La. Taxpayers Deserve Opportunity To Support Deductions

Law360 (December 8, 2020, 4:28 PM EST) -- The Louisiana Department of Revenue has recently significantly increased its use of one of its corporate income tax regulations to disallow legitimate interest expense deductions. Clients have recently been reaching out to us concerned with outsized audit adjustments based on the disallowance of interest expense deductions clearly incurred to produce apportionable income.

Similar to other states, Louisiana law permits the department to attribute a taxpayer's interest expense deductions to different classes of income, e.g., nontaxable, allocable and apportionable income. As a result, a corporate taxpayer undergoing a Louisiana income tax audit is frequently confronted with preliminary workpapers that disallow interest expense...

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