ENROLLED
ACT No. 16
2016 First Extraordinary Session
HOUSE BILL NO. 55
BY REPRESENTATIVES LEGER AND CARPENTER
1 AN ACT
2 To enact R.S. 47:287.82, relative to corporate income tax; to provide with respect to certain
3 corporate deductions; to require that certain deductible items and costs be added-
4 back when computing corporate income tax liability; to provide for certain
5 limitations; to provide for applicability; and to provide for related matters.
6 Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 47:287.82 is hereby enacted to read as follows:
8 ยง287.82. Corporate deductions; add-back of certain intangible expenses; interest and
9 management fees
10 A.(1) For purposes of computing a corporation's Louisiana net income, a
11 corporation shall add-back otherwise deductible interest expenses and costs,
12 intangible expenses and costs, and management fees directly or indirectly paid,
13 accrued, or incurred to, or in connection directly or indirectly with one or more direct
14 or indirect transactions, with one or more related members, except to the extent the
15 corporation shows, upon request of the secretary of the Department of Revenue that
16 the corresponding item of income was in the same taxable year either subject to a tax
17 based on or measured by the related member's net income in Louisiana or any other
18 state, or was subject to a tax based on or measured by the related member's net
19 income by a foreign nation which has an enforceable income tax treaty with the
20 United States, if the recipient was a "resident" as defined in the income tax treaty
21 with the foreign nation. For purposes of this Subsection, the term "subject to a tax
22 based on or measured by the related member's net income" shall mean that receipt
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1 of the payment by the recipient-related member is reported and included in income
2 for purposes of a tax on net income, and not offset or eliminated in a combined or
3 consolidated return which includes the payor. Any portion of an item of income that
4 is not attributed to the taxing jurisdiction, as determined by that jurisdiction's
5 allocation and apportionment methodology or other sourcing methodology, is not
6 included in income for purposes of a tax on net income and, therefore, shall not be
7 considered subject to a tax. That portion of an item of income which is attributed to
8 a taxing jurisdiction having a tax on net income shall be considered subject to a tax
9 even if no actual taxes are paid on the item of income in the taxing jurisdiction by
10 reason of deductions or otherwise.
11 (2) The adjustments required in Paragraph (1) of this Subsection shall not
12 apply to that portion of interest expenses and costs, intangible expenses and costs,
13 and management fees if the corporation establishes that the transaction giving rise
14 to the interest expenses and costs, the intangible expenses and costs, or the
15 management fees between the corporation and the related member did not have as
16 a principal purpose the avoidance of any Louisiana tax. If the transaction giving rise
17 to the interest expenses and costs, intangible expenses and costs, or the management
18 fees has a substantial business purpose and economic substance and contains terms
19 and conditions comparable to a similar arm's length transaction between unrelated
20 parties, the transaction shall be presumed to not have as its principal purpose tax
21 avoidance, subject to rebuttal by the secretary of the Department of Revenue.
22 (3) The adjustments required in this Subsection shall not apply to that
23 portion of interest expenses and costs, intangible expenses and costs, and the
24 management fees that the corporation establishes was paid, accrued, or incurred,
25 directly or indirectly, by the related member during the same taxable year to a person
26 that is not a related member. A corporation shall not be required to add to its taxable
27 income more than once any amount of interest expenses and costs, intangible
28 expenses and costs, or management fees that the corporation pays, accrues, or incurs
29 to a related member described in Paragraph (1) of this Subsection.
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1 B. Nothing in this Section shall be construed to allow any item to be
2 deducted more than once, or to allow a deduction for any item that is excluded from
3 income, or to allow any item to be included in the Louisiana taxable income of more
4 than one taxpayer.
5 Section 2. The provisions of this Act shall be applicable to all tax years beginning
6 on and after January 1, 2016.
7 Section 3. This Act shall become effective upon signature by the governor or, if not
8 signed by the governor, upon expiration of the time for bills to become law without signature
9 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
10 vetoed by the governor and subsequently approved by the legislature, this Act shall become
11 effective on the day following such approval.
SPEAKER OF THE HOUSE OF REPRESENTATIVES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
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