News & Analysis as of

Add-Back Legislation

Virginia Supreme Court Rules on Subject-to-Tax Safe Harbor to the Royalty Addback

by Morrison & Foerster LLP on

In a 4-3 decision, the Virginia Supreme Court held that the subject-to-tax safe harbor to the royalty addback was ambiguous and applies only to the extent that the royalties are actually taxed by another state. In addition,...more

While Virginia Supreme Court Holds “Subject-To-Tax” Means “Actually Taxed,” Determination of “Actually Taxed” is Relatively Broad...

by McDermott Will & Emery on

On August 31, 2017, in a 4-3 split decision, the Virginia Supreme Court (Court) affirmed a circuit court’s ruling that in order for income to qualify for the “subject-to-tax” exception to its addback statute, the income must...more

Favorable Guidance from the New Jersey Tax Court on the ‘Unreasonable’ Exception to the Related-Party Intangible Expense Add-back

by McDermott Will & Emery on

In a recent decision, the New Jersey Tax Court provided some long-awaited guidance on the “unreasonable” exception to the state’s related-party intangible expense add-back provision. In BMC Software, Inc v. Div. of Taxation,...more

Unreasonable Compensation & The Family Business

by Farrell Fritz, P.C. on

“Add-Backs”- In the course of valuing a target business, a potential buyer will want to develop an accurate picture of the target’s earnings and cash flow. In doing so, the buyer will try to normalize those earnings by...more

Department of Revenue Issues Guidance Regarding the Act 52-2013 Add-Back Provision

On February 19, 2016, the Pennsylvania Department of Revenue (“Department”) released Information Notice Corporation Taxes 2016-1 (“Notice”) regarding the Act 52-2013 add-back provision that disallows corporate net income tax...more

NJ Tax Court Denies Interest Addback Exception - Does Your Company Still Qualify?

by Reed Smith on

In a decision published April 26, 2016, the New Jersey Tax Court in Kraft Foods Global Inc. v. Director, Div. of Taxation ruled that a taxpayer couldn’t deduct interest paid to its corporate parent. The taxpayer’s...more

State Tax Fallout From Federal Proposed Related-Party Debt Regulations

Recently proposed Treasury regulations under IRC § 385 (the Proposed Regulations) would create sweeping changes to the federal income tax treatment of related-party debt. The Proposed Regulations could also have far-reaching...more

Virginia Trial Court Rules Against Taxpayer in Addback Case

by Reed Smith on

In a case of first impression, the Richmond City Circuit has determined that Virginia’s “subject to tax” exception to intangible expense addback only applies to the portion of the royalty that the recipient included in its...more

Pennsylvania Department of Revenue Releases Discussion Draft of Add-Back Notice

by Reed Smith on

On February 2, 2016, the Pennsylvania Department of Revenue (the “Department”) released its first effort at providing public guidance regarding Pennsylvania’s intangible expense add-back provision. In its Discussion Draft of...more

MoFo New York Tax Insights - Volume 4, Issue 5 - May 2013

by Morrison & Foerster LLP on

In This Issue: New York Enacts Significant Changes to Related Member Royalty Add-Back Law; Nuclear Power Plant That Produces Steam and Water to Generate Electricity Not Eligible for Investment Tax Credit; Appellate...more

Legal Alert: A Royal Opportunity: Amendments to New York’s Royalty Expense Add-back Statute Leave the Income Exclusion Intact for...

On March 28, 2013, the New York State Legislature passed budget legislation (S.2609D/A.3009D) that replaces the existing New York State and City related - party royalty add - back requirements with provisions based on the...more

PA Tax Law News - February 2013

In This Issue: PA Governor Proposes Corporate Tax Cuts; Add-Back Legislation Reintroduced; PA Supreme Court Issues Business/Nonbusiness Income Decision; Philadelphia Property Reassessments; Commonwealth Court Addresses...more

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