(a)

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Terms Used In Tennessee Code 67-4-2108

  • Certified green energy production facility: means :
    (A) A facility certified by the department of environment and conservation as producing or storing electricity using clean energy technology. See Tennessee Code 67-4-2004
  • Commissioner: means the commissioner of revenue. See Tennessee Code 67-4-2004
  • Compensation: means wages, salaries, commissions and any other form of remuneration paid to employees for personal services. See Tennessee Code 67-4-2004
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Department: means the department of revenue. See Tennessee Code 67-4-2004
  • Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
  • General partnership: means a partnership in which all partners, as defined by state law, are fully liable for the debts of, or the claims against, the partnership. See Tennessee Code 67-4-2004
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Personal property: All property that is not real property.
  • Personal property: includes money, goods, chattels, things in action, and evidences of debt. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States and any foreign country or political subdivision thereof. See Tennessee Code 67-4-2004
  • taxpayer: means every corporation, subchapter S corporation, limited liability company, professional limited liability company, registered limited liability partnership, professional registered limited liability partnership, limited partnership, cooperative, joint-stock association, business trust, regulated investment company, REIT, state-chartered or national bank, or state-chartered or federally chartered savings and loan association. See Tennessee Code 67-4-2004
  • unitary group: includes those entities that are engaged in a unitary business transacted wholly in, or in and out of the state of Tennessee, even if some of the entities would not be subject to tax in this state, if considered apart from their unitary group. See Tennessee Code 67-4-2004
(1) The measure of the tax levied by this part must not be less than the actual value of the real or tangible property owned or used in this state, excluding exempt inventory and exempt required capital investments; provided, that for tax years ending on or after December 31, 2024, the measure of the tax levied in this section applies to the actual value of the taxpayer‘s aggregate real or tangible property in excess of five hundred thousand dollars ($500,000).
(2) There shall not be included within the meaning hereof the value of any property while construction of that property is in progress and, in addition thereto, there is no actual utilization of such property by the taxpayer either in whole or in part.
(3) For purposes of this section, “property” shall be valued at cost less accumulated depreciation in accordance with generally accepted accounting principles; provided, that, if the taxpayer, other than any taxpayer required by this part to file as a unitary group on a combined basis, does not maintain its books and records in accordance with generally accepted accounting principles, the value of the property shall be computed in accordance with the accounting method used by the taxpayer for federal tax purposes, so long as the method fairly reflects the property’s value for purposes of the tax levied by this part. Notwithstanding any provision of this subdivision (a)(3) to the contrary, railroad companies as defined by the uniform system of accounts in 49 CFR 1201 may compute the value of their “property” in accordance with the method used for federal tax purposes so long as such method fairly reflects the property’s value for purposes of the tax levied by this part. A return being filed by a limited liability company that has a general partnership as its single member shall include in its franchise tax minimum measure only the real and tangible property owned or used by the limited liability company. For this purpose, “property” includes a taxpayer’s ownership share of the real or tangible property owned or rented by any general or limited partnership, subchapter S corporation, limited liability company, or other entity treated as a partnership for federal tax purposes and not subject to the tax levied by this part and in which the taxpayer has an ownership interest either directly or indirectly through one (1) or more such entities. In cases where part or all of the property is rented, the value of rented property used shall be determined by multiplying the net annual rental by the following multiples:

Multiples

(A) Real property ………………..8
(B) Machinery and equipment used in manufacturing and processing ………………..3
(C) Furniture, office machinery and equipment ………………..2
(D) Delivery or mobile equipment ………………..1
(4) For purposes of this section, the value of owned or leased mobile or movable property located both in and outside Tennessee during a tax period shall be determined on the basis of the total percentage of time such property is within the state during the tax period; provided, that the value of an automobile or truck assigned to a traveling employee shall be considered in Tennessee, if the employee’s compensation is assigned to Tennessee for purposes of the taxpayer’s apportionment formula payroll factor, or if such vehicle is licensed in Tennessee.
(5)

(A) For purposes of this section, any system, method, improvement, structure, device or appliance appurtenant thereto, used primarily for the control, reduction, or elimination of water or air pollution, or used primarily for the disposal, treatment or recycling of hazardous waste, and required to meet mandatory requirements of state, federal or local law, shall not be deemed to be property that is actually utilized by the taxpayer in the conduct of its principal business. Copies of certificates provided for in § 67-5-604 shall be furnished to the commissioner by the taxpayer with the franchise tax return to verify exemption.
(B) This exemption shall apply only to property, the construction, reconstruction or erection of which is completed by the taxpayer during corporate fiscal years ending on or after July 15, 1981, or which is acquired by the taxpayer during such fiscal years, and the original use of that commences with the taxpayer and commences during such fiscal years.
(C) Machinery and equipment used to produce or store electricity in a certified green energy production facility shall not be deemed to be property that is actually utilized by the taxpayer for purposes of this section. A copy of the facility certification issued by the department of environment and conservation shall be furnished to the commissioner by the taxpayer with the franchise tax return to verify exemption.
(6) As used in this section, unless the context otherwise requires:

(A) “Configuring” computer products means integrating a computer with peripheral computer products, such as a hard disk drive, additional memory or software;
(B) “Exempt inventory” means that portion of a taxpayer’s finished goods inventory in excess of fifty million dollars ($50,000,000) for fiscal years beginning on or after July 15, 1996; forty million dollars ($40,000,000) for fiscal years beginning on or after July 15, 1997; and thirty million dollars ($30,000,000) for fiscal years beginning on or after July 15, 1998, that would otherwise be included in the minimum measure of the taxpayer’s franchise tax base;
(C) “Finished goods inventory” means tangible personal property that is:

(i) Owned by the taxpayer;
(ii) Stored in a facility used primarily for manufacturing, warehousing, or distribution of such inventory;
(iii) Held for wholesale or retail sale by the taxpayer, but not sold over-the-counter to consumers at the location where stored;
(iv) Shown as inventory on the taxpayer’s books and records kept in accordance with generally accepted accounting principles; and
(v) In need of no further fabrication or processing by or for the taxpayer, except, in the case of configuring, testing or packaging of computer products;
(D) “Net annual rental” means the gross annual rental paid by the taxpayer, less the gross rental received by the taxpayer for sub-rental. A lessee’s payments to a lessor, or on such lessor’s behalf, as part of rent, or in lieu of rent, shall be considered rent for purposes of this section. Except with respect to tangible personal property, for purposes of this subsection (a), payments, such as interest, taxes, insurance, repairs or other items, shall be treated as rent paid by the lessee if they would have been paid by the lessor, if the lease contract or other agreement had not specifically provided that they be paid by the lessee;
(E) “Property” includes a taxpayer’s share of any specific property in a general partnership in which such taxpayer has a partnership interest;
(F) “Used” means only such property as is actually utilized by the taxpayer in the conduct of its principal business; and
(G) “Exempt required capital investments” means two-thirds (2/3) in value of all capital investments that are the basis for a taxpayer’s entitlement to credits under § 67-4-2109(b)(2)(B); provided, however, that the investments shall qualify as “exempt required capital investments” only in those tax years in which the additional annual credit is actually allowed under § 67-4-2109(b)(2)(B).
(b) In the case of property leased from an industrial development corporation formed pursuant to title 7, chapter 53, part 1, the value may be determined either in accordance with subsection (a) or, at the taxpayer’s election, by capitalizing the lease on the taxpayer’s books and records in accordance with generally accepted accounting principles. The taxpayer may change its election not more than once during the term of the lease.
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