35 Miss. Admin. Code Pt. III, Subpt. 8, Ch. 08 — Interest Expense

100 Section 27 -7-9(j)(6) requires that if a corporation or other legal entity enters into any
transaction that is for the benefit of its shareholders or for the benefit of an affiliated
corporation without an equal mutual business benefit to the corporation, the transaction
will be adjusted or eliminated. Interest expense incurred for the purchase of its own stock,
whether the corporation retires this stock or not, or for leveraged buyouts are not for the
benefit of the corporation and may not be taken as an expense of the corporation.
101 Section 27-7-17 provides that an interest expense deduction will be denied or limited in
the case of a parent that makes a loan to a subsidiary which is not business related.
Subsidiaries that are undercapitalized and borrow money from a parent corporation or
other corporation of an affiliated group may not deduct any interest on these loans.
Corporations that borrow funds from affiliated corporations for working capital and have
been paying dividends instead of retaining an amount of funds sufficient to maintain
operations will be allowed to deduct interest only on an amount equivalent to the
borrowed funds less dividends paid . Amounts of interest on borrowed funds used to pay
dividends will not be allowed as a deductible expense of the corporation.
102 (Reserved)
103 (Reserved)
Subpart 09 Partnerships