FT-4 - Indebtedness Add-Back in the Franchise Tax Net Worth Tax Base

Only corporations with long-term debt owed to an affiliated corporation, or with debt guaranteed by an affiliated corporation, need to calculate the potential indebtedness addition to the franchise base.  Indebtedness includes both the long-term and current portions of long-term debt with a corporate affiliate, plus any debt guarantees.  There are two methods that may be used to determine the potential adjustment.  The Department will accept either method. The calculations under both methods are shown in the example linked below.

Example - Calculation of Potential Add-Back for Indebtedness

Reference: Tenn. Code Ann. § 67-4-2107(b).

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