MS HB1568

Adds definition of "valid business purpose" to Mississippi income tax law, meaning business purposes that improve the taxpayer's economic position apart from tax effects and must be defined further by regulation.

Requires taxpayers to add back (disallow deductions for) interest expenses and intangible expenses paid to related members unless the taxpayer can establish the related member paid those amounts to an unrelated third party during the same year.

Allows deductions for related-member transactions only if they have valid business purpose and economic substance, contain arm's-length terms comparable to unrelated parties, tax avoidance is not a significant motivation, and the related member is not primarily engaged in acquiring or managing intangible property.

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

Effective date: January 1, 2014.