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  • NJ A1478
  • Allows New Jersey gross income taxpayers to elect to deduct certain losses from certain investment arrangements discovered to be criminally fraudulent.
Introduced
(1/27/2016)
In Committee
(1/27/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill provides relief for New Jersey gross income taxpayers who sustain monetary losses as a result of certain investment arrangements that are discovered to be criminally fraudulent. Under the bill, a taxpayer who sustains a qualified loss as a result of an investment in an investment scheme that is discovered to be criminally fraudulent and who is eligible to claim that loss as a theft loss deduction for federal income tax purposes may elect to deduct from the taxpayer's New Jersey gross income certain investment income reported by the taxpayer in prior taxable years. Specifically, the bill permits taxpayers to deduct interest and dividends, capital gains or any other category of income that is reported as gross income and directly attributable to the fraudulent arrangement determined to be the source of the theft loss deduction. The provisions of the bill stipulate that the deduction is limited to qualified losses sustained in calendar year 2008, 2009, or 2010, and may only be applied against investment income reported in each of the three taxable years prior to the year the qualified loss is discovered. The amount of the deduction excludes any income withdrawn, reimbursed, or otherwise received as cash, or as a cash equivalent, from the investment prior to discovery. The bill grants taxpayers an 18 month window of opportunity to file amended returns to claim the deduction. Eligible taxpayers who elect to amend prior tax returns must file amended returns with the Director of the Division of Taxation in the Department of the Treasury on or after the first day of the sixth month but before the last day of the second year following the last day of the calendar year in which the loss is discovered. Amended returns filed between those dates may be eligible for interest on the amount of overpayment determined to be due. Under current law, New Jersey gross income taxpayers who sustain a loss as a result of a fraudulent investment arrangement may elect to deduct their loss as a theft loss during the year the loss is discovered. The deduction may, however, only be applied against the category of "net gains" or income from the disposition of property, and may not be carried back or forward and applied against past or future tax liabilities. Additionally, investment income reported from the fraudulent investment arrangement in prior taxable years is considered constructively received. Taxpayers are prohibited from amending prior tax returns to deduct constructively received investment income.
Not specified
Introduced, Referred to Assembly Appropriations Committee  (on 1/27/2016)
 
 
Date Chamber Action Description
1/27/2016 A Introduced, Referred to Assembly Appropriations Committee
Date Motion Yea Nay Other
None specified