Add-Back Legislation Reintroduced

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Representative Dave Reed (R-Indiana Co.), with more than fifty co-sponsors, has reintroduced legislation (H.B. 440) that would require corporations preparing PA Corporate Net Income Tax returns to add-back any “intangible expense or cost” paid, accrued or incurred directly or indirectly in a transaction with an affiliated entity. Credit would be provided in some instances when the recipient would pay tax on the income. The legislation also would provide a foreign treaty exception and a “valid business purpose” exception.

 

In addition, the proposed legislation would phase-out the cap on net loss deductions and phase-down the CNI rate from 9.99% to 6.99%.

 

Similar legislation passed the PA House last year by a healthy margin but died in the Senate. Representative Reed appears to be targeting this bill for passage with the 2013-14 state budget

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Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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