FAE174 - Franchise and Excise Financial Institution and ... · Taxable Year Taxpayer Name Account No./FEIN page 3 Schedule G ‑ Determination of Real and Tangible Property Book Value

FAE174

TENNESSEE DEPARTMENT OF REVENUEFranchise and Excise Financial Institution and Captive Real Estate Investment Trust Tax Return

RV-R0012001 (10/19)

Tax Year Beginning

Tax Year Ending

Mailing Address

City

Legal Name

State ZIP Code

FEIN

Account Number

Taxpayer's Signature

Tax Preparer's Signature

Preparer's Address

Date Title

City State ZIP Code

Date TelephonePreparer's PTIN

NAICS SOS Control Number

Date Tennessee operations began (see instructions)

Preparer's Email Address

Schedule A ‑ Computation of Franchise Tax 1. Total net worth from Schedule F1, Line 3 or Schedule F2, Line 3 and Schedule F .................................................. (1) ______________________________________ 2. Total real and tangible personal property from Schedule G, Line 15 ........................................................................ (2) ______________________________________ 3. Franchise tax (25¢ per $100 or major fraction thereof on the greater of Lines 1 or 2; minimum $100) ............. (3) ______________________________________ Schedule B ‑ Computation of Excise Tax 4. Income subject to excise tax from Schedule J, Line 37 ................................................................................................ (4) ______________________________________ 5. Excise tax (6.5% of Line 4) .............................................................................................................................................. (5) ______________________________________ 6. Recapture of tax credit (from Schedule T, Line 13) ...................................................................................................... (6) ______________________________________ 7. Total excise tax due (add Lines 5 and 6) ....................................................................................................................... (7) ______________________________________ Schedule C ‑ Computation of Total Tax Due or Overpayment 8. Total franchise and excise taxes (add Lines 3 and 7) ............................................................. (8) ______________________________________ 9. Total credit from Schedule D, Line 9 (cannot exceed Line 8) ................................................ (9) ______________________________________ 10. Net tax (subtract Line 9 from Line 8; if Line 9 exceeds Line 8, enter zero here) ................ (10) ______________________________________ 11. Total payments from Schedule E, Line 7 ................................................................................. (11) ______________________________________ 12. Penalty (see instructions) ......................................................................................................... (12) ______________________________________ 13. Interest (see instructions) ............................................................................................................................................. (13) ______________________________________ 14. Penalty on estimated franchise and excise tax payments ....................................................................................... (14) ______________________________________ 15. Interest on estimated franchise and excise tax payments ...................................................................................... (15) ______________________________________ 16. Total amount due (overpaid) (add Lines 10, 12, 13, 14, and 15, subtract Line 11) ................................................ (16) ______________________________________ If overpayment reported on Line 16, complete A and/or B below: A. Credit to next year’s tax $ ______________________________________ B. Refund $ _______________________________

Round to the nearest dollar

Under penalties of perjury, I declare that I have examined this report, and to the best of my knowledge and belief, it is true, correct, and complete.Power of Attorney - Check YES if this taxpayer's

signature certifies that this tax preparer has the authority to execute this form on behalf of the taxpayer and is authorized to receive and inspect confidential tax information and to perform any and all acts relating to respec-tive tax matters.

YES

FOR OFFICE USE ONLY

Check all that apply:

a) Amended return

b) Final return

c) Public Law 86-272 applied to excise tax

e) Taxpayer has made an election to calculate net worth per the provisions of Tenn. Code Ann. § 67-4-2103(g)-(i)

g) Annualized income installment method for quarterly estimates election

h) Taxpayer has filed for federal extension

f) Taxpayer has filed the prescribed form to revoke its election made per Tenn. Code Ann. § 67-4-2103(g)-(i)

d) Captive REIT not owned by a bank, bank holding company or public REIT

1. Consolidated net worth (total assets less total liabilities of the affiliated group) ..................................... (1) ______________________________ 2. Franchise tax apportionment ratio (Schedule 174SC or 174NC) ................................................................. (2) ______________________________ 3. Total (multiply Line 1 by Line 2; enter here and on Schedule A, Line 1) ..................................................... (3) ______________________________

Schedule F2 ‑ Consolidated Net Worth

1. Net worth (total assets less total liabilities) .................................................................................................... (1) ______________________________ 2. Franchise tax apportionment ratio (Schedule N if applicable or 100%) ..................................................... (2) ______________________________ 3. Total (multiply Line 1 by Line 2; enter here and on Schedule A, Line 1) ..................................................... (3) ______________________________

Computation of Franchise Tax

Schedule D ‑ Schedule of Credits

Amount Paid 1. Overpayment from previous year, if available ........................................................................................... (1) _____________________________ 2. First quarterly estimate .............................................................................. (2a) ________________________ (2b) ____________________________ 3. Second quarterly estimate ......................................................................... (3a) ________________________ (3b) ____________________________ 4. Third quarterly estimate ............................................................................. (4a) ________________________ (4b) ____________________________ 5. Fourth quarterly estimate .......................................................................... (5a) ________________________ (5b) ____________________________ 6. Extension payment......................................................................................................................................... (6) _____________________________ 7. Total payments (add Lines 1 through 6; enter here and on Schedule C, Line 11) ................................. (7) _____________________________

1. Gross Premiums Tax Credit (cannot exceed Schedule C, Line 8) ................................................................ (1) _____________________________ 2. Tennessee income tax (cannot exceed Schedule B, Line 5) ......................................................................... (2) _____________________________ 3. Community Investment Credit ........................................................................................................................ (3) _____________________________ 4. Tennessee Rural Opportunity Fund Credit .................................................................................................... (4) _____________________________ 5. Tennessee Small Business Opportunity Fund Credit ................................................................................... (5) _____________________________ 6. Industrial Machinery and Research and Development Tax Credit from Schedule T, Line 11 .................. (6) _____________________________ 7. Job Tax Credit from Schedule X, Line 46 ......................................................................................................... (7) _____________________________ 8. Additional Annual Job Tax Credit from Schedule X, Line 38 ......................................................................... (8) _____________________________ 9. Total credit (add Lines 1 through 8; enter here and on Schedule C, Line 9) .............................................. (9) _____________________________

Schedule E ‑ Schedule of Required Quarterly Installments and Payments

Required Quarterly Installments

Account No./FEINTaxable Year Taxpayer Namepage 2

%

%

Schedule F1 ‑ Captive Real Estate Investment Trust Net Worth

Schedules F and SF are used by taxpayers that have not made the consolidated net worth election and by members that were part of a group that made the election, but exited that group during the taxable year due to a sale, merger, or like event. The ratios computed on Schedule SF are used to compute the franchise tax base reported on Schedule F.

Schedule SF ‑ Franchise Tax Apportionment ‑ Standard

Parent or Unitary Group Member Name FEIN TennesseeReceipts

EverywhereReceipts Ratio

Schedule F ‑ Non‑Consolidated Net Worth

Parent or Unitary Group Member Name FEIN NetWorth Indebtedness

EverywhereTotal

Ratio from Schedule SF

TennesseeTotal

Total (Enter here and on Schedule A, Line 1) ...........................................................................................................................................


Schedule G ‑ Determination of Real and Tangible Property Book Value of Property Owned ‑ Cost less accumulated depreciation In Tennessee

Net Annual Rental Paid for: 11. Real property .............................................................................................. _____________________ (11) _____________________________ 12. Machinery and equipment used in manufacturing and processing .... _____________________ (12) _____________________________ 13. Furniture, office machinery, and equipment .......................................... _____________________ (13) _____________________________ 14. Delivery or mobile equipment .................................................................. _____________________ (14)

x8x3x2x1

15. Tennessee total (add Lines 10 through 14; enter here and on Schedule A, Line 2) ................................ (15) _____________________________

1. Gross receipts or sales per federal income tax return ................................................................................ (1) _____________________________Schedule H ‑ Gross Receipts

Rental Value Of Property Used But Not Owned In Tennessee

1. Land .................................................................................................................................................................... (1) _____________________________ 2. Buildings, leaseholds, and improvements ..................................................................................................... (2) _____________________________ 3. Machinery, equipment, furniture, and fixtures ............................................................................................. (3) _____________________________ 4. Automobiles and trucks .................................................................................................................................... (4) _____________________________ 5. Prepaid supplies and other tangible personal property ............................................................................. (5) _____________________________ 6. Ownership share of real and tangible property of a partnership that does not file a return ................ (6) _____________________________ 7. a. Inventories and work in progress............................................................................................................. (7a) _____________________________ b. Exempt inventory in excess of $30 million .............................................................................................(7b) _____________________________ 8. Certified pollution control equipment (include copy of certificate) ........................................................... (8) _____________________________ 9. Exempt required capital investments ............................................................................................................ (9) _____________________________ 10. Subtotal (add Lines 1 through 7a, subtract Lines 7b through 9) ............................................................... (10) _____________________________

Additions 1. Taxable income or loss before net operating loss deduction and special deductions (federal Form 1120, Line 28) and ordinary income or loss (federal Form 1065, Line 22) .............................................(1) ___________________________ 2. a. REIT taxable income before net operating loss deduction and special deductions (federal Form 1120-REIT, Line 20) ..............................................................................................(2a) ________________________ b. REIT deduction for dividends paid (federal Form 1120-REIT, Line 21b) ..... (2b) ________________________ c. REIT taxable income after dividends paid deduction (subtract Line 2b from Line 2a) ............................. (2c) ___________________________ 3. Unrelated business taxable income (federal Form 990-T, Line 30) ...................................................................(3) ___________________________ 4. Other: federal Form __________ ..............................................................................................................................(4) ___________________________ 5. Contribution carryover from prior period(s) ........................................................................................................(5) ___________________________ 6. Capital gains offset by capital loss carryover or carryback ................................................................................(6) ___________________________ 7. Total additions (add Lines 1 through 6) ...............................................................................................................(7) ___________________________ Deductions: 8. Contributions in excess of amount allowed by federal government ................................................................(8) ___________________________ 9. Portion of current year’s capital loss not included in federal taxable income ................................................(9) ___________________________ 10. Total deductions (add Lines 8 and 9) ..................................................................................................................(10) ___________________________ 11. Total (subtract Line 10 from Line 7; enter here and on Schedule J, Line 1) ...................................................(11) ___________________________

Additions: 1. Business Income from federal Form 1040, Schedule C ......................................................................................(1) ___________________________ 2. Business Income from federal Form 1040, Schedule D .....................................................................................(2) ___________________________ 3. Business Income from federal Form 1040, Schedule E ......................................................................................(3) ___________________________ 4. Business Income from federal Form 1040, Schedule F ......................................................................................(4) ___________________________ 5. Business Income from federal Form 4797 ...........................................................................................................(5) ___________________________ 6. Other: federal Form __________ , Schedule ____________ ....................................................................................(6) ___________________________ 7. Total additions (add Lines 1 through 6) ................................................................................................................(7) ___________________________ Deductions: 8. Amount subject to self-employment taxes distributable or paid to the single member (if negative, enter zero; include on Schedule K, Line 3) ......................................................................................................................(8) ___________________________ 9. Total (subtract Line 8 from Line 7; enter here and on Schedule J, Line 1)........................................................(9) ___________________________

Additions: 1. Ordinary income or loss (federal Form 1065, Line 22) .......................................................................................(1) ___________________________ 2. Income items specifically allocated to partners, including guaranteed payments to partners ...................(2) ___________________________ 3. Any net loss or expense distributed to a publicly traded REIT .........................................................................(3) ___________________________ 4. Total additions (add Lines 1 through 3) ................................................................................................................(4) ___________________________ Deductions: 5. Expense items specifically allocated to partners not deducted elsewhere .....................................................(5) ___________________________ 6. Amount subject to self-employment taxes distributable or paid to each partner or member net of any pass-through expense deducted elsewhere on this return (if negative, enter zero) (include on Schedule K, Line 3) ..................................................................................................................................................(6) ___________________________ 7. Amount of contribution to qualified pension or benefit plans of any partner or member, including all IRC 401 plans (include on Schedule K, Line 3) ...............................................................................................(7) ___________________________ 8. Any net gain or income distributed to a publicly traded REIT .........................................................................(8) ___________________________ 9. Any loss on the sale of an asset sold within 12 months after the date of distribution ..................................(9)10. Total deductions (add Lines 5 through 9) ...........................................................................................................(10) ___________________________ 11. Total (subtract Line 10 from Line 4; enter here and on Schedule J, Line 1) ...................................................(11) ___________________________

Schedule J4 ‑ Computation of Net Earnings for Entities Treated as Corporations and Other Entities

Schedule J2 ‑ Computation of Net Earnings for a Single Member LLC Filing as an Individual

Computation of Excise TaxSchedule J1 ‑ Computation of Net Earnings for Entities Treated as Partnerships

Schedule J3 ‑ Computation of Net Earnings for Entities Treated as Subchapter S Corporations Additions: 1. Ordinary income or loss (federal Form 1120S, Line 21) .....................................................................................(1) ___________________________ 2. Income items to extent includable in federal income were it not for "S" status election .............................(2) ___________________________ 3. Total additions (add Lines 1 and 2) .......................................................................................................................(3) ___________________________ Deductions: 4. Expense items to extent includable in federal expenses were it not for "S" status election ........................(4) ___________________________ 5. Any loss on the sale of an asset sold within 12 months after the date of distribution ..................................(6) ___________________________ 6. Total deductions (add Lines 4 and 5) ....................................................................................................................(6) ___________________________ 7. Total (subtract Line 6 from Line 3; enter here and on Schedule J, Line 1) .....................................................(7) ___________________________


1. Adjusted federal income or loss (enter amount from Schedule J1, J2, J3, or J4) ................................................(1) ___________________________ 2. Expenses from transactions between members of the group ............................................................................(2) ___________________________ 3. Dividends and receipts from transactions between members of the group ....................................................(3) ___________________________ 4. Net income for group (add Lines 1 and 2, subtract Line 3) ..................................................................................(4) ___________________________ Additions: 5. Intangible expenses paid, accrued or incurred to an affiliated business entity or entities deducted for federal income tax purposes ...................................................................................................................................(5) ___________________________ 6. Any depreciation under the provisions of IRC Section 168 not permitted for excise tax purposes due to Tennessee permanently decoupling from federal bonus depreciation ............................................................(6) ___________________________ 7. Gain on the sale of an asset sold within 12 months after the date of distribution to a nontaxable entity ...(7) ___________________________ 8. Tennessee excise tax expense (to the extent reported for federal purposes) ..................................................(8) ___________________________ 9. Gross premiums tax deducted in determining federal income and used as an excise tax credit ..................(9) ___________________________ 10. Interest income on obligations of states and their political subdivisions, less allowable amortization ......(10) ___________________________ 11. Depletion not based on actual recovery of cost ..................................................................................................(11) ___________________________ 12. Excess fair market value over book value of property donated........................................................................(12) ___________________________ 13. Excess rent to/from an affiliate. A taxpayer paying excess rent enters a positive amount on this line. A taxpayer receiving excess rent, to the extent added back to net earnings by its affiliate, enters a negative amount on this line. ................................................................................................................................(13) ___________________________ 14. Captive REIT Dividends Paid Deduction taken in computing federal income (does not apply to a captive REIT that is owned, directly or indirectly, by a bank, bank holding company or a public REIT) .....................(14) ___________________________ 15. Net loss or expense received from a pass-through entity subject to the excise tax (attach schedule) .......(15) ___________________________ 16. An amount equal to five percent of IRC Section 951A global intangible low-taxed income deducted on Line 29 ...............................................................................................................................................(16) ___________________________17. Total additions (add Lines 5 through 16) ................................................................................................................(17) ___________________________ Deductions: 18. Any depreciation under the provisions of IRC Section 168 permitted for excise tax purposes due to Tennessee permanently decoupling from federal bonus depreciation ...........................................................(18) ___________________________ 19. Any excess gain (or loss) from the basis adjustment resulting from Tennessee permanently decoupling from federal bonus depreciation ..........................................................................................................................(19) ___________________________ 20. Dividends received from corporations, at least 80% owned ............................................................................(20) ___________________________ 21. Donations to qualified public school support groups and nonprofit organizations .....................................(21) ___________________________ 22. Any expense, other than income taxes, not deducted in determining federal taxable income for which a credit against the federal income tax is allowable ...........................................................................................(22) ___________________________ 23. Adjustments related to the safe harbor lease election ......................................................................................(23) ___________________________ 24. Nonbusiness earnings (from Schedule M, Line 8) ...............................................................................................(24) ___________________________ 25. Intangible expenses paid, accrued or incurred to an affiliated entity or entities (from Form IE, Line 4) Attach From IE - Intangible Expense Disclosure ..................................................................................................(25) ___________________________26. Intangible income from an affiliated business entity or entities if the corresponding intangible expenses have not been deducted by the affiliate(s) under Tenn. Code Ann. § 67-4-2006(b)(2)(N) ............(26) ___________________________ 27. Bad debts not deducted but allowed by IRC Section 585 or 593 as it existed on December 31, 1986 ........(27) ___________________________ 28. Net gain or income received from a pass-through entity subject to the excise tax (attach schedule).........(28) ___________________________ 29. IRC Section 951A global intangible low-taxed income ........................................................................................(29) ___________________________ 30. Grants from governmental units to the extent included in federal taxable income ......................................(30) ___________________________ 31. Total deductions (add Lines 18 through 30) ........................................................................................................(31) ___________________________ Computation of Taxable Income: 32. Total business income (loss) (add Lines 4 and 17, subtract Line 31; if loss, complete Schedule K) ..............(32) ___________________________ 33. Excise tax apportionment ratio (Schedule SE or N, if applicable, or 100%) .....................................................(33) ___________________________ 34. Apportioned business income (loss) (multiply Line 32 by Line 33) ...................................................................(34) ___________________________ 35. Nonbusiness earnings directly allocated to Tennessee (from Schedule M, Line 9) ........................................(35) ___________________________ 36. Loss carryover from prior years (from Schedule U) ............................................................................................(36) ___________________________ 37. Subject to excise tax (add Lines 34 and 35, subtract Line 36; enter here and on Schedule B, Line 4) .........(37) ___________________________

1. Net loss from Schedule J, Line 32 ............................................................................................................................(1) ___________________________ Additions: 2. Amounts reported on Schedule J, Lines 20 and 24 ..............................................................................................(2) ___________________________ 3. Amounts reported on Schedule J1, Lines 6 and 7, or Schedule J2, Line 8 ..........................................................(3) ___________________________ 4. Reduced loss (add Lines 1 through 3; if net amount is positive, enter zero) .....................................................(4) ___________________________ 5. Excise tax apportionment ratio (Schedule SE or N, if applicable, or 100%) .......................................................(5) ___________________________ 6. Current year loss carryover available (multiply Line 4 by Line 5) ........................................................................(6) ___________________________

Schedule J ‑ Computation of Net Earnings Subject to Excise Tax

%

Schedule K ‑ Determination Of Loss Carryover Available

%


1. Land, buildings, leaseholds, and improvements .......................................... _______________________________________________________________________________________________ 2. Machinery, equipment, furniture, and fixtures ....................................................... ____________________________________________________________________________________________________________ 3. Automobiles and trucks ........................... _______________________________________________________________________________________________ 4. Inventories and work in progress .......... _______________________________________________________________________________________________ 5. Prepaid supplies and other property ..... _______________________________________________________________________________________________ 6. Ownership share of real and tangible property of a partnership that does not file a return ............................................... _______________________________________________________________________________________________ 7. Total (add Lines 1 through 6) ................. _______________________________________________________________________________________________ 8. Average value (add Lines 7(a) & (b), divide by two) ............................................ _______________________________________________________________________________________________ 9. Rented property (rent paid x 8) .............. ______________________________________________________________________________________________

1. Receipts from leases of real property .............................................................................. (1) _________________________________________________ 2. Interest income and other receipts from loans or installment sales secured by real or tangible personal property .................................................................................... (2) _________________________________________________ 3. Interest income and other receipts from consumer loans which are not secured .... (3) _________________________________________________ 4. Interest income and receipts from commercial and installment loans which are not secured by real or tangible property ......................................................................... (4) _________________________________________________ 5. Receipts and fee income from letters of credit, acceptance of drafts, and other devices for guaranteeing loans or credit .......................................................................... (5) _________________________________________________ 6. Interest income, merchant discount, and other receipts including service charges from credit card and travel and entertainment credit cards, and credit cardholders’ fees .................................................................................................................. (6) _________________________________________________ 7. Sales of an intangible or tangible asset ............................................................................ (7) _________________________________________________ 8. Receipts from the sale of a security by a dealer in such security ................................. (8) _________________________________________________ 9. Receipts from fiduciary and other services...................................................................... (9) _________________________________________________ 10. Receipts from the issuance of travelers checks, money orders and U.S. savings bonds .................................................................................................................... (10) _________________________________________________ 11. Interest income and other receipts from participation loans ..................................... (11) _________________________________________________ 12. Other business receipts .................................................................................................... (12) _________________________________________________ 13. Total receipts (add Lines 1 through 12) .......................................................................... (13) _________________________________________________ 14. Apportionment ratio (divide total Tennessee receipts by total everywhere receipts; enter here and on Schedule J, Line 33) .................................................................................................... (14) _________________________

%

In Tennessee Everywhere

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Taxable Year Taxpayer Name Account No./FEIN

Schedule SE ‑ Financial Institution Apportionment Schedule for Excise Tax Purposes

Schedule N ‑ Apportionment ‑ Captive REITS

Property In Tennessee (Combined) Total Everywhere (Combined)

Use triple weighted sales factor

b. End of Taxable Yeara. Beginning of Taxable Year b. End of Taxable Yeara. Beginning of Taxable YearUse original cost of assets

a. In Tennessee c. Franchise Ratio d. Excise Ratiob. Total Everywhere

10. Property factor (add Lines 8 and 9) ........ ______________________________________________________________________________________________ 11. Payroll factor ............................................. ______________________________________________________________________________________________ 12. Sales factor (business gross receipts) .... ______________________________________________________________________________________________ 13. Total ratios (add Lines 10, 11 and (Line 12 x three)) ....................................... ______________________________________________________________________________________________ 14. Apportionment ratio (divide Line 13 by five, or by the number of factors with everywhere values greater than zero) (Enter franchise ratio to Schedule F1, Line 2. Enter excise ratio on Schedule J, Line 33.) ............................................................................. _______________________________________________

% % % % % % % %

% %

1. ___________________________________________________________________________________________________________________________________________

2. ___________________________________________________________________________________________________________________________________________

3. ___________________________________________________________________________________________________________________________________________

4. ___________________________________________________________________________________________________________________________________________

5. ___________________________________________________________________________________________________________________________________________

6. ___________________________________________________________________________________________________________________________________________

7. ___________________________________________________________________________________________________________________________________________

8. ___________________________________________________________________________________________________________________________________________

9. ___________________________________________________________________________________________________________________________________________

Net AmountsAllocated Directly

to Tennessee

Total nonbusiness earnings (Enter here and on Schedule J, Line 24)

Nonbusiness earnings allocated directly (Enter here and on Schedule J, Line 35)

Description of Nonbusiness Earnings Gross *Less Related Net (If further description is necessary, see below) Amounts Expenses Amounts

If necessary, describe source of nonbusiness earnings and explain why such earnings do not constitute business earnings as defined above. Enumerate these items to correspond with items listed above.

Schedule M ‑ Nonbusiness Earnings Allocation

Allocation and apportionment schedules may be used only by taxpayers doing business outside the state of Tennessee within the meaningof Tenn. Code Ann. §§ 67-4-2010 and 67-4-2110. The burden is on the taxpayer to show that the taxpayer has the right to apportion.

If all earnings are business earnings as defined below, do not complete this schedule. Any nonbusiness earnings, less related expenses, are subject to direct allocation and should be reported in this schedule.

Definitions:

"Business Earnings" -

1) earnings arising from transactions and activity in the regular course of the taxpayer’s trade or business, or

2) earnings from tangible and intangible property if the acquisition, use, management, or disposition of the property constitutes an integral part of the taxpayer’s regular trade or business operations

Earnings which arise from the conduct of the trade or trades or business operations of a taxpayer are business earnings, and the taxpayer must show by clear and cogent evidence that particular earnings are classifiable as nonbusiness earnings. A taxpayer may have more than one regular trade or business in determining whether income is business earnings.

"Nonbusiness Earnings" - all earnings other than business earnings

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Taxable Year Taxpayer Name Account No./FEIN

*As a general rule, the allowable deductions for expenses of a taxpayer are related to both business and nonbusiness earnings. Items such as administrative costs, taxes, insurance, repairs, maintenance, and depreciation are to be considered. In the absence of evidence to the contrary, it is assumed that the expenses related to nonbusiness rental earnings will be an amount equal to 50% of such earnings and that the expenses related to other nonbusiness earnings will be an amount equal to 5% of such earnings. (see Tenn. Comp. R. & Regs.1320-06-01.23(3)).

franchise and excise tax liability, but any unused credit may be carried forward 15 years under Tenn. Code Ann. § 67-4-2009(3).

The Industrial Machinery Tax Credit previously established on this form must be partially recaptured if the equipment on which it was based was sold or removed from the state before the end of the equipment’s life as established for federal income tax purposes. The recapture amount is a percentage of useful life remaining at the time of sale or removal multiplied by the credit originally established on this form. Previously established credits have either offset tax or populated the carryover table Schedule V. Complete the Industrial Machinery Credit Recapture Worksheet and then enter the applicable recapture amounts on Lines 12 and 13 below.

1. Purchase price of industrial machinery and research and development equipment ....................................(1) __________________________

2. Percentage allowed (generally 1%*) ......................................................................................................................(2) __________________________

3. Current year credit (multiply Line 1 by Line 2) ......................................................................................................(3) __________________________

4. Credit available from prior year(s) (from Schedule V) ..........................................................................................(4) __________________________

5. Total credit available (add Lines 3 and 4) ..............................................................................................................(5) __________________________

6. Franchise and excise tax liability before any credits (add Schedule A, Line 3 and Schedule B, Line 5) ..........(6) __________________________

7. Limitation on credit (50% of Line 6) .......................................................................................................................(7) __________________________

8. Franchise and excise tax liability before any credits (add Schedule A, Line 3 and Schedule B, Line 5) .........(8) __________________________

9. Credits from Schedule D, Lines 1 through 5 and Schedule D, Line 8 .................................................................(9) __________________________

10. Tax before Industrial Machinery Credit (subtract Line 9 from Line 8) .............................................................(10) __________________________

11. Amount available in current year (enter the smaller value of Lines 5, 7, or 10 here, and on

Schedule D, Line 6) .................................................................................................................................................(11) __________________________

Franchise and excise taxes may be reduced by a credit on industrial machinery and research and development equipment purchased during the tax period covered by the return and located in Tennessee. The credit is generally computed at 1% of the purchase price of qualified industrial machinery and research and development equipment. The credit taken on any return cannot exceed 50% of the current year’s

Schedule T ‑ Industrial Machinery and Research and Development Equipment Tax Credit

Part 1: Tax Credit Computation

%

*The percentage allowed on Part 1, Line 2 above is 1%, unless the taxpayer has met the requirements of Tenn. Code Ann. § 67-4-2009(3)(I) and has been approved by the Commissioner of Revenue for an enhanced rate based on the investment amount. The statutory minimum investment requirements and applicable rates for the enhanced credit are shown on the following chart:

Minimum Required Capital Investment Rate of Credit $100,000,000 3% $250,000,000 5% $500,000,000 7% $1,000,000,000 10%

page 8

Account No./FEINTaxable Year Taxpayer Name

Part 2: Recapture of Tax Credit

12. Reduction to credit carryover table, Schedule V, from recapture worksheet, Part 2, Line 16 ....................(12) __________________________

13. Recapture of credit from recapture worksheet, Part 2, Line 17 (enter here and on Schedule B, Line 6) ....(13) __________________________

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Period Industrial Machinery Year Ended Original Return or Used in Credit Carryover (MM/YY) as Amended Prior Year(s) Expired or Recaptured Available

Total Amount (Enter here and on Schedule J, Line 36) ............................................................................

Total Amount (Enter here and on Schedule T, Line 4) .............................................................................

Schedule V ‑ Schedule of Industrial Machinery and Research and Development Equipment Credit Carryover

Period Year Ended Original Return or Used in Loss Carryover (MM/YY) as Amended Prior Year(s) Expired Available

Schedule U ‑ Schedule of Loss Carryover

Net operating losses may be carried forward and used to offset income for up to 15 years or until fully utilized, whichever occurs first. Tenn. Code Ann. § 67-4-2006(c)(8) requires that loss carryover be reduced by the Tennessee portion of discharge of indebtedness income excluded from federal gross income under IRC Section 108(a) where the bankruptcy discharge occurs on or after October 1, 2013. See Excise Tax Report of Bankruptcy Discharge form and the above referenced code section for more information.

123456789

101112131415

123456789

101112131415

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Account No./FEINTaxable Year Taxpayer Name

Industrial Machinery Credit may be carried forward and used to offset franchise and excise tax for up to 15 years or until fully utilized, whichever occurs first.

General Information

The beginning and ending dates of the tax year must be entered. The tax year covered must coincide with the

federal return. A return can cover a 52/53-week filing period, but cannot otherwise exceed 12 months.

Enter the franchise and excise account number. This number may be found by using Tennessee Taxpayer Access

Point (TNTAP) available on the Department’s website at www.tn.gov/revenue.

Enter the FEIN and/or Tennessee Secretary of State Control Number. Also enter the North American Industry

Classification System (NAICS) code.

Check all of the boxes in the top right of the return that apply to the taxpayer.

a) Check the amended return box if the return reflects changes from a previously filed return.

b) Check the final return box if all of the assets of the business have been liquidated and distributed and no

further returns are required to be filed. If the final return box is checked, the Department may request a

schedule of liquidation, distribution, or disposition of all assets and/or Final Return Worksheets (available

on the Department’s website).

c) Check this box to claim the protections afforded by P.L. 86-272 and file only the franchise tax schedules.

d) Check this box if the taxpayer is a captive Real Estate Investment Trust (REIT) that is not owned by a bank,

bank holding company or a public REIT.

e) Check this box to indicate that the Consolidated Net Worth Election Registration Application has been

filed. This election is a group election that is binding for five years.

f) Check this box if the Consolidated Net Worth Election Registration Application was filed during the tax

period with the revoke election box checked. Complete Sch. F1- Non-Consolidated Net worth.

g) The election to use the alternative annualized income installment method of computing the required

estimated tax payments can only be made on an original tax return and must be made annually. See the

Estimated Franchise and Excise Tax Payments Worksheet for additional information and to determine

the required quarterly estimates under this alternative method. The amounts from Line 23 of the

worksheet should be reported on Schedule E, Lines 2(a) through 5(a).

h) Check this box if a federal income tax extension was filed.

Date Tennessee operations began should be completed if this is the initial return. Taxpayers incorporated or

otherwise formed in Tennessee must prorate the franchise tax on the initial return from the date formed or the

date Tennessee operations began, whichever occurred first. Taxpayers incorporated or otherwise formed

outside Tennessee must prorate the franchise tax on the initial return from the date Tennessee operations

began.

A taxable entity that is incorporated, domesticated, qualified or otherwise registered to do business in Tennessee

that was inactive in Tennessee for the entire taxable period and owes only the minimum tax may file only page 1 of

this return and omit the remaining pages.

http://www.tn.gov/revenue

Schedule A – Computation of Franchise Tax

Line 1: Enter the sum of the amounts from Schedule F and Schedule F2, Line 3. Generally, only one schedule

is completed. However, both are completed if a member of a group that has made the consolidated

net worth election exits that group (due to sale, merger, or like event) before the group's period end

date. In that case, the exiting member completes Schedule F, and the remaining group members

complete Schedule F2. Captive real estate investment trusts (REITs) enter the value from Schedule F1,

Line 3 on this line.

Line 2: Enter amount from Schedule G, Line 15.

Line 3: Multiply the greater of Line 1 or 2 by $0.25 per $100 or major fraction thereof. The minimum tax is

$100. Franchise tax may be prorated on short period returns, but not below the $100 minimum.

Complete the Short Period Return Worksheets and retain them for your records when filing a short

period return. The franchise tax may not be prorated on returns covering 52 weeks filed by 52/53

week filers.

Schedule B – Computation of Excise Tax

Line 4: Enter amount from Schedule J, Line 37.

Line 5: Multiply amount on Line 4 by 6.5%. If Line 4 is a loss, enter zero.

Line 6: Enter amount from Schedule T, Line 13.

Line 7: Add Lines 5 and 6.

Schedule C – Computation of Total Tax Due or Overpayment

Line 8: Add Schedule A, Line 3, and Schedule B, Line 7. This is the total franchise and excise tax liability.

Line 9: Enter the total available credits from Schedule D, Line 9. Total credits cannot exceed the total

franchise and excise amount on Line 8.

Line 10: Subtract Line 9 from Line 8. This value must be zero or greater.

Line 11: Enter total payments reported on Schedule E, Line 7. If filing an amended return, subtract any tax

refund received and reduce payment amounts reported in Schedule E accordingly.

Line 12: Penalty is calculated at a rate of 5% for each 30-day period, or portion thereof, that a return is

delinquent, up to a maximum of 25% of the delinquent amount. The minimum penalty is $15 for the

delinquent filing of a return.

Line 13: Interest is due on any amount of tax that is paid after the statutory due date of the return. The

interest rate is determined in accordance with Tenn. Code Ann. § 67-1-801. The current interest rate

can be found at www.tn.gov/revenue under Tax Resources.

Line 14: Penalty on estimated franchise and excise tax payments is calculated at a rate of 2% per month, or

portion thereof, that an estimated payment is deficient or delinquent, up to a maximum of 24% of the

deficient or delinquent amount. It is calculated from the due date of the estimated payment through

the date paid or the due date of the return, whichever is earlier.

Line 15: Interest is calculated on estimated franchise and excise tax payments on any deficient or delinquent

amount. The rate of interest is the same as determined on Line 13. It is calculated from the due date

of the estimated payment through the date paid or the due date of the return, whichever is earlier.

Line 16: Add Lines 10, 12, 13, 14 and 15, and subtract Line 11. If an overpayment exists on this line, enter the

amount to be credited to the next year on Line A and/or to be refunded on Line B. If a refund of $200

or more is requested on Line B of an amended return, a Report of Debts Form must be completed and

filed with the return.

http://www.tn.gov/revenue

Schedule D – Schedule of Credits

Line 1: A taxpayer may take a credit for gross premium tax paid to the Department of Commerce and

Insurance during the period covered by this return, excluding the 0.4% Tennessee Occupational Safety

and Health Act (TOSHA) surcharge. If the credit is taken, this same amount should be added to

taxable income on Schedule J, Line 9. A taxpayer may elect to forego the credit instead of adding back

the deduction in Schedule J.

Line 2: Enter the amount of any Tennessee income tax paid during the period covered by this return. Cannot

exceed excise tax due listed on Schedule B, Line 5.

Line 3: Enter any Community Investment Credit available per Tenn. Code Ann. § 67-4-2109(h).

Line 4: Enter any Tennessee Rural Opportunity Fund Credit available per Tenn. Code Ann. § 67-4-2109(I).

Line 5: Enter any Tennessee Small Business Opportunity Fund Credit available per Tenn. Code Ann. § 67-4-

2109(I).

Line 6: Enter the amount of Industrial Machinery Credit from Schedule T, Line 11.

Line 7: Enter the amount of Job Tax Credit from Schedule X, Line 46.

Line 8: Enter the amount of Additional Annual Job Tax Credit from Schedule X, Line 38.

Line 9: Add Lines 1 through 8 and enter here and on Schedule C, Line 9. Total credits may not exceed the

amount on Schedule C, Line 8.

Schedule E – Schedule of Payments

Lines 2a-5a: Enter the required quarterly installments from the applicable line of the Estimated Franchise and

Excise Tax Payments Worksheet.

Lines 1-6: Enter any overpayment from a prior period, estimated tax payments, and extension payment on the

applicable lines.

Line 7: Total the amounts in the second column, and enter here and on Schedule C, Line 11.

Schedule F – Non-consolidated Net Worth

All amounts in this schedule should be determined in accordance with generally accepted accounting principles

(GAAP). However, financial institutions that are not filing a combined return and do not maintain GAAP records may

complete this schedule based on records used for federal tax purposes, provided this method reflects the

taxpayer's activity.

Net worth is total assets less total liabilities computed in accordance with the above instructions. To the extent that

a corporation is inadequately capitalized, indebtedness to or guaranteed by a parent corporation or affiliated

corporation must be added back, TENN. COMP. R. & REGS. 1320-06-01.-15. This amount cannot be a deduction.

Enter the apportionment ratio as computed on Schedules SF. If the entity is not entitled to apportion, the ratio

entered on Schedule SF and this schedule should be 100%. Total the last column, and enter this amount here and

on Schedule A, Line 1.

Schedule SF – Franchise Tax Apportionment – Standard

This apportionment schedule is used by financial institutions or unitary groups of financial institutions who have not

elected to compute net worth on a consolidated basis. In addition, this apportionment schedule is used by any

member that exits a group that has made the consolidated net worth election. This may occur due to a change in

ownership, merger, or liquidation of the member. The member exiting the group must compute its net worth on

Schedule F. The remaining group members continue to be bound by the consolidated net worth election and would

complete Schedule F2. Tenn. Code Ann. § 67-4-2103(d)

List each unitary member and compute their franchise tax apportionment ratio. The ratio(s) computed should be

reported on Schedule F to determine the net worth franchise tax base. See Tenn. Code Ann. § 67-4-2118 for a

complete list of receipts to be included and applicable allocation requirements. Values in the apportionment

schedules must be reported at the same value used for federal income tax purposes.

Schedule F1 – Captive Real Estate Investment Trust Group Net Worth

Schedule F1 is to be completed by Captive Real Estate Investment Trusts (REIT) and Captive REIT Affiliated Groups as

defined by Tenn. Code Ann. § 67-4-2004. Captive REITs and Captive REIT Affiliated Groups that are part of a larger

group that has made an election to file consolidated net worth must use Schedule F2.

Line 1: Net worth is total assets less total liabilities computed in accordance with the above instructions.

Line 2: Enter franchise tax apportionment ratio as computed on Schedule N, Line 14, Column c. If the

taxpayer is not entitled to apportion, enter 100%.

Line 3: Multiply Line 1 by Line 2. Enter this amount here and on Schedule A, Line 1.

Schedule F2 – Consolidated Net Worth

Schedule F2 is to be completed only if the consolidated net worth (CNW) election has been made. All amounts in

this schedule should be determined in accordance with generally accepted accounting principles (GAAP). An

affiliate exiting the group during this taxable year (due to sale, merger or like event) should not be included on this

schedule, but must complete Schedule F. Members in the CNW group at year end will be included in this schedule.

Line 1: Consolidated net worth is total assets less total liabilities of all members of the affiliated group

computed in accordance with the above instructions.

Line 2: Enter franchise tax apportionment ratio as computed on Schedule 174SC or 174NC.

Line 3: Multiply Line 1 by Line 2. Enter this amount here and on Schedule A, Line 1.

Schedule G – Determination of Real and Tangible Property

Values in Schedule G must be reported in accordance with generally accepted accounting principles (GAAP), except as permitted by Tenn. Code Ann. § 67-4- 2108(a)(3).

Lines 1-5: The amounts on these lines are based on the year-end net book values of the assets on the entity’s

book basis books and records. All tangible assets should be included in these values regardless of how

the assets are classified.

Line 6: This amount is calculated by multiplying the taxpayer’s percentage of ownership in a general

partnership, shown on federal Schedule K-1, by the amount of real and tangible property owned or

used in this state, shown on the balance sheet of an entity treated as a partnership for federal tax

purposes. Only include property from an entity treated as a partnership on this line if the entity itself

is not required to file a Tennessee franchise and excise tax return.

Line 7: Include all inventory and work in progress on Line 7a. Include all exempt inventory on Line 7b.

Exempt inventory is any amount of finished goods in excess of $30,000,000 in accordance with Tenn.

Code Ann. § 67-4-2108(a)(6)(B).

Line 8: Enter the net book value of pollution control equipment that has been certified by the Department of

Environment and Conservation. This amount will have been reported on Lines 2 or 3 above.

Line 9: Enter the amount of any required capital investments exempted by Tenn. Code Ann. § 67-4-

2108(a)(6)(G).

Line 10: Add Lines 1 through 7a, and subtract Lines 7b through 9.

Lines 11-14: The amounts in the first column are the total net annual rental paid for property located in Tennessee.

Multiply these amounts by the multiples, and enter each total on Lines 11 through 14. Rents must be

annualized for returns covering a period of less than 12 months. Complete the Short Period Return

Worksheets and retain them with your records when filing a short period return.

Line 15: Add Lines 10 through 14, and enter total here and on Schedule A, Line 2. This amount is the total real

and tangible property owned or used in Tennessee.

Schedule H - Gross Receipts

Line 1: Enter the amount of gross receipts or sales shown on the federal income tax return covering the same

tax period. This is Line 1a on federal Forms 1120, 1120S and 1065 and Schedule C, Line 1 on federal

Form 1040.

Schedule J1 – Net Earnings for Entities Treated as Partnerships

Line 1: Enter the amount of ordinary income (loss) from federal Form 1065, Line 22.

Line 2: Enter the amount of additional income items passed through to partners or members from federal

Form 1065, Schedule K, Lines 2 through 11. This includes guaranteed payments to partners.

Line 3: Enter any net loss or expense distributed to a publicly traded Real Estate Investment Trust (REIT) on

Schedule K-1. The name and FEIN of the REIT must be made available upon request

Line 4: Add Lines 1 through 3.

Line 5: Enter the amount of additional expense items passed through to partners or members from federal

Form 1065, Schedule K, Lines 12 and 13 a-d. However, do not include excess business interest expense

under 163(j) reported on federal Form 1065, Schedule K, 13d with a code K. In addition, do not report

contributions to a qualified pension or benefit plan of any partner or member on this line, but report

them on Line 7 instead.

Line 6: Enter the amount subject to self-employment taxes distributable or paid to each partner or member

net of any pass-through expense deducted elsewhere on this return, such as IRC Section 179

expenses and contributions. Do not enter a negative amount on this line. This deduction cannot

create a loss carryover. Include this amount on Schedule K, Line 3.

Line 7: Enter the amount of contribution to qualified pension or benefit plans of any partner or member,

including all IRC 401 plans. This deduction cannot create a loss carryover. Include this amount on

Schedule K, Line 3.

Line 8: Enter any net gain or income distributed to a publicly traded REIT on federal Schedule K-1. Attach a

schedule listing the name and FEIN of the REIT.

Line 9: Enter loss on the sale of an asset not already included in the taxpayer’s net earnings or loss that was

distributed to a member, partner, or certificate holder, when such asset was sold within 12 months of

the date of distribution. Thus, the loss is recognized by the entity making the asset distribution rather

than by the seller of the asset.

Line 10: Add Lines 5 through 9. This is the total amount of deductions.

Line 11: Subtract Line 10 from Line 4, and enter here and on Schedule J, Line 1.

Schedule J2 –Net Earnings for a Single Member LLC Filing as an Individual

Line 1: Enter the amount of business income (loss) from federal Form 1040, Schedule C, Line 31.

Line 2: Enter the amount of capital gain (loss) attributable to the LLC from federal form Schedule D. If it is a

loss, enter as a negative.

Line 3: Enter the amount of total income (loss) attributable to the LLC from federal Form 1040, Schedule E,

Line 41.

Line 4: Enter the amount of net profit (loss) attributable to the LLC from federal Form 1040, Schedule F, Line

34.

Line 5: Enter the amount of gain (loss) attributable to assets used by the LLC from federal Form 4797.

Line 6: Enter the amount of any income (loss) attributable to the LLC that is reported on any other federal

schedules and that is not reported on Lines 1 through 5 above. Please enter the type of federal form

and schedule in the space provided.


Line 8: Enter the amount subject to self-employment taxes distributable or paid to the single member. This

deduction cannot create a loss carryover. Include this amount on Schedule K, Line 3.

Line 9: Subtract Line 8 from Line 7 and enter here and on Schedule J, Line 1.

Schedule J3 – Net Earnings for Entities Treated as Subchapter S Corporations

Line 1: Enter the amount of ordinary income (loss) from federal Form 1120S, Line 21.

Line 2: S corporation’s pass-through income items are required to be added to ordinary income. This amount

should include the total income items as shown on federal Form 1120S, Schedule K.


Line 4: S corporation’s pass-through expense items are required to be deducted from ordinary income. This

amount should include the total expense items as shown federal Form 1120S, Schedule K, Lines 11-

12d.

Line 5: Enter loss on the sale of an asset not already included in the taxpayer’s net earnings or loss that was

distributed to a shareholder or certificate holder, when such asset was sold within 12 months of the

date of distribution. Thus, the loss is recognized by the entity making the asset distribution rather than

by the seller of the asset.

Line 6: Add Lines 4 and 5. This is the total amount of deductions.


Schedule J4 – Net Earnings for Entities Treated as Corporations and “Other” Entities

Line 1: Enter the amount of net earnings (loss) from federal Form 1120, Line 28. This is the amount of taxable

income or loss before the net operating loss deduction and special deductions. When one or more

group members are taxed as partnerships, include ordinary income (loss) from federal Form 1065,

Line 22. An Excise Tax Interest Expense Worksheet is available that shows the methodology that

should be used in determining the allowable interest expense deduction after any 163(j) limitation.

Line 2a: Enter the amount from federal Form 1120-REIT, Line 20.

Line 2b: Enter the amount from federal Form 1120-REIT, Line 21b.

Line 2c: Subtract Line 2b from Line 2a.

Line 3: Enter the amount of unrelated business taxable income before net operating loss deduction from

federal Form 990-T, Line 30.

Line 4: Enter the amount of net earnings or loss from any entity that reports on any other federal schedules

and that is not reported on Lines 1 through 3 above. Enter the type of federal form in the space

provided. Include pass-through income and expense items from federal Form 1065, Schedule K.

Line 5: Contribution carryovers must be added back to net income when used for federal purposes.

Line 6: Capital loss carryovers must be added to net income when offset against capital gains for federal tax

purposes.


Line 8: Contributions may be deducted, in full, for the year in which the contributions were made.

Line 9: Capital losses may be deducted, in full, the year the loss was incurred.

Line 10: Add Lines 8 and 9. This is the total amount of deductions.


Schedule J – Net Earnings Subject to Excise Tax

Line 1: Enter the amount of net earnings or loss reported on Schedule J1, J2, J3, or J4.

Line 2: Enter expenses from transactions between members of the group.

Line 3: Enter any dividends and receipts from transactions between members of the group.

Line 4: Add Lines 1 and 2, and subtract Line 3.

Line 5: Enter the intangible expense you paid, accrued or incurred to an affiliate and deducted on your

federal income tax return. “Intangible expense” and “affiliate” are defined by Tenn. Code Ann. § 67-4-

2004(23) and Tenn. Code Ann. § 67-4-2004(1)(A).

Line 6: Enter any depreciation under the provisions of IRC Section 168 not permitted for excise tax purposes

due to Tennessee permanently decoupling from federal bonus depreciation.

Line 7: Enter the amount of any gain on the sale of an asset sold within 12 months after distribution to a

nontaxable entity. This gain is to be reported by the entity that distributed the assets. If an asset was

distributed to a member, partner, shareholder, or certificate holder and no sale has taken place, or

the asset was sold 12 months after distribution, no entry is required. Failure to report this gain may

result in a 50% negligence penalty.

Line 8: Enter the amount of excise tax that was deducted in determining federal net income. In the event of

an over accrual in the prior year that causes the current year’s federal return to report a negative

“deduction,” this amount can be reported as a deduction.

Line 9: If a taxpayer elects to take the gross premiums tax paid to the Tennessee Department of Commerce

and Insurance as a credit against its franchise and excise taxes, the amount of the gross premiums tax

expensed for federal purposes that is used as an excise tax credit must be shown here.

Line 10: This amount is all tax-exempt interest as shown on the books of the taxpayer, net of disallowed

interest expense pursuant to 26 U.S.C. §§ 265 and 291.

Line 11: Enter any percentage depletion deducted for federal tax purposes.

Line 12: The excess of the fair market value over the book value of property donated must be added to net

income.

Line 13: The amount of rent that is paid, accrued, or incurred in excess of reasonable rent for real property

owned by an affiliate must be added back. Reasonable rent means rent that does not exceed 2% per

month of the appraised value for property tax purposes. A taxpayer receiving excess rent, to the

extent added back to net earnings by its affiliate, may enter a negative amount on this line.

Line 14: Enter any Captive Real Estate Investment Trust Dividends Paid Deduction taken in computing federal

income.

Line 15: Enter the amount of any pass-through net loss and expense included in the excise tax base by the

taxpayer. The pass-through items are reported to the taxpayer on federal Schedule K-1. This

adjustment is only made if the entity issuing the K-1 is itself subject to the excise tax and filing a

franchise and excise tax return. This adjustment is to prevent the duplicate recognition of the pass-

through loss and expense in the excise tax base. Attach Schedule(s) K-1 or a list showing the pass-

through entity’s name, FEIN, Tennessee franchise and excise tax account number, and the amount.

Line 16 Enter an amount equal to five percent (5%) of IRC Section 951A global intangible low-taxed income

(GILTI), before any related IRC Section 250 deduction.

Line 17: Add Lines 5 through 16. This is the amount of total additions.

Line 18: Enter any depreciation under the provisions of IRC Section 168 permitted for excise tax purposes due

to Tennessee permanently decoupling from federal bonus depreciation.

Line 19: Enter any excess gain reported for federal tax purposes resulting from the basis adjustment resulting

from Tennessee permanently decoupling from federal bonus depreciation.

Line 20: Enter all dividends received from corporations in which the entity owns at least 80% of the

corporation’s stock.

Line 21: Enter 75% of donations to qualified public school support organizations as defined in Tenn. Code Ann.

§ 67-4-2006(b)(2)(M) or nonprofit organizations as described in Tenn. Code Ann. § 67-4- 2006(b)(2)(P).

Line 22: Enter any expenses incurred, other than income taxes, that were not deducted for federal tax

purposes but were used as a credit against federal income tax.

Line 23: Enter adjustments provided by Tenn. Code Ann. §§ 67-4-2006(b)(1)(G) and (b)(2)(G)-(H) in relation to

federal “safe harbor” lease election permitted under Section 168 of the Economic Recovery Act of

1981. If the net adjustment is an increase in taxable income, enter a negative number on this line.

Line 24: Enter the amount from Schedule M, Line 8.

Line 25: Enter intangible expenses paid, accrued, or incurred to an affiliated entity or entities. In order to take

this deduction, Form IE - Intangible Expense Disclosure must be completed and attached to the return.

Otherwise, the deduction will be disallowed and a penalty may be assessed.

Line 26: Enter any intangible income from an affiliated business entity to the extent that the affiliate’s

corresponding intangible expense was included in the affiliate’s net earnings or loss, but was not

deducted on the affiliate’s excise tax return under Tenn. Code Ann. § 67-4-2006(b)(2)(N).

Line 27: Enter bad debts not deducted but allowed by IRC Sections 585 or 593, as that law existed on

December 31, 1986.

Line 28: Enter the amount of any pass-through net gain and income included in the excise tax base by the

taxpayer. The pass-through items are reported to the taxpayer on federal Schedule K-1. This

adjustment is only made if the entity issuing the K-1 is itself subject to the excise tax and filing a

franchise and excise tax return. This adjustment is to prevent the duplicate recognition of the gain and

income in the excise tax base. Attach Schedule(s) K-1 or a list showing the pass-through entity’s name,

FEIN, Tennessee franchise and excise tax account number, and the amount.

Line 29: Enter IRC Section 951A global intangible low-taxed income (GILTI), before any related IRC Section 250

deduction.

Line 30: Enter the amount of governmental grants included in federal taxable income as a result of the Tax

Cuts and Jobs Act of 2017, Pub. L. No. 1 15-97.

Line 31: Add Lines 18 through 30. This is the amount of total deductions.

Line 32: Add Lines 4 and 17, and subtract Line 31. This is the total business income. If the corporation has a net

loss, enter on Schedule K, Line 1.

Line 33: Enter apportionment ratio as computed on Schedule SE, Line 14 or Schedule N, Line 14, Column d. If

the entity is not entitled to apportion, enter 100%.

Line 34: Multiply Line 32 by Line 33.

Line 35: Enter the amount on Schedule M, Line 9.

Line 36: Enter loss carryover from prior year as shown on Schedule U. Please note that Tennessee loss

carryover is computed separately from federal loss carryover.

Line 37: Add Lines 34 and 35, and subtract Line 36. Enter this amount here and on Schedule B, Line 4. This is

the excise tax base.

Schedule K – Determination of Loss Carryover Available

Line 1: Enter the net loss on Schedule J, Line 32.

Line 2: Enter the total of amounts reported on Schedule J, Lines 20 and 24.

Line 3: Enter the total of amounts reported on Schedule J1, Lines 6 and 7 or on Schedule J2, Line 8.

Line 4: Add Lines 1 through 3. If the net amount is positive, then enter zero, and no loss carryover is available.

This is the net reduced loss carryover.

Line 5: Enter apportionment ratio as computed on Schedule SE, Line 14 or Schedule N, Line 14, Column d. If

the entity is not entitled to apportion, enter 100%.

Line 6: Multiply Line 4 by Line 5. This is the current year loss carryover available.

Schedule SE – Financial Institution Apportionment Schedule for Excise Tax Purposes

Values in the apportionment schedules must be reported at the same value used for federal income tax purposes.

Lines 1-12: Enter the applicable receipts for each line. See Tenn. Code Ann. § 67-4-2013(b) for the allocation

requirements used to determine Tennessee receipts.


Line 14: Divide the total Tennessee receipts in the first column by the total everywhere receipts in the second

column. Enter this ratio here and on Schedule J, Line 33.

Schedule N – Apportionment – Captive REITs

Values in the apportionment schedules must be reported at the same value used for federal income tax purposes.

Line 1-3: Complete all four columns for each line using the original tax-basis cost of the tangible property.

Beginning and end of year values are reported in the respective columns for property located in

Tennessee and for all property located everywhere.

Line 4: Include all types of inventory on this line.

Line 5: Enter other tangible assets and supplies not included in the other lines.

Line 6: Enter the taxpayer’s percentage of ownership (shown on federal Schedule K-1) multiplied by the

amount of real and tangible personal property shown on the balance sheet of an entity treated as a

partnership for federal tax purposes. Only include on this line the taxpayer’s ownership share of a

partnership’s property if the partnership itself is not required to file its own franchise and excise tax

return.


Line 8: Add Lines 7(a) and 7(b) and divide by two.

Line 9: Enter the year-end value of rented property, determined by multiplying the annual rental rate by

eight. The value of owned or leased mobile/moveable property will be determined based on the

percentage of time the property was within the state during the tax period. However, the value of an

automobile/truck assigned to a traveling employee is entirely sourced to Tennessee if the vehicle is

registered in this state or if the employee’s compensation is assigned to Tennessee for purposes of

the payroll factor.

Line 10: Add Lines 8 and 9 and enter in the appropriate columns. Divide 10(a) by 10(b) to calculate the

franchise and excise tax ratios.

Line 11: Enter the total compensation paid during the taxable period in Tennessee on Line 11(a) and the total

compensation paid everywhere during the taxable period on Line 11(b). Divide 11(a) by 11(b) to

calculate the franchise and excise tax payroll ratios.

Line 12: Enter the total business gross receipts during the taxable period in Tennessee on Line 12(a) and the

total everywhere business gross receipts during the taxable period on Line 12(b). Divide 12(a) by 12(b)

to calculate the franchise and excise tax sales ratios.

Line 13: Add Lines 10 and 11 and Line 12 multiplied by three.

Line 14: Divide Line 13 by five or by the number of factors with everywhere values greater than zero. Enter

here and on Schedule F1, Line 2 (the franchise tax ratio) and Schedule J, Line 33 (the excise tax ratio).

Schedule M – Nonbusiness Earnings

Lines 1-7: Income that meets the statutory definition of nonbusiness earnings is uncommon. Income that does

meet that definition and related expenses should be reported here. Deductions for taxpayer expenses

are generally related to both business and nonbusiness earnings. These expenses include, but are not

limited to, administrative costs, taxes, insurance, repairs, maintenance, and depreciation. In the

absence of evidence to the contrary, it is assumed that the expenses related to nonbusiness rental

earnings will be an amount equal to 50% of such earnings and that expenses related to other

nonbusiness earnings will be an amount equal to 5% of such earnings. See TENN. COMP. R. & REG. 1320-

06-01-.23(3).

Line 8-9: Add Lines 1 through 7 to arrive at net nonbusiness earnings and net nonbusiness earnings directly

allocated to Tennessee. Enter net nonbusiness earnings on Schedule J, Line 24, and enter net

nonbusiness earnings directly allocated to Tennessee on Schedule J, Line 35.

Schedule T – Industrial Machinery and Research and Development Tax Credit

Industrial machinery includes everything included under the industrial machinery definition in Tenn. Code Ann. §

67-6-102, computer and related equipment listed in Tenn. Code Ann. § 67-4-2009(3)(A)(ii) purchased as part of the

required capital investment made in order to qualify for the job tax credit, and certain research and development

equipment meeting the requirements of TENN. COMP. R. & REG. 1320-05-01-.128. This regulation requires that the

ultimate goal of the research and development must be one of the following:

basic research in a scientific field of endeavor;

advancing knowledge or technology in a scientific or technical field of endeavor;

the development of a new product, whether or not the new product is offered for sale;

the improvement of an existing product, whether or not the improved product is offered for sale;

the development of new uses of an existing product, whether or not a new use is offered as a rationale to

purchase the product; or

the design and development of prototypes, whether or not a resulting product is offered for sale.

Line 1: Enter the purchase price of industrial machinery or research and development equipment purchased or

leased during the tax period.

Line 2: Enter 1% unless the taxpayer has filed an Enhanced Industrial Machinery Credit Business Plan and received

prior approval for a higher rate under Tenn. Code Ann. § 67-4- 2009 (3)(I) for investments in excess of

$100,000,000.

Line 3: Multiply Line 1 by Line 2.

Line 4: Enter the amount of credit carryover available from Schedule V.


Line 6: Add Schedule A, Line 3 and Schedule B, Line 5.

Line 7: Enter 50% of Line 6 unless the taxpayer has prior approval from the Commissioner of Revenue and the

Commissioner of Economic and Community Development for a higher limitation under Tenn. Code Ann. §

67-4-2009(3)(H).

Line 8: Add Schedule A, Line 3 and Schedule B, Line 5.

Line 9: Add credits without the provision for carryover from Schedule D, Lines 1 through 5 and Schedule D, Line 8.

Line 10: Subtract Line 9 from Line 8.

Line 11: Enter the least of Lines 5, 7, or 10. Also enter this amount on Schedule D, Line 6.

Line 12: Enter the amount calculated on the Industrial Machinery Credit Recapture Worksheet, Part 2, Line 16.

Line 13: Enter the amount calculated on the Industrial Machinery Credit Recapture Worksheet, Part 2, Line 17. Also

enter this amount on Schedule B, Line 6.

Schedule U – Schedule of Loss Carryover

Net operating losses may be carried forward and used to offset income for up to 15 years or until fully used,

whichever occurs first.

Column Headings

Period Ended – Enter the ending date of the tax period in which the loss was incurred. List the oldest period

first.

Original Return or as Amended – Enter the amount of loss created in the corresponding tax period. If this

amount has been adjusted by the Department, or otherwise amended, enter the corrected amount. If there is

an adjustment that has not been previously reported to us, simply changing this line will not adjust our records.

Adjustments may be made by filing a form FAE170 with the amended box checked, filing Franchise and Excise Tax

Federal Income Revision form, or by correspondence with the Department.

Used in Prior Year(s) – Enter the cumulative amount of loss carryover that has previously been used. The oldest

loss within the 15 year carryover period is used first.

Expired – Enter the amount of loss carryover that was not used within the 15 year carryover period.

Loss Carryover Available – Enter each year’s carryover amount less amounts used or expired. Enter the total loss

carryover on Schedule J, Line 36.

Schedule V – Industrial Machinery Credit Carryover

Industrial Machinery Credit may be carried forward and used to offset franchise and excise tax for up to fifteen

years or until fully utilized, whichever occurs first.

Column Headings

Period Ended – Enter the ending date of the tax period in which the credit originated. List the oldest period first.

Original Return or as Amended – Enter the amount of credit created in the corresponding tax period. If this

amount has been adjusted by the Department, or otherwise amended, enter the corrected amount. If there is

an adjustment that has not been previously reported to us, simply changing this line will not adjust our records.

Adjustments must be made on the applicable Departmental form (amended FAE170, Federal Income Revision

form, etc.) or by correspondence.

Used in Prior Year(s) – Enter the cumulative amount of credit that has previously been used. The oldest credit

within the 15 year carryover period is used first.

Expired or Recaptured – Enter the amount of credit that was not used within the 15 year carryover period.

Industrial Machinery Credit Carryover Available – Enter each year’s carryover amount less amounts used or

expired. Enter the total industrial machinery credit carryover on Schedule T, Line 4.

Documents

FAE174 - Franchise and Excise Financial Institution and ... · Taxable Year Taxpayer Name Account No./FEIN page 3 Schedule G ‑ Determination of Real and Tangible Property Book Value