29 Apr Can I offset gains with losses on my N.J. tax return?

Q. I have capital gains from 2021 and substantial net operating capital losses from prior years. I understand that in New Jersey you can deduct these losses from capital gains but not other wages. I can’t figure out how to apply them to Schedule NJ-BUS-2. What am I missing?
— Taxed out

A. Ah, taxes.

Unfortunately, you understand the tax law incorrectly for New Jersey.

New Jersey does not allow you to carry capital losses forward to offset capital gains in future years, said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.

That’s why you don’t see it on the form.

Bagner said effective for taxable years beginning on or after Jan. 1, 2012, New Jersey created the “Alternative Business Calculation Adjustment,” or ABCA, which allows an accumulated loss to be applied against four categories of income: income/loss from sole proprietorships, rentals and royalties, partnerships and S Corporations.

“So if you created an AMA which allows 50% of the loss to be carried forward and have income in these categories in future years, you can offset the income with the carryforward AMA,” Bagner said.

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This story was originally published on April 29, 2022.

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