If financial statements are prepared using liquidation basis of accounting, in accordance with generally accepted accounting principles (“GAAP”), should they be used to complete Schedules F and G for the franchise tax?

Yes, GAAP basis financial statements must be used in calculating the franchise tax base on Schedules F and G of the Tennessee franchise tax return, if they are maintained.  Whenever liquidation basis of accounting is required by GAAP, and those records are maintained, they should be used for Tennessee franchise tax purposes. 

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