The New Jersey instructions for Schedule NJ-BUS-1 Part IV say to enter the information "for each source of income or loss." I think that makes it pretty clear that a property with a net loss should be included. The instructions also say to enter the "gain or (loss) from each type of property." And the form itself says that line 4 is "net income or (loss)." So they obviously intend a net loss to be entered.
There is nothing in the instructions to indicate that it makes any difference whether the property is in New Jersey or another state. As I said yesterday, because you are a New Jersey resident you have to report all of your income on your New Jersey tax return, no matter where the income is from.
If properties A and B are your only rental properties, it obviously will not make any difference in your tax if you omit them, since the net loss becomes zero on Form NJ-1040. But I think it's clear that New Jersey expects the out-of-state properties with losses to be shown on Schedule NJ-BUS-1.
I don't understand the comment about future gains offsetting these 2023 losses. That doesn't happen on the New Jersey tax return because losses are not carried over. But if the CPA thinks that omitting the properties "may become an issue" in the future, then why take a chance of creating an issue?
