Schedule G-2: Claim for Exceptions to Disallowed Interest and Intangible Expenses and Costs (2025)
New Jersey · NJ Division of Taxation · Used for tax years 2025
New Jersey Schedule G-2 is used to claim exceptions to the required addback of interest and intangible expenses and costs reported on Schedule G. It records related member or lender information and calculates exception amounts to carry to Schedule G.
Who files this form
Use Schedule G-2 to claim the listed exceptions for interest or intangible expenses and costs reported on Schedule G of Form CBT-100, CBT-100U, CBT-100S, or BFC-1.
- Part I covers qualifying interest involving related members in treaty countries, related members whose interest income is taxed, related corporations filing in New Jersey, or independent lenders where the taxpayer guarantees the debt.
- Part II covers qualifying intangible expenses and costs, including intangible interest expenses and costs, involving related members in treaty countries or related corporations filing in New Jersey.
Each exception has its own eligibility conditions. Complete the applicable exception only if you meet those conditions.
What you'll need
Have your Schedule G and the information required for the exception you claim, including applicable tax rates, allocation factors, and related-member income figures.
Depending on the exception, you will also need:
- Related-member details: Name, federal ID number, and fiscal period where requested.
- Treaty exceptions: Nation, treaty description, allocation factor, tax rate, tax paid, and amount allowed as a deduction.
- Part I, Exception 2: A copy of the return on which the related member reported the interest income. Submit it with your return.
- Part I, Exception 4: A copy of the loan agreement showing that you guarantee the debt. Submit it with your return.
If more space is needed, enclose a schedule listing the information.
Common mistakes
- Combining related members without separate calculations: Complete Part I, Exception 2 or 3, or Part II, Exception 2 separately for each related member, then enter the combined total in the applicable Total Exceptions Chart.
- Claiming overlapping interest exceptions: Part I, Exception 3 is not available for a related member if an exception for that member was determined under Exception 1 and/or 2.
- Continuing after a stop instruction: For Part I, Exception 3 and Part II, Exception 2, if the related member's entire net income on line 2 is zero or less, stop and enter zero as the exception amount on line 8.
- Claiming an unlisted exception on the return: Other exceptions require a separate Claim for Refund, Form A-3730, with all facts and applicable supporting evidence.
Questions people ask
Does a tax treaty alone qualify a payment for an exception?
No. The related member must also be taxed in the foreign nation on a tax base that includes the payment. Its income from the transaction must be taxed at an effective rate no more than three percentage points below New Jersey's rate applied to taxable interest.
Do transactions within a combined group need an exception?
No exception is required when the transactions are between members included on the same New Jersey combined return and the amounts reported on Schedule A are also eliminated on Schedule A.
Where do I enter the total exceptions?
Enter the Part I total on line (b) of Schedule G, Part I. Enter the Part II total on line (b) of Schedule G, Part II.
Where can I find definitions of related members and intangible expenses?
The form directs you to the Schedule G instructions for Form CBT-100, CBT-100U, CBT-100S, or BFC-1 for definitions of a related member, intangible expenses and costs, intangible interest expenses and costs, and intangible property.