The Louisiana Department of Revenue has proposed a new regulation expansively interpreting Louisiana’s recently enacted related party expense addback statute.  

  • Earlier this year, Louisiana enacted a new statute requiring taxpayers to add back interest expenses, intangible expenses and management fees paid to related members, subject to certain exceptions.
  • The Proposed Regulation seeks to adopt

Recently proposed Treasury regulations under IRC § 385 would create sweeping changes to the federal income tax treatment of related-party debt. The Proposed Regulations could also have far-reaching effects for state income tax purposes, particularly on the deductibility of intercompany interest expenses in separate company reporting states.

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