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North Carolina Supreme Court holds market discount income on U.S. obligations to be non-deductible interest

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On Aug. 18, 2017, the North Carolina Supreme Court held that a taxpayer was not entitled to deduct market discount income that was earned as interest on United States obligations for state corporate income tax purposes. In affirming a decision by the North Carolina Business Court, the Supreme Court declined to conform to the federal treatment of market discount income as deductible interest, finding that the controlling state provision contained no language evidencing legislative intent to require that state law treatment of market discount income mirror its federal treatment.