In general, the franchise tax is based on a taxpayer’s net worth (assets less liabilities) apportioned to Tennessee.
The tax rate is $0.25 per $100 (0.25%) of the tax base. There is a $100 minimum tax.
The net worth value is computed in accordance with generally accepted accounting principles (GAAP). However, if the taxpayer’s books and records are not maintained in accordance with GAAP, net worth may be computed in accordance with the accounting method used by the taxpayer for federal tax purposes, so long as the method fairly reflects the taxpayer's net worth.
References: Tenn. Code Ann. §§ 67-4-2106 - 2109; 67-4-2119.
Note: This article was updated on June 25, 2024, as a result of a law change. The previous version of FT-1 is available here.
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