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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