R.I. Gen. Laws § 44-14-13 — Business expenses deductible

(a) In computing net income there shall be allowed as deductions all the ordinary and
necessary expenses paid or incurred by the taxpayer during the income period in carrying
on its trade or business, except United States income and excess profits taxes and
the tax imposed by this chapter. Without limiting the generality of the foregoing
there shall be allowed as deductions: a reasonable allowance for salaries and other
compensation for personal services actually rendered; rent; repairs; bad debts; interest;
taxes, except United States income and excess profits taxes and the tax imposed by
this chapter; losses sustained and not compensated for by insurance or otherwise;
depreciation; depletion of mines, oil and gas wells, and timber; amortization of assets;
amortization of premiums on “securities” as defined in § 44-14-2(5)(ii); and contributions to any corporation, association, or fund organized and operated
exclusively for religious, charitable, scientific, literary, or educational purposes,
no part of the net earnings of which inures to the benefit of any private shareholder
or individual.
(b) For tax years beginning on or after January 1, 2025, to the extent that a taxpayer
subject to tax under this chapter has elected to allocate and apportion its net income
pursuant to § 44-14-14.1(f)(1) and would be included in a unitary business, as defined in § 44-11-1(11), with one or more entities subject to tax under chapter 11 of this title if not for
the exemptions from the definition of “corporation” set forth in § 44-11-1(4)(i), all business expense transactions between the taxpayer and the members of the unitary
business shall be added to net income of the taxpayer subject to tax under this chapter;
except that no such adjustment shall be required to the extent it would result in
duplicate taxation in violation of law.
(c) The adjustments required in subsection (b) of this section shall add back otherwise
deductible business expenses paid, accrued, or incurred to a related member, except
that a deduction shall be permitted to the extent that either:
(1) The taxpayer establishes by clear and convincing evidence, as determined by the tax
administrator, that the disallowance of the deduction is unreasonable; or
(2) The taxpayer and the tax administrator agree in writing to the application of an alternative
method of apportionment. For purposes of this subsection, the add back of a business
expense transaction will be considered unreasonable where the taxpayer establishes
by clear and convincing evidence that the transaction was primarily entered into for
a valid business purpose rather than to avoid payment of taxes due under this chapter,
the business expense paid is pursuant to a written contract that reflects arm’s length
terms, and that it is supported by documented economic substance. Nothing in this
subsection shall be construed to limit or negate the tax administrator’s authority
to otherwise enter into agreements and compromises otherwise allowed by law.