2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:287.82. Corporate deductions; add-back of certain intangible expenses; interest and management fees

RS 47:287.82 - Corporate deductions; add-back of certain intangible expenses; interest and management fees
A.(1) For purposes of computing a corporation's Louisiana net income, a corporation shall add-back otherwise deductible interest expenses and costs, intangible expenses and costs, and management fees directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions, with one or more related members, except to the extent the corporation shows, upon request of the secretary of the Department of Revenue that the corresponding item of income was in the same taxable year either subject to a tax based on or measured by the related member's net income in Louisiana or any other state, or was subject to a tax based on or measured by the related member's net income by a foreign nation which has an enforceable income tax treaty with the United States, if the recipient was a "resident" as defined in the income tax treaty with the foreign nation. For purposes of this Subsection, the term "subject to a tax based on or measured by the related member's net income" shall mean that receipt of the payment by the recipient-related member is reported and included in income for purposes of a tax on net income, and not offset or eliminated in a combined or consolidated return which includes the payor. Any portion of an item of income that is not attributed to the taxing jurisdiction, as determined by that jurisdiction's allocation and apportionment methodology or other sourcing methodology, is not included in income for purposes of a tax on net income and, therefore, shall not be considered subject to a tax. That portion of an item of income which is attributed to a taxing jurisdiction having a tax on net income shall be considered subject to a tax even if no actual taxes are paid on the item of income in the taxing jurisdiction by reason of deductions or otherwise.
(2) The adjustments required in Paragraph (1) of this Subsection shall not apply to that portion of interest expenses and costs, intangible expenses and costs, and management fees if the corporation establishes that the transaction giving rise to the interest expenses and costs, the intangible expenses and costs, or the management fees between the corporation and the related member did not have as a principal purpose the avoidance of any Louisiana tax. If the transaction giving rise to the interest expenses and costs, intangible expenses and costs, or the management fees has a substantial business purpose and economic substance and contains terms and conditions comparable to a similar arm's length transaction between unrelated parties, the transaction shall be presumed to not have as its principal purpose tax avoidance, subject to rebuttal by the secretary of the Department of Revenue.
(3) The adjustments required in this Subsection shall not apply to that portion of interest expenses and costs, intangible expenses and costs, and the management fees that the corporation establishes was paid, accrued, or incurred, directly or indirectly, by the related member during the same taxable year to a person that is not a related member. A corporation shall not be required to add to its taxable income more than once any amount of interest expenses and costs, intangible expenses and costs, or management fees that the corporation pays, accrues, or incurs to a related member described in Paragraph (1) of this Subsection.
B. Nothing in this Section shall be construed to allow any item to be deducted more than once, or to allow a deduction for any item that is excluded from income, or to allow any item to be included in the Louisiana taxable income of more than one taxpayer.
Acts 2016, 1st Ex. Sess., No. 16, §1, eff. March 10, 2016.
NOTE: See Acts 2016, 1st Ex.Sess., No. 16, §2, regarding applicability.