Tennessee Form Help
The following information has been provided to assist in the preparation of Tennessee business returns.
A taxable entity that is incorporated, domesticated, qualified or otherwise registered to do business in Tennessee must file Form FAE 170, Franchise, Excise Tax Return regardless of income.
Prepare Schedule F1 or F2, and/or Schedule G, to calculate franchise tax. The minimum franchise tax is $100.
Prepare the appropriate Schedule J1-J4, depending on type of entity, Schedule J, and Schedule T, if applicable, to calculate excise tax.
Total franchise and excise tax is calculated on Schedule C, Line 8. Payments of estimated tax, amounts paid with an extension, and prior year overpayment credited to the state of Tennessee will flow to Schedule E from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is TN. Total payments calculated on Scheule E, Line 7 will then carry to Schedule C, Line 11.
Total credits calculated on Schedule D will carry to Schedule C, Line 9 to be included in the computation of total tax due or overpayment. If the Industrial Machinery Credit is claimed on Schedule D, Line 7, Schedule T is required to be prepared and can be electronically filed. However, CrossLink does not currently support Schedule X, Jobs Tax Credit. In order to claim the Jobs Tax Credit, Schedule X must be manually prepared and attached to the return (and paper-filed). The return would thus not be eligible for EFile.
Payments of estimated tax, amounts paid with an extension, and prior year overpayment credited to the state of Tennessee will flow from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is TN. Total payments from Schedule E, Line 7 carry to Schedule C, Line 11 to be included in the computation of tax due or overpayment.
Schedule F1 or F2 and Schedule G are used in the computation of franchise tax. All amounts should be determined in accordance to GAAP. However, if the company books are not maintained on a GAAP basis, franchise tax may be computed by the accounting method used for federal tax purposes. Prepare Schedule F1 if the Consolidated Net Worth Election has not been made.
Schedule F1 or F2 and Schedule G are used in the computation of franchise tax. All amounts should be determined in accordance to GAAP. However, if the company books are not maintained on a GAAP basis, franchise tax may be computed by the accounting method used for federal tax purposes. Prepare Schedule F2 only if the Consolidated Net Worth Election has been made.
Schedule F1 or F2 and Schedule G are used in the computation of franchise tax. Schedule G, Lines 1 through 5 must reflect the YEAR-END net book values of the assets. All tangible assets should be included in Lines 1 through 5 regardless of how the assets are classified. If using the Multistate Apportionment Information worksheet in the General section of the return, check the checkbox at the top of the Schedule G section if you want to populate the applicable lines in Schedule G from the Multistate Apportionment Information worksheet. Be sure to review carefully and override as necessary. All fields are enterable without requiring an override.
In computing net earnings subject to excise tax, entities treated as a partnership for federal tax purposes must use Schedule J1. Ordinary income or loss from Federal Form 1065, Line 22 will automatically carry to Schedule J1, Line 1. Schedule J1, Lines 2, 3, 5, 6, 7 and 8, if applicable, must be manually entered. Schedule J1, Line 10 will carry to Schedule J, Line 1 to complete the computation of net earnings subject to excise tax.
In computing net earnings subject to excise tax, a single-member LLC filing as an individual for federal tax purposes must use Schedule J2. Business income (attributable to the LLC) from Form 1040, Schedule(s) C, D, E, and F and Form 4797 must be manually entered on Schedule J2, Lines 1 through 5, as applicable. Use Schedule J2, Line 6 to enter amounts of income or loss attributable to the LLC that is not included in Schedule J2, Lines 1 through 5. Schedule J1, Lines 9 and 10, if applicable, must be manually entered, as well. Schedule J2, Line 12 will carry to Schedule J, Line 1 to complete the computation of net earnings subject to excise tax.
In computing net earnings subject to excise tax, entities treated as a Subchapter S corporation for federal tax purposes must use Schedule J3. Ordinary income or loss from Federal Form 1120S, Line 21 will automatically carry to Schedule J3, Line 1. Schedule J1, Lines 2, 3, 5, and 6, if applicable, must be manually entered. Schedule J3, Line 8 will carry to Schedule J, Line 1 to complete the computation of net earnings subject to excise tax.
In computing net earnings subject to excise tax, entities treated as a corporation (or other 1120 entity type) for federal tax purposes must use Schedule J4. Taxable income or loss before NOL or special deductions from Federal Form 1120, Line 28 will automatically carry to Schedule J4, Line 1. Schedule J4, Lines 3, 4, and 5, if applicable, must be manually entered. Schedule J4, Line 6 will carry to Schedule J, Line 1 to complete the computation of net earnings subject to excise tax.
Schedule J is used to compute the net earnings subject to excise tax. Schedule J, Line 1 is net earnings as calculated in and carried from the applicable Schedule J1 through J4, depending on the federal entity type. Schedule J, Line 33, carries automatically to Schedule B, Line 4 and is then subject to TN excise tax of 6.5%.
Any loss carryover available will be computed automatically in Schedule K using the information in the return.
If all earnings are from the conduct of regular course of the companys trade or business operations do not complete Schedule M. A company may have more than one regular trade or business in determining whether income is business earnings. All nonbusiness earnings, less related expenses, are subject to direct allocation and should be reported in Schedule M, Schedule of Nonbusiness Earnings.
Complete Schedule N, Apportionment Standard if the taxpayer is a manufacturer, retailer, wholesaler, etc., and doing business outside of Tennessee. If using the Multistate Apportionment Information worksheet in the General section of the return, the applicable lines in Schedule N will populate from the Multistate Apportionment Information worksheet when the state ID entered is TN. Be sure to review the information flowing from the Multistate Apportionment Information Worksheet carefully and override if necessary. Note that in calculating the franchise and excise tax ratios, if a factors denominator (everywhere value) is zero, that factor is eliminated entirely and the average is computed from the remaining factor or factors.
Complete Schedule O apportionment schedule if the taxpayer is a common carrier and is doing business outside of Tennessee. Note that the total franchise mileage and Tennessee intrastate receipts and interstate gross receipts everywhere must be manually entered. This information is not gathered in the Multistate Apportionment Information worksheet in the General section of the return.
Complete Schedule P apportionment schedule if the taxpayer is an air carrier and is doing business outside of Tennessee. Note that the originating revenue and air miles flown must be manually entered. This information is not gathered in the Multistate Apportionment Information worksheet in the General section of the return.
Complete Schedule R apportionment schedule if the taxpayer is an air express carrier and is doing business outside of Tennessee. Note that the originating revenue and air miles flown and ground miles traveled must be manually entered. This information is not gathered in the Multistate Apportionment Information worksheet in the General section of the return.
Complete Part 1 of Schedule T if the taxpayer purchased qualified industrial machinery in the current tax period and the machinery is located in Tennessee. The credit, which may be used to reduce franchise and excise tax, is 1% of the purchase price of the qualified industrial machinery, unless the taxpayer has met the requirements of TCA Section 67-4-2009(3)(l) and has been approved by the Commissioner of Revenue for an enhanced rate of credit based on the amount of the investment. Crosslink defaults the rate of credit on Line 2 to 1% but has provided the chart of allowed enhanced rate of credit per minimum required capital investment on the Schedule T screen. If the taxpayer qualifies for one of the enhanced rates of credit, override Line 2 with the allowable credit. Note, Schedule T calculates the amount of credit that can be claimed in the current year which cannot exceed 50% of the current years franchise and excise tax liability. Any unused credit can be carried forward for 15 years, under TCA Section 67-4-2009(3). Use Schedule V, Schedule of Industrial Machinery, to track unused credit amounts and maintain it for your records. The amount of Industrial Machinery Credit that can be claimed in the current year will carry to Schedule D, Line 7.
Complete Part 2 of Schedule T in the event that any industrial machinery, for which an Industrial Machinery Credit had previously been claimed, is sold or removed in the current tax period. The amount of the recapture is computed as the original credit claimed multiplied by the percentage of useful life of the machinery remaining at the time of the sale or removal. The recapture to be used to increase the current year franchise and excise tax liability computed in Schedule T, Part 2 will carry to Schedule B, Line 6.
Schedule U, Schedule of Loss Carryover, and Schedule V, Schedule of Industrial Machinery Credit Carryover, may be used as worksheets to compute the amount of net operating loss carryover and industrial machinery credit carryover available. These two schedules are not filed with the tax return. They should be maintained with your records.
Taxpayers who expect a franchise, excise tax liability of $5,000 or more for the current tax year must file a declaration of their franchise, excise for the taxable year and make quarterly tax payments, due the 15th day of the 4th, 6th, 9th month of the current taxable year and the 15th day of the first month of the subsequent taxable year. The minimum amount of each quarterly payment is the lesser of (a) 25% of the franchise, excise tax reported on the preceding years tax return or (b) 25% of the franchise, excise tax liability for the current year. CrossLink provides FAE 172 vouchers For quarterly payments not filed electronically.
Tennessee recognizes the federal automatic extension of time to file provided Form FAE 170 is filed by the federal extended due date and a copy of the federal extension form is attached to the Tennessee return when filed. Corporations will be granted an extension of time to file of up to six months, and partnerships will be granted an extension of up to five months. If you did not extend your federal return, you can still use either Form FAE 173 or the federal extension request form to extend the filing due date of FAE 170. In fact, if no payment is due with Form FAE 170, neither form needs to be filed by the original due date of the return as long as one of the forms is attached to Form FAE 170 when it is filed on or before the extended due date. If a payment is due with Form FAE 170, either Form FAE 173 or the federal extension request form may be filed with the extension payment by the original due date of Form FAE 170. However, if a payment is required and your federal return is filed as part of a consolidated group, you must use Form FAE 173 or file an extension request electronically with the extension payment on or before the original due date of the return.
The EF Authorization form is the electronic signature form summarizing the agreement between the taxpayer and the Electronic Return Originator or Paid Preparer. The submission ID for the Tennessee is available on the Information and Status screen for your records. This form also allows the entry of the required information to schedule electronic payment of tax due. The withdrawal date is required to initiate the payment.