NEW JERSEY cannot require power companies to add back some taxes paid to other states when calculating their New Jersey incomes, the state tax court said in December.
Duke Energy sells crude oil, refined products, liquid petroleum gas, residual fuels and coal in New Jersey and, therefore, is subject to corporate income tax in New Jersey. The state starts with the net income a company reports for federal income tax purposes and then makes adjustments. A company must add back income taxes paid to other states.
Duke pays electric utility taxes in North Carolina that are based on gross receipts. It also pays a tax in South Carolina that is measured in part by the value of its real property in the state.
The New Jersey tax court said neither tax is an income tax that has to be added back. The decision is in a case called Duke Energy Corporation v. Director, Division of Taxation.
The same court held in October in a case called PPL Electric Utilities Corp. v. Division of Taxation that the parent company of Pennsylvania Power & Light does not have to add back a gross receipts or capital stock tax that it pays in Pennsylvania.
Keith Martin in Washington