N.J. Admin. Code § 18:35-2.1

Current through Register Vol. 56, No. 19, October 7, 2024

Section 18:35-2.1 - Interest and gains from certain obligations; taxable status of State and Federal securities

(a) Gross income shall not include interest on obligations:

1. Issued by or on behalf of New Jersey or any county, municipality, school or other district, agency, authority, commission, instrumentality, public corporation (including one created or existing pursuant to agreement or compact with this or any other state), body corporate, and politic or political subdivision of New Jersey:

i. Specifically included within this subsection is interest received with respect to Certificates of Participation issued in connection with lease-purchase agreements, provided that the liability for payments of principal and interest is solely that of a New Jersey governmental entity;

2. Those obligations which are statutorily free from State or local taxation under any act of New Jersey or under the laws of the United States.

(b) Under the authority of 54A:9-17, which empowers the Division to require such facts and information to be reported as are deemed necessary to enforce the provisions of the Gross Income Tax Act, every person required to file a resident New Jersey Gross Income Tax Return (NJ-1040) for a taxable year shall report on such return the amount of interest received or accrued during the taxable year which is exempt from the gross income tax.

(c) The term net gains or income shall not include gains or income derived from obligations whose interest is exempt from tax under (c)1 below. Losses from sales of such exempt securities shall not be taken into account in the computation of gains from disposition of property. A list of various securities follows, together with an indication of whether the interest and the gains therefrom are taxable or exempt:

1. Federal securities:
Security	Interest
i.	Asian Development Bank	T
ii.	Bank for Cooperatives	E
iii.	Environmental Financing Authority	T
iv.	Export-Import Bank of the United States ("Eximbank"):
(1)	Series 1978--B debentures	E
(2)	Participation certificates (reversal of Counsel opinion dated 8/29/67)	T
v.	Federal Deposit Insurance Corporation	E
obligations
vi.	Federal Housing Authority (F.H.A.)	E
vii.	Farmers Home Administration	E
viii.	Federal Financing Bank	E
ix.	Federal Home Loan Bank	E
x.	Federal Home Loan Mortgage Corp.	T
xi.	Federal Intermediate Credit Banks	E
xii.	Federal Land Banks	E
xiii.	Federal National Mortgage Association (Fannie Mae):
(1)	Interest on bonds and debentures	T
(2)	Guaranteed Participation Certificates	T
xiv.	Federal Savings and Loan Insurance Corporation	E
obligations
xv.	General Services Administration	E
xvi.	Government National Mortgage Association	T
(Ginnie Mae)
xvii.	Guam	E
xviii.	H.U.D./New Communities	E
xix.	H.U.D. Public Housing Notes and Bonds (Tax free in State of issuance)
(In state of issuance)	E
(1)	If issued in the District of Columbia,
Puerto Rico, the Virgin Islands, they
are exempt from all State tax.
(If issued in other states)	T
xx.	Inter-American Development Bank Bonds	T
xxi.	International Monetary Fund and Bank for	T
Reconstruction and Development (World Bank)
xxii.	Jonathan Development Corporation (Obligations	T
guaranteed under New Communities Act of 1968)
xxiii.	Merchant Marine	E
xxiv.	Panama Canal Zone Bonds specifically exempt from tax by 31 U.S.C. §§ 744 and 745	E
xxv.	Production Credit Associations	E
xxvi.	Puerto Rico Water Resources--4.2 per cent bonds	E
due 1/1/89--Interest on Bonds
xxvii.	Puerto Rico	E
xxviii.	R.F.K. Stadium Bonds	T
xxix.	Small Business Administration	E
xxx.	Student Loan Marketing Association	E
xxxi.	Tennessee Valley Authority	E
xxxii.	U.S. Postal Service	E
xxxiii.	U.S. Treasury	E
xxxiv.	U.S. Treasury Bills	E
xxxv.	USAVE Certificates--Farmers Home Administration	Partially
Insured Loan Notes
xxxvi.	Virgin Islands	E
xxxvii.	Washington Metropolitan Area Transit Authority	T
Bonds

(d) Gross income shall include interest and gains from obligations issued by or on behalf of other states of the United States, and foreign governments.

N.J. Admin. Code § 18:35-2.1

Amended by 48 N.J.R. 295(a), effective 2/16/2016