Reasonable Business Purposes

# (a)

In proving that a transaction, or series of transactions of which the transaction is a part, has one or more reasonable business purposes other than the creation of State income tax benefits, the taxpayer must show:

# (1)

The business purpose asserted was valid and realistic;

# (2)

The transaction was a reasonable and realistic means to accomplish the asserted business purpose;

# (3)

Evidence exists that shows the taxpayer took steps to achieve the asserted business purpose; and (4) The value of the non-State income tax benefits reasonably anticipated by the taxpayer from the transaction exceeds the additional cost associated with the transaction.

# (b)

Generally, reasonable business purpose is supported by contemporaneous documentation. Though not conclusive, the absence of contemporaneous documentation weakens the contention that the asserted business purpose is valid.

Last amended: Authority G.S. 105-130.5A; 105-262.1; Eff. January 31, 2013; Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. August 19, 2017.

Source: view the official text

In this chapter (40 sections)

Full table of contents →