FT-11 - Apportionment of the Consolidated Net Worth Amount

A single consolidated net worth election form may include both financial institutions and non-financial institution entities. As a result, the consolidated net worth amounts reported on FAE170 Schedule F2, Line 1 will include values from both types of entities. To complete the apportionment section of this schedule a determination must be made as to if the affiliated group is a financial institution affiliated group. A financial institution affiliated group is any affiliated group in which more than 50% of the group's aggregate gross income, excluding dividends and receipts resulting from transactions between members, is derived from conducting the business of a financial institution; the computation of gross income of a member does not include income from nonrecurring, extraordinary transactions.

Example - determining if the affiliated group is a financial institution affiliated group:

In this example, ABC Bank will file FAE174 and will apportion the consolidated net worth amount found on Schedule F2, Line 1 using apportionment Schedule 174SC. If the numbers in the above example changed in the following year, whereas the percentage of the group's receipts derived from conducting the business of a financial institution was 49% instead of 60%, the group would not be a financial institution affiliated group and ABC Bank would use Schedule 174NC to apportion the consolidated net worth amount.

Also, in this example, AAA Retail will file FAE170 and will apportion the consolidated net worth amount found on Schedule F2, Line 1 using apportionment Schedule 170SF in the initial year and  Schedule 170NC in the following year when the group's ratio declined to under 50%.

Reference: Tenn. Code Ann. §§ 67-4-2004(18); 67-4-2103(f); 67-4-2111; 67-4-2118.