F&E Credit-1 - Tax Credits are Claimed by the Entity That Earned Them

Tax credits are specific to the entity that earned them.  If a SMLLC with a corporate parent has elected to be a regarded entity and earns job tax credits, the credits are being earned by the SMLLC that files a franchise, excise tax return.  If the SMLLC later elects to become a disregarded entity and be treated as a division of its parent, the parent is not entitled to claim job tax credits the SMLLC earned as a regarded entity.

In the case of mergers, consolidations, and like transactions, no tax credit incurred by a predecessor taxpayer is allowed as a credit on the tax return filed by the successor taxpayer unless a successor entity is a "shell" that has no income, expenses, assets, liabilities, equity or net worth; provided, that the time limitations for the carryover have not expired.

Reference: Tenn. Code Ann. §§ 67-4-2009(6); 67-4-2109(e).


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