North Carolina – Related party interest expense further limited, conduit exception enacted

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May 2016

Overview

On May 11, 2016, North Carolina enacted S.B. 729, which modifies the state’s related party interest expense deduction from 30% to 15% of a taxpayer’s adjusted taxable income.  Additionally, S.B. 729 adds a conduit exception to the interest expense limitation. 

The interest expense limitation, as originally enacted in 2015, and the changes to it imposed by S.B. 729, are effective for tax years beginning on or after January 1, 2016.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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