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various other types of exceptions, many of whichare unique to a particular state. 44Summary And ConclusionsAt present, 20 states and the District of Columbiahave enacted provisions that may deny a domesticcorporation a deduction for interest expensesand intangible expenses paid to a related foreignperson. Although the different state statutes sharemany common themes, there are significant differencesamong the states, particularly with respect tothe circumstances under which an exception appliesand a deduction is permitted. It is importantto consider the implications of these deductiondisallowance provisions when analyzing the taxconsequences of interest expenses or intangible expensespaid by a domestic corporation to a foreignparent corporation or other related foreign person.E NDNOTES12Forty-five states and the District of Columbia imposecorporate income taxes, with tax rates ranging fromabout five to 10 percent (CCH IntelliConnect, MultistateQuick Answer Charts, Table of 2013 CorporateIncome Tax Rates ). Nevada, Ohio, South Dakota,Washington and Wyoming do not impose corporateincome taxes. However, Ohio and Washington imposegross receipts taxes.IRS statistics indicate that the magnitude of thesetransactions is significant. A domestic corporation thatis 25-percent-or-more owned by a single foreign personmust report the dollar amounts of these transactionson Form 5472 ( Code Sec. 6038A ). For tax year 2008,large domestic corporations (total gross receipts of$500 million or more) reported that they made $68.134567891011121314151617billion of interest payments and $6.9 billion of royaltypayments to related foreign persons. Isaac J. Goodwin,Transactions Between Large Foreign-Owned DomesticCorporations and Related Foreign Persons, 2008 , STA-TISTICS OF INCOME BULLETIN (Fall 2012).J. Healy and M. Schadewald, 2013 MULTISTATE COR-PORATE TAX GUIDE (Chicago: CCH Incorporated,2012), at 3001 – 11.Code Sec. 163(a) .Code Sec. 162(a) , and Reg. §1.162-11.Reg. §1.482-2(a).Reg. §1.482-5.See , for example, Article 9 of the U.S. Model IncomeTax Treaty of 2006.Code Sec. 267(a)(3) and Reg. §1.267(a)-3(b). Specialrules apply to payments that represent income effectivelyconnected with the conduct of a U.S. trade or business,income which is exempt under a treaty, or incomederived by a controlled foreign corporation or a passiveforeign investment company. Reg. §1.267(a)-3(c).Reg. §1.267(a)-3(b)(1).Code Sec. 163(j)(3) .Code Secs. 163(j)(4) and 267(b).Code Sec. 163(j)(2)(A) .Code Sec. 163(j)(1)(A) .Code Sec. 163(j)(2)(B) . Adjusted taxable income is arough approximation of the corporation's cash flowfrom operations, before taking into account any interestexpense deductions. Code Sec. 163(j)(6)(A) .Code Sec. 163(j)(1)(B) .Common addition modifications include state incometaxes, net operating losses, dividends-received deductions,Code Sec. 199 deduction, federal bonus depreciationand interest expenses and intangible expenses paidto related parties. Common subtraction modifications48