HB 969 - This act establishes a procedure for the determination of tax liability for purposes of corporate income tax of certain expenses and costs related to certain intangible property when the property is transferred to a related entity. The act provides specific criteria for determining if transactional expenses and costs related to the transfer and use of the rights to patents, trade names, trademarks, and other intangible property incurred by a taxpayer from a related entity are a legitimate business expense and are allowed to be deducted in the computation of Missouri taxable income.

The act establishes a test to determine that the transaction or transfer in question was not primarily intended to avoid tax. The test is a five part test, wherein satisfaction of two parts of the test will lead to the conclusion that the transaction is not a tax avoidance scheme.

Any issue relevant to ascertaining the tax liability of a taxpayer related to the deductibility of these expenses and costs will be strictly construed against the taxing authority in favor of the taxpayer.

This act is similar to SB 1059 (2004).
JEFF CRAVER

SA 1 - THIS AMENDMENT WOULD MODIFY THE FIVE PART TEST TO REQUIRING ALL FIVE PARTS TO BE MET. THE AMENDMENT WOULD ALSO DISTINGUISH BETWEEN INCOME THAT IS MOVED AMONG FRANCHISEES VERSUS AMONG CORPORATIONS THAT HAVE COMMON OR SIMILAR OWNERSHIP