F&E Apportionment-6 - Identifying the Correct Apportionment Formula [ARCHIVE ONLY]

This article is for informational purposes only. The analysis is no longer accurate due to the Tennessee Works Tax Act, effective for tax years beginning on or after December 31, 2023. See Important Notice 23-11 and Chapter 14 of the Department’s Franchise and Excise Tax Manual for more information.

The apportionment formula will differ depending on the type of taxpayer and elections made.   Please see the chart and examples linked below. 

The first example shows the standard apportionment calculation that is applied to both the franchise and excise tax base when no elections have been made. 

The second example shows the apportionment calculation for the franchise tax base when consolidated net worth (CNW) applies and an affiliate (not the taxpayer) has elected the single sales factor (SSF).  

The third example shows the franchise and excise tax apportionment calculations for a manufacturer that is a member of a CNW affiliated group and the manufacturer has made the SSF election. 

The fourth example shows the franchise and excise apportionment calculations for a manufacturer that has made the SSF election but is not a member of an affiliated group electing CNW.

Apportionment Examples Chart

Example 1 - Standard Apportionment

Example 2 - CNW applies & an affiliate (not the taxpayer) elected SSF

Example 3 - CNW applies & the taxpayer elected SSF

Example 4 - CNW does not apply & taxpayer elected SSF

There are additional rules regarding the apportionment for financial institution affiliated group members or taxpayers that are common carriers, air carriers or air express carriers.

More information: Important Notice #17-11 Single Sales Factor for Manufacturers.

Reference: Tenn. Code Ann. §§ 67-4-2012; 67-4-2111.

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