Form R-6950 - Schedule Ab - Louisiana Corporation Income Tax Add-Back Form Page 2
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3R-6950i (1/17)
Instructions for Schedule AB – Louisiana
Corporation Income Tax Add-Back Form
Expense Add-Back Requirements and Exceptions of R.S. 47:287.82.
Pursuant to R.S. 47:287.82, when computing a corporation’s Louisiana net income, a corporation shall add-back, subject to certain ex-
ceptions, otherwise deductible interest expenses and costs, intangible expenses and costs, and management fees resulting from direct
or indirect transactions with one or more related members.
R.S. 47:287.82(A)(1) provides an exception to the add-back to the extent the corresponding item of income of the related member was
subject to a tax on net income in Louisiana or any other state or a foreign nation (of which, the related member is a resident) which has
an enforceable income tax treaty with the United States.
R.S. 47:287.82(A)(2) provides an exception to the add-back if the corporation establishes that the transaction that gave rise to the inter-
est expenses , intangible expenses, or the management fees did not have as its principle purpose the avoidance of any Louisiana tax.
R.S. 47:287.82(A)(3) provides an exception to the add-back for the amount of the expenses that were paid, accrued, or incurred, directly
or indirectly, by the related member during the same taxable year to a person that is not a related member.
General Instructions
This form was designed to assist taxpayers in complying with the provisions of R.S. 47:287.82. Taxpayers that have incurred the expens-
es described in R.S. 47:287.82 are required to complete this form and report the amounts of add-back and exceptions thereto, on this
form and on form CIFT-620 as instructed herein. See LAC 61:I.1115 for more information. Attach the completed form to Form CIFT-620.
For purposes of the form and these instructions, “recipient related member” means a related member that the taxpayer transacted with
to incur interest expenses, intangible expenses, or management fee expenses and therefore has a corresponding item of income for
these taxpayer expenses. Columns are provided on Schedule AB to report each recipient related member separately. Use additional
pages as needed.
All dollar amounts should be rounded to the nearest dollar.
Line 1a: Enter the Federal Employer Identification Number of each recipient related member.
Line 1b: Enter the name of each recipient related member.
Line 2: Enter the amount of intangible expense that arose from transactions with the related member.
Line 3: Enter the amount of interest expense that arose from transactions with the related member.
Line 4: Enter the amount of management fee expense that arose from transactions with the related member.
Line 5: Enter the total of the amounts in Lines 2 through 4.
Line 6: Line 6 is used for the amount exempted from add-back provided in R.S. 47:287.82(A)(2) –principal purpose of transaction(s) not
to avoid Louisiana tax. If a transaction giving rise to the interest expense and cost, intangible expense and cost, or management fee
expense has a substantial business purpose and economic substance and contains terms and conditions comparable to a similar arm’s
length transaction between unrelated parties, the transaction shall be presumed to not have as its principal purpose tax avoidance,
subject to rebuttal by the secretary of the Department of Revenue. Enter the amount of the recipient related member’s income, included
in Line 5, arisen from transactions not having avoidance of a Louisiana tax as a principal purpose.
Line 7: Line 7 is used for the amount exempted from add-back provided in R.S. 47:287.82(A)(3) – amounts paid to a nonrelated person.
Enter the amount, included in Line 5, but not included in Line 6, that was paid, accrued, or incurred, directly or indirectly, by the recipi-
ent related member during the same taxable year to a person that is not a related member.
Lines 8a through 8f are used to determine the amount excluded from add-back provided in R.S. 47:287.82(A)(1) – the portion of the
recipient related member’s corresponding income that was subject to a tax based on or measured by net income. See R.S. 47:287.82
for more details.
Line 8a: Enter the name of the jurisdiction(s) where the recipient related member is “subject to tax.” State abbreviations are acceptable.
The recipient related member’s intangible/interest/management fee income must be “subject to tax” on a post-allocation and apportion-
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