation to post-allocation basis for tax years ending on and after July 31, 2019. As part of the change to a post-allocation net operating loss subtraction method, the chapter laws include a statutory conversion formula for unused unexpired pre-allocation net operating loss carryovers using the allocation factor from the last tax year ending prior to the change. For example, a business would use the allocation factor calculated on Schedule J of Form CBT-100 for a tax year that ended on July 31, 2018, if the business’s next tax year ends July 31, 2019.
In updating Form-500 for the 2018 returns, the Division of Taxation created Worksheet 500-P to assist taxpayers calculating the converted net operating loss carryovers for the 2019 returns. The 2018 CBT-100, 2018 CBT-100S, and 2018 BFC-1 are the last tax returns on which the net operating loss subtraction calculation is on a pre-allocation basis.