MS HB635

Amends Mississippi Code Section 27-7-17 to define "valid business purpose" as business motivation that improves the taxpayer's economic position apart from tax effects, with further definition by regulation.

Requires taxpayers to add back otherwise deductible interest expenses and intangible expenses paid to related members, unless the expenses meet specific exceptions.

Allows deduction of related-member expenses if the related member paid them to an unrelated party in the same income year, or if the transaction has valid business purpose, economic substance, arm's-length terms, and the related member is not primarily engaged in acquiring or managing intangible property.

Clarifies that if development or purchase costs of intangible property were shared, the paying party must have been compensated at fair market arm's-length price, or the expenses are not deductible.

Effective January 1, 2012.