Jan 29, 2018
From KPMG TaxWatch
Recently, the Louisiana Department of Revenue issued a notice of intent to adopt a regulation providing guidance on the related party addback requirements effective for tax years beginning on or after January 1, 2016.
The regulation provides definitions for key terms including, but not limited to, “intangible expenses,” “management fees,” “related entity,” and “indirectly paid.” These terms are not defined in the statute. The regulation also provides guidance on qualifying for the five exceptions to the addback requirements - a subject to tax exception, an exception for when the related member is subject to tax in a foreign nation that has a tax treaty with the U.S., an exception for when the transaction giving rise to the expense does not have as a principal purpose the avoidance of Louisiana tax, a so-called conduit exception, and an exception for when the add back would be unreasonable. Numerous examples in the regulation explain the exceptions and provide details on the documentation required to substantiate that a taxpayer qualifies for the exceptions. Comments to the regulation are being accepted through February 23, 2018. Please stay tuned to TWIST for future updates on this regulation.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.