New Jersey and Federal depreciation and
expense deduction limits are different. A
New Jersey depreciation adjustment may
be required for assets placed in service
on or after January 1, 2004.
If you sold an interest in a rental property,
you may be required to use a New Jersey
adjusted basis.
There is no distinction between active and
passive losses for New Jersey purposes.
You cannot carry back or carry forward
such losses when reporting income on
Form NJ-1040. You can deduct Federal
passive losses in full in the year incurred
against any gain within the same category
of income, but only in the year that
it occurred.
http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf