(a) The franchise tax return shall be filed as provided in § 67-4-2015. On any return covering less than a twelve-month period, including the return of a taxpayer in final return status, but excluding any return based on a fifty-two to fifty-three-week year, the franchise tax shall be prorated to cover the proportionate part of the year covered by the return. In the event the taxpayer’s taxable year is closed within less than twelve (12) months of incorporation, formation, domestication, or commencing of business, the franchise tax of a domestic entity shall be prorated to cover the proportionate part of the year since the date of incorporation or formation, or the date of commencing business, whichever occurred first. The franchise tax of a taxpayer formed outside of Tennessee shall be prorated to cover the proportionate part of the year since beginning business in this state. On any return where the franchise tax is prorated, annualization of rent paid shall be required when determining the minimum franchise tax measure under § 67-4-2108. Proration of the franchise tax and annualization of rent paid shall be computed by a fraction based on a days method.
Terms Used In Tennessee Code 67-4-2115
Affiliated group: means :(i) A taxpayer that, standing alone, is subject to the Tennessee franchise tax. See Tennessee Code 67-4-2004
Final return status: means the status of any person or taxpayer that has commenced the process of effecting a surrender of charter, withdrawal of qualification to do business in this state, merger, consolidation, liquidation, complete sale, transfer or distribution of assets, conversion, dissolution, or any similar event that results in, or is intended to result in, the taxpayer ceasing to exist, or no longer being subject to the tax imposed by this part, or no longer having any substantial remaining business or financial activity. See Tennessee Code 67-4-2004
State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States and any foreign country or political subdivision thereof. See Tennessee Code 67-4-2004
taxpayer: means every corporation, subchapter S corporation, limited liability company, professional limited liability company, registered limited liability partnership, professional registered limited liability partnership, limited partnership, cooperative, joint-stock association, business trust, regulated investment company, REIT, state-chartered or national bank, or state-chartered or federally chartered savings and loan association. See Tennessee Code 67-4-2004
(b) If a person or taxpayer in final return status effects a complete liquidation that is initiated and completed on the same date, then the franchise tax shall be computed utilizing net worth, or the minimum franchise tax base under § 67-4-2108, on the date immediately preceding the liquidating event; otherwise, on any return of a taxpayer in final return status, the franchise tax shall be computed by using the average monthly value of net worth or the average monthly value of the real and tangible property owned in Tennessee. Such average monthly value shall be determined by totaling the value of net worth as of the final day of each month of the tax period, or the book value of the real and tangible property owned in Tennessee as of the final day of each month of the tax period, and then dividing that total by the number of months in the tax period. In the event the taxpayer is part of an affiliated group that has elected to compute its net worth on a consolidated basis, such election shall not apply to the taxpayer while it is in final return status unless the entire affiliated group is in final return status during the same tax period, in which case the election shall continue to apply to the taxpayer.
