(1) Rentals
included in the minimum measure of the franchise tax may be offset by
subrentals only to the amount of rentals paid. To qualify as subrental, the
sublessee must have the same rights as the lessee with respect to use of the
property.
(2) If property owned by
others is used by the taxpayer at no charge or rented by the taxpayer for a
nominal rate, the net annual rental rate for such property shall be determined
on the basis of a reasonable market rental rate for such property.
(3) Property in transit between locations of
the taxpayer to which it belongs shall be considered to be at the destination
for purposes of the franchise tax. Property in transit between the buyer and
seller and shown on the books and records of the taxpayer in accordance with
its regular accounting practices shall be included in the minimum measure of
the franchise tax if it is destined to a Tennessee location.
(4) The value of any property while under
construction must be included in the minimum measure of the franchise tax if
there is actual utilization of such property by the taxpayer either in whole or
in part. Actual utilization of the construction in progress will depend upon
whether or not the construction in progress is utilized in the particular
business conducted by the corporation.
Example 1: A manufacturer is in the process of building or
expanding its facilities. The construction in progress would not actually be
utilized in conducting the business of manufacturing until put in service by
the corporation.
Example 2: A corporation is in the business of building and
selling homes and the construction in progress will ultimately be for sale or
rental. All of the construction in progress is utilized in conducting the
business of home building.
Example 3: A corporation is in the business of operating
motels and has a facility under construction. The construction in progress
would not actually be utilized in conducting the business of operating motels
until put in service by the corporation.
Notes
Tenn. Comp. R. & Regs. 1320-06-01-.18
Original
rule certified June 7, 1974. Repealed and refiled July 22, 1977; effective
August 22, 1977. Amendment filed November 6, 1984; effective December 6, 1984.
Amendments filed June 28, 2016; effective
9/26/2016.
Authority: T.C.A. ยงยง 67-1-102(a),
67-1-102, 67-4-906, and 67-4-2108.