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Upcoming Deadline: Selling NJ NOLs and R&D Tax Credits

The mission of the New Jersey Economic Development Authority (“NJEDA”) is to assist small and mid-sized businesses through incentives and initiatives to grow and retain jobs and revitalize communities throughout the state.

One of the more popular programs is the Technology Business Tax Certificate Transfer (NOL) Program. The program’s annual allotment of $60 million in tax benefits helps fund innovation and creativity for those who participate in the program. The program enables qualified technology and biotechnology to sell a percentage of net operating losses (NOL) and research and development (R&D) tax credits to unrelated profitable corporations.

To be eligible a company must meet the following requirements:

  • Only technology and biotechnology companies whose primary business involves the provision of a scientific process, product or service are eligible.
  • An eligible company must own, have filed for, or have a license to use protected, proprietary intellectual property (defined as a patent or a registered copyright).
  • An eligible company cannot have had positive net operating income on either of its last two full-year income statements according to GAAP.   In addition, an eligible company cannot have a parent company with positive net operating income, or be part of a consolidated group of affiliates for federal income tax purposes with positive net operating income
  • An eligible company must have at least one full-time employee working in New Jersey if incorporated or formed less than three years, five full-time employees in New Jersey if incorporated or formed more than three years but less than five years, or 10 full-time employees in New Jersey if incorporated or formed more than five years
  • An eligible company must have financial statements for the two most recent full years of operation compiled, reviewed or audited by an independent CPA firm and prepared according to US GAAP.

The application and all required attachments and schedules are due by June 30th, 2020.

To learn more about how Withum can help strategically partner with you regarding this and other NJEDA initiatives, please contact a member of Withum’s professional team.

Over the past few years, Withum’s life science and technology clients have received over $20 million from the program, which will be reinvested in the state, spur innovation and lead to economic growth in New Jersey. Our Life Science and Technology groups serve a diverse client base throughout the state and focus on partnering with them from early-stage to maturity. Our expertise in this area strengthens that partnership and puts your business in a Position of Strength.

Author: Gianluca Panarelli, CPA, MST | gpanarelli@withum.com

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