Tennessee Franchise and Excise Tax Guide - September 2019 - TN.gov
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Tennessee
Franchise and Excise
Tax Guide
September 2019Franchise and Excise Taxes
Dear Tennessee Taxpayer,
This franchise and excise tax guide is intended as an informal reference for taxpayers who wish to
gain a better understanding of Tennessee franchise and excise tax requirements. It is not an all-
inclusive document or a substitute for Tennessee franchise and excise tax statutes or rules and
regulations. The information in this guide is current as of the date of publication. Tax laws, their
interpretation, and their application can change due to legislative action, reviews, and court
decisions.
Frequently asked questions and answers are located on our website at www.TN.gov/revenue. If you
cannot locate your answer, feel free to submit an electronic help ticket for an email response to your
specific question. The Department of Revenue also offers a toll-free franchise and excise tax
information line for Tennessee residents. The number is (800) 397-8395. If calling from Nashville or
outside Tennessee, you may call (615) 253-0700. The Department of Revenue also offers a
telecommunications device for the deaf (TDD) line at (615) 741-7398.
Finally, if you have questions, please do not hesitate to contact any of the offices listed below.
Sincerely,
Taxpayer Services Division
Tennessee Department of Revenue Toll-Free: (800) 342-1003
Taxpayer Services Division Out-of-State: (615) 253-0600
Andrew Jackson Building TDD: (615) 741-7398
500 Deaderick Street
Nashville, Tennessee 37242-1099
Regional Offices
Memphis Chattanooga Jackson
3150 Appling Road 1301 Riverfront Parkway Lowell Thomas State Office Building
Bartlett, TN 38133 Suite 203 225 Dr. Martin L. King Jr. Drive
Chattanooga, TN 37402 Suite 340
Jackson, TN 38301
Johnson City Knoxville
204 High Point Drive 7175 Strawberry Plains Pike
Johnson City, TN 37601 Suite 209
Knoxville, TN 37902
1Franchise and Excise Taxes
Legislative Changes Included in the 2019 Franchise and Excise Tax Guide
(1) Responders to state-declared disaster - Out-of-state businesses, who do not otherwise have
nexus in Tennessee, who are responding to a state-declared disaster are exempt from franchise and
excise taxes for the income generated from performing disaster or emergency related work in the
state in response to the disaster, effective May 10, 2019. (Page 17)
(2) Repatriated earnings and global intangible low-taxed income (GILTI) - For taxpayers with
repatriated earnings or GILTI in their federal taxable income, Public Chapter 306 establishes
adjustments for computing Tennessee net earnings. This legislation applies to all tax periods
beginning on or after January 1, 2018. (Pages 23 and 25)
(3) Job tax credit - Two provisions that allowed the Commissioners of Revenue and Economic and
Community Development to lower the requirements for certain taxpayers to qualify for the job tax
credit were repealed for tax years beginning on or after January 1, 2019. (Pages 44 and 46)
(4) Financial institution credit – The definitions of “eligible activity” and “eligible housing entity” were
expanded for the purpose of the community investment tax credit available to financial institutions,
effective May 10, 2019. (Pages 48 and 49)
(5) Broadband credit - The credit that was available to broadband service providers for purchases of
qualified broadband internet access equipment used in Tier 3 and Tier 4 counties was repealed,
effective July 1, 2019. (Page 50)
2Franchise and Excise Taxes
Table of Contents
The Franchise and Excise Taxes 6
Who Is Liable? 6
Not-for-profit Status 7
Registration 7
Secretary of State Requirements 7
Nexus and Doing Business 7
Classifications of Businesses 8
Financial Institutions 8
Captive Real Estate Investment Trusts 10
Terminating a Business 11
Exempt Entities 13
Entities Specifically Exempted Under Statute 13
Publicly Traded Real Estate Investment Trusts 16
Annual Certification 16
The Franchise Tax 18
The Measure of the Tax 18
Net Worth 18
Adjustments and Other Provisions 20
Exemptions 21
The Excise Tax 22
The Measure of the Tax 22
Net Earnings 22
Additions 22
Deductions 23
Permanent Decoupling from Federal Provisions 25
Business and Non-business Earnings and Losses 25
Allocation of Non-business Earnings (Losses) 26
Intangible Expense Add-Back and Disclosure Requirements 26
Intangible Income 28
Gain or Loss Recognition on Distribution of Assets 28
Disclosure Requirements on Dividends Received from Captive REIT 29
Apportionment to Tennessee 30
Apportionment by Multi-state Corporations 30
The Property Factor 30
The Payroll Factor 30
The Receipts Factor 31
Market-based Sourcing 31
Distribution Incentives 33
3Franchise and Excise Taxes
Table of Contents
Apportionment to Tennessee (continued)
Variances from the Standard Apportionment Formula 33
Apportionment of the Net Worth of Common Carriers 34
Railroads 34
Motor Carriers 34
Rail and Motor Carriers 35
Pipelines 35
Air Carriers 35
Air Express Carriers 35
Barges 35
Manufacturers 36
Apportionment of Financial Institutions 36
Business and Non-business Earnings (Losses) 38
Credits 39
Income Tax Credit 39
Industrial Machinery Tax Credit 39
Job Tax Credit 40
General Provisions 40
Key Terms Defined 41
Additional Annual Credit Tier 2, 3, or 4 Enhancement County 43
Additional Annual Credit Higher Level of Investment and Job Creation 43
Additional Annual Credit Adventure Tourism District 45
Special Provisions 45
Job Tax Credit for Employing Persons with Disabilities 46
Community Resurgence Jobs Tax Credit 47
Legislative Changes to Job Tax Credit Public Chapters 1019 and 759 47
Part-time and Seasonal Adventure Tourism Jobs 48
Gross Premiums Tax Credit 48
Financial Institution Loans to Eligible Housing Entities 48
Tennessee Rural Opportunity Fund Credit 49
Brownfield Property Tax Credit 49
Consolidations, Mergers, and Like Events 50
Qualified Broadband Internet Access Equipment 50
Credits Repealed 50
Returns and Payments 51
Electronic Filing 51
Filing the Annual Return 51
Proration of Franchise Tax for Partial Year Returns 51
Financial Institutions Combined Return 51
Estimated Tax Payments and Penalties 52
Extension of Filing Time 52
Penalties for Late Filing 53
4Franchise and Excise Taxes
Table of Contents
Penalties for Failure to Disclose Transactions 53
Delinquent Accounts Certified to the Secretary of State 53
Paper Forms 53
General Provisions 54
Mailing Date 54
Electronic Payments 54
Electronic Filing and Tennessee Taxpayer Access Point (TNTAP) 54
Penalties 55
Interest 55
Audits and Assessments 56
Audits and Overpayments 56
Keeping Records 56
Refunds 56
Dishonored Checks 57
The Taxpayer Bill of Rights 58
5Franchise and Excise Taxes
The Franchise and Excise Taxes Who Is Liable?
The excise tax is a tax imposed on the Any person having substantial nexus with,
privilege of doing business in Tennessee. and doing business in, Tennessee is liable
General partnerships and sole for the franchise and excise tax. In this
proprietorships are not subject to the tax. regard, “person” or “taxpayer” means
The tax is based on net earnings or every corporation, subchapter S
income for the tax year. [Tenn. Code Ann. corporation, Limited Liability Company,
§ 67-4-2007] professional limited liability company,
registered limited liability partnership,
The franchise tax is also levied upon the professional registered limited liability
privilege of doing business in Tennessee partnership, limited partnership,
and is based on the greater of net worth cooperative, joint-stock association,
or the book value of real or tangible business trust, regulated investment
personal property owned or used in company, real estate investment trust,
Tennessee. For this purpose, net worth or state-chartered or national bank, or state-
property values at the end of the taxable chartered or federally chartered savings
period are used. [Tenn. Code Ann. § 67-4- and loan association. [Tenn. Code Ann. §
2104] 67-4-2004]
Both taxes are state taxes for state A person doing business in Tennessee
purposes only. No county, municipality, or without incorporating, domesticating,
taxing district shall have power to levy like qualifying, or otherwise registering in
taxes. Tennessee, or doing business in
Tennessee while its charter or other
Although the franchise and excise taxes registration is forfeited, revoked, or
are two separate taxes, the intention of suspended, will not be relieved from filing
the state legislature, and the policy of the a return and paying the tax for each tax
Department of Revenue, is that they are year that it does business in Tennessee.
part of the same taxing scheme. [Tenn. Code Ann. §§ 67-4-2105(c), 2007(b)]
Generally, any taxpayer that is liable for
one will be liable for both. The use of the If a taxpayer dissolves without settling its
terms “franchise and excise tax” or “the franchise and excise tax obligations, the
tax” in this publication will indicate officers, stockholders, partners, members,
applicability to both taxes. Persons liable principals, or employees may be held
for the tax will register for both on one liable for the tax to the extent that they
form and must file returns on one form. received any of the entity’s corporate
The taxable periods for both the franchise property in the liquidation process. [Tenn.
and excise taxes are always coincidental. Code Ann. §§ 67-4-2016, 2117]
A return is required for every fiscal closing
of the corporate books of each taxpayer
and must be filed coincidentally with each
federal return filing period.
6Franchise and Excise Taxes
The Franchise and Excise Taxes appropriate forms and fees must be filed
(continued) with the Tennessee Secretary of State. Any
amendments must also be filed with the
Not-for-profit Status Secretary of State’s office. All
corporations, limited liability companies,
Franchise and excise taxes are not
and limited partnerships qualified with
applicable to nonprofit persons as defined
the Tennessee Secretary of State must file
by law. They must file an annual report
an annual report and pay a filing fee with
with the Secretary of State and pay the
that office. The report is due on the first
filing fee. However, any nonprofit entity
day of the fourth month following the
with income from activities that are not
corporation’s fiscal closing.
related to the reason it was granted
nonprofit status is liable for the franchise
and excise taxes on that income. [Tenn. Nexus and Doing Business
Code Ann. §§ 67-4-2007(a) and 67-4- [Tenn. Code Ann. § 67-4-2004]
2105(a)]
For tax years beginning on or after
Registration January 1, 2016, all nonexempt entities
are subject to the tax if they are “doing
All persons subject to the franchise and business in Tennessee” and have
excise tax should register with the “substantial nexus in this state.”
Department of Revenue within 15 days
after the date the person becomes subject “Doing business in Tennessee” means an
to the tax. Electronic registration is activity purposefully engaged in within
available on the Tennessee Taxpayer Tennessee by a person with the object of
Access Point (TNTAP) accessible from the gain, benefit, or advantage consistent with
Department’s website. [Tenn. Code Ann. § the intent of the general assembly to
67-4-2003(c)]. There is no fee for subject such persons to the tax to the
registration. fullest extent permitted by the
Constitution. The law provides some
Taxpayers that need additional exceptions to this definition. See Tenn.
information concerning this tax may visit Code Ann. § 67-4-2004(14)(E).
or call one of the Department of Revenue
offices listed on the first page of this “Substantial nexus in this state” means
publication. Trained personnel are any direct or indirect connection of the
available there to explain Tennessee’s taxpayer to this state such that the
tax system and to answer your taxpayer can be required under the
questions. If online filing is not possible, Constitution of the United States to remit
taxpayers may mail the Application for the tax. Such connection includes, but is
Franchise, Excise Tax Registration form to not limited to, any of the following:
the address shown on the instructions.
+ The taxpayer is organized or
Secretary of State Requirements
commercially domiciled in
To obtain a corporate charter, articles of Tennessee;
organization, a certificate of limited + The taxpayer owns or uses its
partnership, or a certificate of authority capital in Tennessee;
for out-of-state corporations, the
7Franchise and Excise Taxes
The Franchise and Excise Taxes
(continued) Classifications of Businesses
[Tenn. Code Ann. § 67-4-2007]
+ The taxpayer has a systematic and
continuous business activity in this Businesses will be classified as
state that has produced gross corporations, partnerships, or other types
receipts attributable to customers in of business entities consistent with the
Tennessee; way they are classified for federal income
+ The taxpayer licenses intangible tax purposes and taxed accordingly.
property for use by another party in Entities disregarded for federal income
the state and derives income from tax purposes, except limited liability
that use of intangible property in companies whose single member is a
this state; or corporation, will not be disregarded for
+ The taxpayer has a bright-line Tennessee franchise and excise tax
presence in the state. A person has purposes. Except for unitary groups of
a bright-line presence in this state financial institutions, captive REIT
for a tax period if any of the affiliated groups, or business entities that
following applies: have been required or permitted to file
Receipts in TN > $ 500,000 or 25% franchise and excise tax returns on a
of total receipts from sales combined, consolidated, or separate
Property in TN > $ 50,000 or 25% accounting basis, each taxpayer will be
of total property considered an separate and single
Payroll in TN: > $ 50,000 or 25% of business entity for Tennessee franchise
total compensation paid and excise tax purposes. Each entity will
file its Tennessee franchise and excise tax
With regard to motor carriers, substantial return reflecting only its own business
nexus only exists if the carrier: (1) activities.
provides intrastate transportation services
Financial Institutions
within Tennessee; (2) makes deliveries of
[Tenn. Code Ann. §§ 67-4-2004 and 2105]
goods into Tennessee that originate in
another state; or (3) transports goods For franchise and excise tax purposes, a
from Tennessee for delivery into another “financial institution” is defined as a
state. holding company, any regulated financial
corporation, a subsidiary of a holding
Public Law 86-272 precludes the company or a regulated financial
assessment of excise tax when the only corporation, an investment entity that is
activity is solicitation of orders for sales of indirectly more than 50% owned by a
tangible personal property to be accepted, holding company or a regulated financial
approved, and shipped from outside corporation, or any other entity that is
Tennessee. However, nexus would exist carrying on the business of a financial
for franchise tax. institution. “Financial institution” does not
include insurance companies subject to
For tax year beginning prior to January 1, tax under Tenn. Code Ann. §§ 56-4-201
2016, before the definition of “substantial through 56-4-214.
nexus” was enacted, a business was The Franchise and Excise Taxes
generally required to have “physical (continued)
presence” nexus.
8Franchise and Excise Taxes
The “business” of a financial institution is A financial institution is not considered to
defined as the business that a regulated be conducting the business of a financial
financial corporation may be authorized institution in this state if its only activity is
to do under state or federal law or the the ownership of an interest in one or
business that its subsidiary is authorized more of the following types of property,
to do by the proper regulatory authorities; including activities that are required to
the business that any person organized acquire or dispose of the property, to
under the authority of the United States service the property, to collect income
or organized under the laws of any other from the property, or to acquire or
taxing jurisdiction or country does or has liquidate collateral relating to the
authority to do that is substantially similar property:
to the business that a corporation may be
created to do under title 45, or any + A real estate mortgage investment
business that a corporation or its conduit, real estate investment
subsidiary is authorized to do by title 45; trust, or regulated investment
otherwise making, acquiring, selling or company as defined by the Internal
servicing loans or extensions of credit, Revenue Service.
including, but not limited to, the following: + A loan-backed security representing
secured or unsecured consumer loans; ownership or participation in a pool
installment loans; mortgages or deeds of of promissory notes or certificates
trust or other secured loans on real or of interest that provide for
tangible personal property; credit card payments, or reasonable projections
loans; secured or unsecured commercial of payments, on the notes or
loans of any type; letters of credit and certificates.
acceptance of drafts; the holding of + A loan, lease, note, or other asset
participation loans in which more than attributed to this state in which the
one (1) lender is a creditor to a common payment obligations were solicited
borrower; loans arising in factoring; and and entered into by an independent
any other transactions of a comparable person not acting on behalf of the
economic effect; leasing or acting as an owner.
agent, broker or adviser in connection + The right to service or collect income
with leasing real and personal property from a loan or other asset from
that is the economic equivalent of an which interest on the loan or other
extension of credit; or operating a credit asset is attributed to this state and
card business. in which the payment obligations
were solicited and entered into by
Notwithstanding the above definition, if an independent person that is not
the business of a financial institution acting on behalf of the owner.
generates less than fifty percent (50%) of a + Demand deposit clearing accounts,
person's gross income, the person shall federal funds, certificates of deposit,
not be considered to be a financial and other similar wholesale banking
institution. For purposes of this instruments issued by other
computation the gross income of a person financial institutions.
does not include income from + Securities.
nonrecurring, extraordinary transactions.
9Franchise and Excise Taxes
The Franchise and Excise Taxes combined return and pay tax based on
(continued ) the apportioned combined net earnings of
the entire captive REIT affiliated group, as
+ Any intangible, tangible, real, or
personal property acquired in defined in Tenn. Code Ann. § 67-4-2006(a).
satisfaction, fully or in part, of any a The members of the group shall designate
payment obligation that is in one member that is subject to tax in this
default, secured or unsecured, if the state to file the combined return. Each
ownership of the interest would be member subject to tax in this state shall
exempt otherwise. be jointly and severally liable for the tax
imposed by this part with regard to the
Captive Real Estate Investment Trusts affiliated group. [Tenn. Code Ann. § 67-4-
[Tenn. Code Ann. §§ 67-4-2004, 2006, 2007(e)(3)]
2007, 2013, 2106, and 2111]
Net Worth defined for a captive REIT
“Captive real estate investment trust” or affiliated group: For a captive REIT
“captive REIT” means an entity with an affiliated group, “net worth” is defined as
election in effect under § 856(c)(1) of the the difference between the total assets
Internal Revenue Code, compiled in 26 less the total liabilities of the affiliated
U.S.C. § 856(c)(1), in which any other entity group at the close of business on the last
or individual, directly or indirectly, has at day of the tax year, as shown by a pro
least eighty percent (80%) ownership forma consolidated balance sheet
interest by value determined in including all members of the group. The
accordance with generally accepted pro forma consolidated balance sheet
accounting principles and whose shares shall be prepared in accordance with
are not traded on a national stock generally accepted accounting principles
exchange. [Tenn. Code Ann. § 67-4-2004] wherein transactions and holdings
between members of the group and
“Captive REIT affiliated group” means a holdings in non-domestic persons have
captive REIT and any entity in which the been eliminated. [Tenn. Code Ann. § 67-4-
captive REIT, directly or indirectly, has 2106(b)]
more than fifty percent (50%) ownership
interest; provided, however, that a Net Worth Apportionment for a captive
“captive REIT affiliated group” does not REIT affiliated group: Except as may be
include a group in which the captive REIT otherwise provided in this part, the net
is owned, directly or indirectly, by a bank, worth of a taxpayer doing business both
a bank holding company, or a public REIT. in and outside Tennessee shall be
[Tenn. Code Ann. § 67-4-2004] apportioned to this state by multiplying
such values by a fraction, the numerator
“Real estate investment trust” means an
of which shall be the property factor plus
entity that has an election in effect under
the payroll factor plus triple the receipts
§ 856(c)(1) of the Internal Revenue Code.
factor and the denominator of such
[Tenn. Code Ann. § 67-4-2004]
fraction shall be five. [Tenn. Code Ann. §
67-4-2111(a)(2))]
Captive REIT affiliated groups are required
to file a combined return. Persons subject
to tax in this state that are members of a
captive REIT affiliated group shall file a
10Franchise and Excise Taxes
The Franchise and Excise Taxes Ann. § 67-4-2013(d)] For all tax years
(continued ) beginning before July 1, 2016, the sales
factor was double weighted instead of
“Net earnings” and “net loss” defined for a triple weighted.
captive REIT affiliated group: Captive REIT
affiliated group; “Net earnings” or “net Terminating a Business
loss” is defined as the combined net
earnings or net loss, for all members of Before a taxpayer can terminate its
the affiliated group, with all dividends, charter, articles of organization, or
receipts, and expenses resulting from certificate of limited partnership, or
transactions between members of the withdraw its certificate of authority or
affiliated group excluded when computing other similar document, a tax clearance
combined net earnings, and subject to the certificate must be issued by the
adjustments in Tenn. Code Ann. §§ 67-4- Department of Revenue. In order to
2006(b) and (c) on a combined basis, even receive a tax clearance certificate, a
if some of the members would not be taxpayer must file all returns to date
subject to taxation if considered apart and a final franchise and excise tax return
from the affiliated group. [Tenn. Code through the date of liquidation or the date
Ann. § 67-4-2006(a)(9)] the taxpayer ceased operations in
Tennessee.
Dividends Paid Deduction required to be
added to Net Earnings: There shall be A taxpayer in the process of liquidating
added to net earnings any deduction by a and ceasing business operations will be
captive REIT for dividends paid, as defined considered in a “Final Return Status.” If the
under 26 U.S.C. § 561, that is allowed and liquidation occurs all on one day, the
taken under 26 U.S.C. § 857(b)(2)(B); franchise tax will be determined by the
however, this add-back does not apply to balance sheet values immediately
a captive REIT that is owned, directly or preceding liquidation. If the liquidation
indirectly, by a bank, a bank holding occurs over more than one day, then the
company, or a public REIT. [Tenn. Code taxpayer will use monthly average values
Ann. § 67-4-2006(b)(1)(O)] to compute the franchise tax bases for
any return(s) in a “Final Return Status.” A
Net earnings apportionment for a captive schedule of liquidation, distribution, or
REIT affiliated group: The net earnings of disposition of all assets must accompany
a captive REIT affiliated group shall be these return(s). [Tenn. Code Ann. § 67-4-
apportioned to Tennessee based on 2115]
property, payroll, and triple weighted
When these requirements have been met,
receipts as provided in Tenn. Code Ann. §
the Department of Revenue will issue the
67-4-2012, including the factors of those
tax clearance certificate for termination or
members of the affiliated group that
withdrawal. The certificate will be mailed
would not be subject to taxation in this
to the taxpayer’s mailing address unless
state if considered apart from the
otherwise specified.
affiliated group; however, dividends,
receipts, and expenses resulting from
transactions between members of the
affiliated group shall be excluded for
purposes of apportionment. [Tenn. Code
11Franchise and Excise Taxes
The Franchise and Excise Taxes
(continued )
To complete the termination or
withdrawal process, the
taxpayer must contact the Tennessee
Secretary of State’s office for that office’s
requirements. The tax clearance
certificate is valid for 45 days from the
date of issue.
It is the Commissioner’s responsibility to
collect the franchise and excise tax due,
plus any penalties and interest, from any
officer, stockholder, partner, member,
principal, or employee of a taxpayer that
has ceased business without paying the
tax, if such person has received property
of the defunct business. The amount of
tax that may be collected in this situation
may not exceed the value of the property
received by the person from whom
collection is sought. [Tenn. Code Ann. §§
67-4-2016 and 67-4-2117]
12Franchise and Excise Taxes
Exempt Entities
+ Certain venture capital funds
Entities Specifically Exempted Under dealing primarily in trading
Statute securities in non-publicly traded
companies on its own behalf. The
The law exempts seventeen entities
capital of the fund may be derived
from the franchise and excise tax:
from investments by one or more
affiliates if such affiliates also
+ Corporations organized in
qualify as venture capital funds.
Tennessee, whose sole purpose is
[Tenn. Code Ann. § 67-4-
furthering industrial development
2008(a)(5)]
in Tennessee communities, whose
+ Certain limited liability companies,
stockholders receive no income
limited partnerships, and limited
other than interest on money
liability partnerships, the activities
invested in the corporation, and
of which are at least 66.67%
whose officers receive no
farming or holding personal
compensation. [Tenn. Code Ann. §
residences where one or more of
67-4-2008(a)(1)]
its partners or members reside.
+ Corporations organized for the
[Tenn. Code Ann. § 67-4-
purpose of erecting or owning a
2008(a)(6)]
meeting place for more than one
+ Limited liability companies, limited
Masonic lodge, lodge of Odd
liability partnerships, or limited
Fellows, or similar lodge; which
partnerships existing on May 1,
could obtain general welfare
1999, that:
charters; and whose stock is
were at least 98% owned by
owned by lodges participating in
corporate members of an
the common meeting place.
affiliated group defined in 26 USC
Commercial rental income
§ 1504(a);
received by such corporations is
were formed and operated for
not tax exempt. [Tenn. Code Ann.
the purpose of acquiring notes
§ 67-4-2008(a)(2)]
and other evidence of
+ Regulated investment companies
indebtedness from its members;
or funds organized as unit
the assets of which serve as
investment trusts, taxable as
security for third party borrowings
grantor trusts under federal law,
or indebtedness;
and whose investment value
had at least 80% of the income
consists of at least 75%
from these instruments included
government bonds of the United
in the income of a corporation
States, the state of Tennessee, or
doing business in Tennessee; and
any county, municipal, or political
were subject to apportionment
subdivision of the state. [Tenn.
rules. [Tenn. Code Ann. § 67-4-
Code Ann. § 67-4-2008(a)(3)]
2008(a)(7)]
+ Federal and state credit unions,
production credit associations,
and investment companies
organized under state law. [Tenn.
Code Ann. § 67-4-2008(a)(4)]
13Franchise and Excise Taxes
Exempt Entities (continued)
making this election must file the
+ Limited partnerships and limited required documentation with the
liability companies organized Secretary of State to become fully
exclusively for the purpose of liable for the debts, obligations,
providing affordable housing are and liabilities of the entity and are
exempt from franchise and excise referred to as “obligated
taxes if the entity receives an members.” In the event that any
allocation of low-income housing obligated member or any owner
tax credits pursuant to § 401 of of an obligated member, whether
the Internal Revenue Code (IRC) of such ownership is in whole, in
1986 and has in effect an part, direct, or indirect, provides
“extended low-income housing limited liability protection, the
commitment” as defined in obligated member entity is liable
Internal Revenue Code § for franchise and excise taxes on
42(h)(6)(B) with respect to each the portion of income and equity
residential building owned by the attributable to such obligated
entity for the period covered by member. This is effective for tax
the return. Effective for tax period periods ending on or after July 1,
ending on or after June 20, 2003. 2005. [Tenn. Code Ann. § 67-4-
[Tenn. Code Ann. § 67-4- 2008(a)(9)]
2008(a)(8)] + Entities, classified as partnerships
+ Limited liability companies, limited or trusts under 26 USC § 7701, or
liability partnerships, or limited that have elected to be treated as
partnerships, all of whose a REMIC or FASIT entity, whose
members or partners are fully sole purpose is the asset-backed
liable for the debts, obligations, securitization of debt obligations.
and liabilities of the entity, and [Tenn. Code Ann. § 67-4-
who have filed appropriate 2008(a)(10)]
documentation with the office of + Non-corporate entities that are at
the Secretary of State prior to the least 95% family owned. At least
first day of the taxable year for 66.67% of the entity’s income
which a return is filed. However, in must be derived from activities
some instances, a secondary level that produce passive investment
of limited liability entities may be income, or from a combination of
formed between the initial limited the production of passive
liability entity and the individual investment income and farming as
owners in an attempt to avoid the defined by statute. Effective July 1,
franchise and excise taxes while 2009, the definition of “rents”
still providing limited liability to relative to passive investment
the individual owners or partners. income was revised to include
Members or partners of a limited only rental income from
liability entity may make an residential or farm property.
election for the entity to be “Residential property” includes
treated as an exempt “obligated only property leased or rented for
entity.” The members or partners residential purposes and includes
14Franchise and Excise Taxes
Exempt Entities (continued) diversified investing fund [Tenn.
Code Ann. § 67-4-2008(a)(12)]
not more than four residential
units at any one location. Four + Tennessee historic property
separately deeded condominium preservation or rehabilitation
units within a building with over entities. [Tenn. Code Ann. § 67-4-
four units would qualify. “Farm 2008(a)(13)]
property” does not include + Effective June 3, 2008, insurance
acreage used for recreational companies as defined in Tenn.
purposes by clubs, including golf Code Ann. § 56-1-102 are exempt.
course playing hole [Tenn. Code Ann. § 67-4 -
improvements. Additionally, 2008(a)(14)]
ownership units held in trust are + Any qualified TNInvestco, as
not treated as owned by members defined in Tenn. Code Ann. § 4-28-
of the family unless the ownership 102, that has received an
units are property of a trust allocation of investment tax
described in Tenn. Code Ann. § 67- credits and continues to
4-2008(a)(11)(B)(i)(e) (namely, a participate in the program
testamentary trust). [Tenn. Code established by the Tennessee
Ann. § 67-4-2008(a)(11)] Small Business Investment
+ Diversified investing funds are Company Credit Act. Effective date
exempt from franchise and excise June 30, 2010. [Tenn. Code Ann. §
taxes if the fund is a limited 67-4-2008(a)(15).]
partnership, limited liability An exemption is available for
company, or limited liability facilities owned directly, in whole
partnership or business trust that or in part, by a branch of the
is formed and operated for the United States Armed Forces. The
purpose of buying, holding, or entity must derive more than 50%
selling qualified investment of its gross income from the
securities on its own behalf. The operation of facilities that are
capital of the fund must be located on property owned or
primarily derived from leased by the federal government
investments by entities or and are operated primarily for the
individuals that are not affiliated benefit of members of the United
with the fund. At least 90% of the States Armed Forces. [Tenn. Code
fund’s gross income must consist Ann. § 67-4-2008(a)(16)]
of interest, dividends, and gains + Effective for tax periods ending on
from the sale or exchange of such or after July 1, 2015, a franchise
investment securities. No less and excise tax exemption is
than ninety percent (90%) of the available for certain interests in
diversified investing fund's cost of qualified low-income community
its total assets consist of qualifying historic structures. The exemption
investment securities, deposits at is available to: any qualified low-
banks or other financial income community historic
institutions, and office space and structure owner; any qualified
equipment reasonably necessary
to carry on its activities as a
15Franchise and Excise Taxes
Exempt Entities (continued)
For an entity that does not directly or
low-income community historic indirectly distribute 100 % of its net
structure lessee; or any entity earnings or net losses to a publicly traded
that directly or indirectly owns an real estate investment trust, the entity is
interest in a qualified low-income exempt only to the extent of the
community historic structure distribution to the publicly traded real
owner, a qualified low-income estate investment trust. [Tenn. Code Ann.
community historic structure § 67-4-2019]
lessee, or both, and that has no
business operations or assets Annual Certification
other than: (a)its investment in the
qualified low-income community Entities claiming exemption from
historic structure owner, the franchise and excise taxes under Tenn.
qualified low-income community Code Ann. § 67-4-2008, except as
historic structure lessee, or both; indicated below, must file an application
(b) business operations and assets for exemption with the Department.
incidental to its investment in the Effective for tax years beginning on or
qualified low-income community after January 1, 2017, the date for filing an
historic structure owner, the application for exemption is the 15th day
qualified low-income community of the fourth month following the close of
historic structure lessee, or both; the first tax year for which the person
and (c ) De minimis other claims the exemption. [Tenn. Code Ann. §
operations and assets. "Qualified 67-4-2008(f)(1) [Public Chapter 194, Acts of
low-income community historic 2017]
structure," "Qualified low-income
community historic structure Persons that have previously filed the
lessee," and "Qualified low- statutorily required application for
income community historic exemption must annually renew their
structure owner” is defined in the exempt status. The renewal is due on or
code. [Tenn. Code Ann. § 67-4- before the fifteenth day of the fourth
2008(a)(17) month following the close of the person’s
tax year.
Publicly Traded Real Estate Investment
Trusts The initial application and annual renewal
is made on form FAE 183 Application for
Any entity treated as a partnership for
Exemption / Annual Exemption Renewal.
federal tax purposes that directly or
indirectly distributes 100 percent of its net
Persons claiming exemption under Tenn.
earnings or net losses to a publicly traded
Code Ann. §§ 67-4-2008(a)(6) or (11) must
real estate investment trust is exempt
complete the Disclosure of Activity section
from the excise tax. A “publicly traded real
of form FAE 183 when completing the
estate investment trust” is defined as an
form for the initial application and the
entity that has an election in effect under
annual renewal.
§ 856 of the Internal Revenue Code, and
that files with the Securities and Exchange
Commission and whose shares are traded
on a national stock exchange.
16Franchise and Excise Taxes
Exempt Entities (continued) that business activities first began in the
state.
No person will be exempt from the
franchise and excise taxes until the proper The disaster response period is the period
exemption initial application or renewal that begins ten days before the date of
form has been filed, as required. When a the earliest event establishing a disaster
person fails to file the appropriate initial or emergency and that ends 120 days
application or renewal form in a timely thereafter, or later if set by the governor
manner, a statutory penalty of $200 will or president of the United States. Effective
be imposed for the delinquent filing. May 10, 2019 [Tenn. Code Ann. § 58-2-
[Tenn. Code Ann. § 67-4-2008(f)(3); Public 904(c)(5)]
Chapter 194, Acts of 2017]
Any person who claims exemption under
Tenn. Code Ann. § 67-4-2008 but who fails
to meet the criteria for exemption will be
assessed all due tax, penalty, and interest.
These requirements do not apply to
persons qualified for exemption under
Tenn. Code Ann. § 67-4-2008, sub§§ (a)(1),
(a)(2), (a)(3), (a)(4), (a)(13), (a)(14), and
(a)(15).
Responders to a State-Declared Disaster
Out-of-state businesses, who do not
otherwise have nexus in Tennessee, who
are responding to a state-declared
disaster are exempt from franchise and
excise taxes for the income generated
from performing disaster or emergency
related work in the state. This work
includes repairing, renovating, installing,
building, and rendering services or other
business activities that relate to critical
infrastructure that has been damaged,
impaired, or destroyed during a disaster
or emergency and activities conducted in
good faith before a potential disaster to
prepare for the provision of this work.
After a disaster response period, if a
responding out-of-state business remains
in the state the business loses this
exemption and may be subject to the
franchise and excise tax from the date
17Franchise and Excise Taxes
The Franchise Tax
furniture and office machinery and
The Measure of the Tax equipment - 2; delivery or mobile
equipment - 1. [Tenn. Code Ann. § 67-4-
The franchise tax rate is 25 cents per 2108(a)(3)]
$100, or major fraction thereof, of a
taxpayer’s net worth at the close of the tax The value of owned or leased mobile
year covered by the required return. The property, located both in and outside
minimum franchise tax payable each year Tennessee during a tax period, will be
is $100. A taxable business that is inactive determined on the basis of the total
or has had its charter or other registration percentage of time this property is in the
forfeited, revoked, or suspended, but has state during the tax period. The value of
not been dissolved or otherwise properly an automobile or truck assigned to a
terminated, is not relieved from filing a traveling employee will be considered in
return and paying the minimum franchise Tennessee if the vehicle is licensed in
and excise tax. [Tenn. Code Ann. §§ 67-4- Tennessee or if the employee’s
2106 and 2119] compensation is assigned to Tennessee
for purposes of the taxpayer’s
The measure of the tax levied will not be apportionment formula payroll factor.
less than the actual book value (cost less [Tenn. Code Ann. § 67-4-2108(a)(4)]
accumulated depreciation) of the real and
tangible property owned or used in Net Worth
Tennessee, excluding exempt inventory
and two thirds of the capital investment For taxpayers filing on a separate entity
used to qualify for the additional annual basis, “net worth” is defined as the
jobs tax credit for higher level investments difference between a taxpayer’s total
under Tenn. Code Ann. § 67-4-209(b)(2)(B). assets less its total liabilities. If the
The value of any property under taxpayer does not maintain its books and
construction and not actually utilized by records in accordance with generally
the taxpayer will not be included in the tax accepted accounting principles, net worth
base. [Tenn. Code Ann. § 67-4-2108(a)] will be computed according to the
accounting method used by the taxpayer
Property that is used primarily for air or for federal tax purposes, so long as the
water pollution control or treatment of method fairly reflects the taxpayer’s net
hazardous waste, certified by the worth for purposes of the franchise tax.
appropriate government authority as For taxpayers required by this part to file
necessary to meet the requirements of as a unitary group on a combined basis,
state, federal, or local law, will not be “net worth” is defined as the difference
included in the franchise tax minimum between each such taxpayer’s total assets
measure. [Tenn. Code Ann. § 67-4-2108(5)] less its total liabilities computed in
accordance with generally accepted
The value of rental property will be accounting principles. [Tenn. Code Ann. §
determined by multiplying the net annual 67-4-2106(b)]
rental by the following multiples: real
property - 8; machinery and equipment
that is used in manufacturing - 3;
18Franchise and Excise Taxes
The Franchise Tax (continued)
that, standing alone, is subject to the
Effective for tax periods beginning on or Tennessee franchise tax; (2) All other
after January 1, 2004, the deduction from domestic persons in which the taxpayer,
a taxpayer’s net worth base for the value directly or indirectly, has more than fifty
of stock held in companies doing business percent (50%) ownership interest; (3) All
in Tennessee was repealed and replaced other domestic persons that, directly or
with a voluntary election to calculate the indirectly, have more than fifty percent
net worth base for franchise tax purposes (50%) ownership interest in the taxpayer;
on a consolidated basis. Once made, the and (4) All other domestic persons in
election is binding for a minimum of 5 which a person described in (3) above,
years. Taxpayers continue to pay on the directly or indirectly, has more than fifty
greater of apportioned net worth or the percent (50%) ownership interest,
value of real and tangible personal regardless of whether such persons do
property in Tennessee regardless of the business in Tennessee. A noncorporate
method that is used to arrive at the taxable entity is more than fifty percent
apportioned net worth. (50%) owned, if, upon liquidation more
than fifty percent (50%) of the assets of
A taxpayer that is a member of an the noncorporate taxable entity, directly
affiliated group may elect to compute its or indirectly, accrue to a member or
net worth on a consolidated basis, members of the affiliated group. A
provided that, upon election, each “domestic person” is any person with more
member of the group will be required to than twenty percent (20%) of the average
compute its net worth on a consolidated of its property, payroll and receipts
basis. The group election is made on the factors, as each factor is calculated for a
Consolidated Net Worth Election separate entity under Tenn. Code Ann. §
Registration Application. This election 67-4-2111, in the United States. [Tenn.
should be made on or before the the due Code Ann. § 67-4-2004(15)]
date of the return for the period for which
the election is to first apply. The election An affiliated group will generally not be
is binding for five years. Elections remain allowed to elect to compute net worth on
in effect after the minimum period until a consolidated basis unless all members
revoked. The affiliated group may revoke of the group close their taxable year on
the election, after five years, by filing the the same date. If a member exits the
Consolidated Net Worth Election consolidated group during a tax year
Registration Application form with the because of a change in ownership,
Revoke Election box checked. The form merger, or liquidation of the member, the
should be mailed to the address shown member exiting the group will be
on the form on or before the due date of excluded from the group and will
the tax return for the period during which compute its net worth individually.
such election is to be revoked.
For a taxpayer electing to compute its net
Tenn. Code Ann. § 67-4-2004(2) provides a worth on a consolidated basis, net worth
uniform definition of an “affiliated group” is defined as the difference between the
for franchise tax and excise tax purposes. total assets less the total liabilities of the
An "affiliated group" is: (1) A taxpayer affiliated group at the close of business on
19Franchise and Excise Taxes
The Franchise Tax (continued)
Adjustments and Other Provisions
the last day of the tax year, as shown by a
pro forma consolidated balance sheet If a corporation whose capital stock is
including all members of the group. The inadequate for its business needs is
pro forma consolidated balance sheet extended credit or has indebtedness to,
should be prepared in accordance with or guaranteed by, a parent or affiliated
generally accepted accounting principles corporation, the indebtedness must be
wherein transactions and holdings included in computation of the
between members of the group and corporation’s net worth franchise tax
holdings in non-domestic persons have base. This provision only applies to
been eliminated. [Tenn. Code Ann. § 67- taxpayers that have not elected to file net
4-2106(b)] worth on a consolidated basis. [Tenn.
Code Ann. § 67-4-2107(c)(1)]
The Commissioner of Revenue is
For purposes of calculating the value of
authorized, upon written request from the
real and tangible personal property for
taxpayer, to exclude one or more persons
the franchise tax, railroad companies may
from the taxpayer’s affiliated group if it is
value such property in accordance with
determined that the persons are so
the method used for federal tax purposes
remote from the taxpayer that it cannot
so long as the method used for federal tax
obtain the information necessary to
purposes fairly reflects the property’s
calculate the net worth of the group, and
actual value. [Tenn. Code Ann. § 67-4-
either that the person is included in the
2108(a)(3)]
group only because of a direct or indirect
interest or that the person has a direct or
The franchise tax imposed on any
indirect interest in both the taxpayer and
manufacturer, one whose principal
another person that is remote from the
business is fabricating or processing
taxpayer. In any case, excluding such
tangible personal property for resale and
persons from the affiliated group must
use or consumption off the premises, will
result in a fair representation of the
be assessed only on the first $2 billion of
affiliated group’s net worth. If the
apportioned net worth or real and
exclusion is granted, all members of the
tangible personal property owned or used
affiliated group are bound by it. The
in Tennessee. [Tenn. Code Ann. § 67-4-
Commissioner may require information to
2121]
substantiate a request, due on or before
the due date of the return when the
For tax periods beginning on or after
exclusion is to be applicable, and may for
January 1, 2004, the provision under
good cause accept a late filed request.
which the value of an interest which is
[Tenn. Code Ann. § 67- 4-2103(d)]
held by one taxpayer in any other
taxpayer paying the franchise tax, or the
gross premiums tax levied under either
Tenn. Code Ann. §s 56-4-205 or 56-4-206,
and doing business in this state, could be
deducted from the franchise tax of the
first taxpayer was repealed. This provision
was replaced with the option to elect to
calculate the net worth base for franchise
20Franchise and Excise Taxes
tax purposes on a consolidated basis.
[Tenn. Code Ann. § 67-4-2107(b)]
The Franchise Tax (continued)
Exemptions
Exempt inventory may be excluded from
the minimum measure of the franchise
tax. “Exempt inventory” means that
portion of a taxpayer's finished goods
inventory in excess of $30 million that
would otherwise be included in the
minimum measure of the taxpayer’s
franchise tax. Finished goods inventory
for franchise tax purposes must be held at
a manufacturing, warehousing, or
distribution facility rather than at a facility
where retail sales are made to customers.
[Tenn. Code Ann. § 67-4-2108(a)(6)(B)-(C)]
Exempt required capital investments may
also be excluded from the minimum
measure of the franchise tax. “Exempt
required capital investments” means two
thirds of the value of all capital
investments that are the basis for the
taxpayer’s entitlement to the job tax credit
under Tenn. Code Ann. §§ 67-4-
2109(c)(2)(G) and (H). Under these
provisions, certain capital investments in
excess of $1 billion or $500 million, as the
case may be, qualify taxpayers to take tax
credits for certain qualifying jobs created
as a result of such investment enterprises.
[Tenn. Code Ann. § 67-4-2108(a)(1)(G)]
21Franchise and Excise Taxes
The Excise Tax
In order to determine the loss carryover
The Measure of the Tax from the current year, there is an add
back on Schedule K of all nonbusiness
All persons, except those with nonprofit earnings and any other income that was
status or otherwise exempt, are subject to excluded from net earnings on Schedule J
a 6.5% corporate excise tax on the net in determining the excise tax base. In
earnings from business done in addition, there is an add back on Schedule
Tennessee for the fiscal year. This tax is in K of any “discharge of indebtedness” in
addition to any other taxes assessed the current year that was not included in
under state law. Nonprofit persons and federal taxable income, and then any
other exempt entities will be subject to excess amount applies to an offset of the
the excise tax on net earnings in prior year’s NOL carryover available,
Tennessee from all activities unrelated to applied to the oldest year first. [Tenn.
and outside the scope of the activities that Code Ann. §§ 67-4-2006(c)(5&8]
give them exempt status.
A unitary group of financial institutions
Except for unitary groups of financial may take qualified loss carryovers of any
institutions, captive REIT affiliated groups, group member that is in existence as a
and business entities that have been member of the group at the end of the tax
required or permitted to file excise tax year if such loss has not been previously
returns on a combined, consolidated, or taken by the member itself or by another
separate accounting basis, each taxpayer unitary group of financial institutions
is treated as a separate entity and must entitled to the loss when the member was
file its excise tax return on a separate part of its unitary group. [Tenn. Code Ann.
entity basis, reflecting only its own § 67-4-2006(c)(4)]
business activities even though it may
have filed a consolidated federal income Net Earnings
tax return. [Tenn. Code Ann. § 67-4-2007]
Net earnings (losses) are defined as
In the case of consolidations, mergers, or federal taxable income (loss), before the
like events, no carryover loss by the net operating loss deduction and special
previous taxpayer will be allowed as a deductions provided for in the Internal
deduction against the net earnings of the Revenue Code, plus or minus certain
succeeding taxpayer. However, if the additions and deductions provided by
previous taxpayer merges out of existence state law. Some examples of adjustments
and into a surviving successor taxpayer are:
that has no income, expenses, assets,
Additions to Federal Taxable Income
liabilities, equity, or net worth, the
before the Net Operating Loss Deduction
survivor of the merger may take any
and Special Deductions (The list is not all
qualified loss carryover incurred by the
inclusive.) [Tenn. Code Ann. § 67-4-
predecessor. [Tenn. Code Ann. § 67-4-
2006(b)(1)]
2006(c)(3)]
22Franchise and Excise Taxes
The Excise Tax (continued) + Any gain on the sale of an asset
based on the asset’s federal tax
+ Tennessee excise tax deducted on basis without any adjustment as a
the federal tax return. (Refunds of result of the taxpayer not having
Tennessee excise taxes are been subject to Tennessee excise
excluded from net income to the tax during any portion of the period
extent they have been included in during which the taxpayer took
federal taxable income in the year depreciation on the asset for
of the refund.) Federal income tax purposes. [Tenn.
+ Interest income from state and local Code Ann. § 67-4-2006(b)(2)(C)]
obligations to the extent not taxable + Any amount in excess of reasonable
under federal law. The interest rent (2% per month of the appraised
income so added back may be value of the property) that is paid,
reduced by allowable amortization accrued, or incurred for the rental,
and any interest expense not leasing, or comparable use of
deductible for federal tax purposes. industrial and commercial real
+ Gains on sales of assets not already property (not tangible personal
included in the net earnings property) owned by an affiliate,
computations for federal tax whether or not the affiliate is
purposes. (Capital gains are subject subject to the franchise and excise
to the excise tax in the tax year taxes. [Tenn. Code Ann § 67-4-
incurred.) 2006(b)(1)(N)]
+ Federal capital loss carrybacks or + An amount equal to 5% of
carryovers. (Capital losses may be repatriated earnings and global
deducted for excise tax purposes in intangible low-tax income (GILTI),
the tax year incurred, and before any deductions, for all tax
carryovers or carrybacks are not periods beginning on or after
permitted.) January 1, 2018. [Tenn. Code Ann.
+ Percentage depletion in excess of §§ 67-4-2006(b)(1)(P), 67-4-
cost depletion. (Only cost depletion 2006(b)(1)(Q)]
is deductible for excise tax
purposes.) Deductions from Federal Taxable Income
+ Charitable contribution carryovers. before the Net Operating Loss Deduction
(Charitable contributions may be and Special Deductions (The list is not all
deducted for excise tax purposes in inclusive.) [Tenn. Code Ann. § 67-4-
the tax year that they are made. 2006(b)(2)]
Carryovers are not permitted.)
+ Non-business losses net of related + Dividends earned by a taxpayer that
expenses. owns 80% or more of the
+ Any gain that is not included in net outstanding capital stock of a
earnings or loss that is realized by corporation. (Expenses incurred in
an S corporation attributable to a earning the dividends need not
IRC § 338(h)(10) election . reduce this deduction.)
+ Amounts included in federal taxable
income but not taxable under state
law.
23Franchise and Excise Taxes
The Excise Tax (continued) donation that the sales and use tax
has actually been paid. [Tenn. Code
+ Actual charitable contributions Ann. § 67-4-2006(b)(2)(M)]
made by the taxpayer during the tax + Effective for tax years beginning on
year but not deducted for federal or after July 1, 2005, 75% of the
purposes. (Contributions may be value of charitable donations made
deducted for excise tax purposes to IRC 501(c)(3) exempt nonprofit
in the tax ye year that they are corporations, associations, and
made. Carryovers are not organizations; to IRC 501(c)(4)
permitted.) (Real property exempt nonprofit civic leagues or
contributed must be valued at book organizations; and to IRC 501(c)(5)
value rather than fair market value.) and 501(c)(6) exempt associations
and organizations. The receiving
+ Capital losses incurred during the exempt organization must be
tax year not deducted for federal registered with the Department of
purposes. (Capital losses may be Revenue for sales and use tax
deducted for excise tax purposes in purposes, must spend the donated
the tax year incurred. Capital loss funds on goods or services subject
carryovers or carrybacks are not to the sales and use tax, and must
permitted.) certify to the taxpayer making the
+ Net operating losses carryovers. donation that the sales and use tax
(The carryover period for losses has actually been paid. Effective
allocable to Tennessee is 15 years June 27, 2006, the exemption for
for losses incurred in fiscal years donations made to organizations
ending on or after January 15, 1984. exempt under IRC 501(c)(6) is
Net operating losses can be claimed eliminated. [Tenn. Code Ann. § 67-4-
only by the entity that suffered the 2006(b)(2)(P)]
loss. Taxpayers are not entitled to + Any loss realized by an S
use net operating losses that corporation attributable to a IRC §
occurred before they became 338(h)(10) election. [Tenn. Code
subject to the excise tax.) Ann. § 67-4-2006(b)(Q)]
+ Non-business earnings. (Non- + Any loss on the sale of an asset
business earnings directly allocated based on the asset’s federal tax
to Tennessee under Tenn. Code basis without any adjustment as a
Ann. § 67-4-2011 are taxed in result of the taxpayer not having
Tennessee at 100%.) been subject to Tennessee excise
+ Effective for tax years beginning on tax during any portion of the period
or after July 1, 2004, 75% of the during which the taxpayer took
amount donated to a qualified depreciation on the asset for federal
public school support group. The income tax purposes. [Tenn. Code
school support group must be Ann. § 67-4-2006(b)(2)(C)]
registered with the Department of + Any amount in excess of reasonable
Revenue for sales and use tax rent (2% per month of the appraised
purposes, must spend the donated value of the property) that is
funds on goods or services subject received for the rental, leasing, or
to the sales and use tax, and must comparable use of industrial and
certify to the taxpayer making the commercial real property (not
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