MS SB2723

Amends Mississippi Code Section 27-7-17 to define "valid business purpose" for income tax deductions as business activities or transactions that improve the taxpayer's economic position apart from tax effects.

Requires taxpayers to add back (disallow deductions for) interest expenses and intangible expenses paid to related members, with limited exceptions for expenses paid to unrelated parties or transactions meeting strict requirements.

Allows deductions for related-member expenses only when the transaction has valid business purpose, economic substance, arm's-length terms, and the related member is not primarily engaged in intangible property acquisition or management.

Specifies that if a related member shared in development or purchase costs of intangible property, the paying party must have been compensated at fair market value or the expenses become non-deductible.

Becomes effective January 1, 2012.