Kevin Assocs., LLC v. Crawford: Louisiana Court Resists State's Effort to Expand Reach Via Related-Party Transactions

One of the biggest issues in state taxation today, attracting the attention of state taxing authorities and taxpayers alike, is the effect of related-party transactions. In recent years, state taxing authorities have become especially attuned to related-party transactions involving intercompany sales of goods and services, intercompany financing arrangements including intercompany loans and dividends, and intercompany sales of licenses of intangible property, etc. States have attempted to challenges these transactions on several grounds. For example, states have attempted to disallow deductions for payments to affiliated entities, enacted statutes that specifically disallow deductions for related party transactions, and even attempted to directly tax out-of-state party.