332: Tiered Subsidiary Dividend Pyramid Tax Credit (2024)
New Jersey · NJ Division of Taxation · Used for tax years 2024
New Jersey Form 332 calculates the Tiered Subsidiary Dividend Pyramid Tax Credit for Corporation Business Tax. It reports subsidiary dividends, the subsidiary’s tax rate and allocation factor, and the allowable credit for the current tax period.
Who files this form
Use 2024 Form 332 to calculate the Tiered Subsidiary Dividend Pyramid Tax Credit for qualifying dividends received from a subsidiary that received those dividends from other subsidiaries.
- The taxpayer must own 50% or more of the subsidiary’s voting stock and all other classes of stock.
- The distributing subsidiary must have filed a timely New Jersey Corporation Business Tax return, included the qualifying dividends in its allocated entire net income, and paid New Jersey tax on them. For this credit, tax paid also includes tax the subsidiary would have paid without tax credits, prior year net operating losses, or net operating losses.
- For a combined group, the managerial member completes Form 332. The group is treated as one taxpayer and cannot claim the credit for taxes paid by another member of that same group.
Include the appropriate credit form in the year the credit was earned, even if you are not claiming the credit on your return.
What you'll need
Have the following information available to complete Form 332:
- Your name as shown on the return, federal ID number, and unitary ID number, if applicable.
- For combined group filers, the member’s name and federal ID number.
- Each qualifying subsidiary’s name and federal ID number.
- Dividends received from each subsidiary and the amount not excluded by the dividend exclusion.
- Each subsidiary’s tax rate and New Jersey allocation factor, along with information about tax paid or tax that would have been paid without credits or losses.
- Your tax liability from CBT-100 or CBT-100S, page 1, line 2a, or CBT-100U, Schedule A, Section II, Part III, line 4a, column (c).
- Other tax credits used on the current year’s return.
How to file
- Enter your identifying information and select whether you are a combined group or separate return filer. For a combined group, the managerial member completes the form.
- Complete Part I for qualifying subsidiary dividends. Separate return filers skip column 1 and begin with column 2.
- Calculate column 5 by multiplying column 3b by columns 4a and 4b, taking into account the instructions about tax paid or tax that would have been paid without credits or losses. Enter the total of column 5 on line 1.
- Complete Part II. Enter tax liability on line 2 and other credits used on line 3. Subtract line 3 from line 2, entering zero if the result is zero or less.
- Enter the smaller of line 1 or line 4 on line 5 and on Schedule A-3, Part I, of CBT-100, CBT-100U, or CBT-100S.
- Include the completed Form 332 with your CBT-100, CBT-100S, or CBT-100U return to validate the claim.
Common mistakes
- Including ineligible dividends. Do not include dividend income from a subsidiary that has not filed and paid New Jersey tax on those dividends, using the form’s definition of tax paid.
- Claiming credit for dividends already eliminated. Dividends and deemed dividends already eliminated in Schedule A, Part I or Part II, column (b), do not qualify.
- Claiming another combined group member’s tax. Members of the same combined group are treated as one taxpayer.
- Completing the wrong column. Separate return filers must skip Part I, column 1.
- Using the credit against the surtax or carrying it forward. Neither is allowed, and the credit is not refundable.
- Leaving out the credit form. Include it in the year the credit was earned, even if you are not claiming the credit.
Questions people ask
Does Form 332 replace Schedule RT?
Yes. Form 332 replaces Schedule RT, Allocated Tiered Subsidiary Dividend Exclusion.
Can the credit reduce my tax to zero?
Yes. It may be applied against the minimum tax and can reduce liability to zero, but not below zero. It cannot be used against the surtax.
Can I get a refund or carry unused credit forward?
No. The credit is not refundable, and excess credit cannot be carried forward.
What if the subsidiary used tax credits or losses?
The credit calculation includes tax the subsidiary would have paid without tax credits, prior year net operating losses, or net operating losses.
Can a combined group claim this credit?
Yes, for qualifying dividends from subsidiaries outside that combined group that meet the filing and tax-payment requirements. It cannot claim the credit for taxes paid by another member of the same combined group.