IE (F1406701): Intangible Expense Disclosure (Revision 2022-12)
Tennessee · Tennessee DOR · Used for tax years 2024, 2025, 2026
Tennessee Form IE, Intangible Expense Disclosure, reports intangible expenses involving an affiliate and any related expense deduction. It is filed with franchise and excise tax return FAE170 or FAE174, with a separate Form IE for each affiliate.
Who files this form
You must file Form IE if you paid, accrued, or incurred intangible expenses in a transaction with an affiliate. This applies even if you did not deduct those expenses when figuring income or loss subject to Tennessee excise tax.
File Form IE with your franchise and excise tax return, FAE170 or FAE174, each year it applies. If expenses were paid to more than one affiliate, complete a separate Form IE for each affiliate.
What you'll need
Have the following information ready:
- Your taxable year, taxpayer name, and account number or FEIN.
- Each affiliate’s name, account number, and FEIN.
- The federal form line number where the expense was deducted and the expense account title.
- The amounts eligible for deduction in Part 2 for the affiliate listed in Part 1.
- The foreign nation’s name if you enter an amount on Line 2.
- The applicable exemption or other reason the affiliate is not required to register for or pay Tennessee excise tax if you use Line 3.
Form IE must accompany your FAE170 or FAE174 return.
How to file
Submit Form IE electronically with your electronic FAE170 or FAE174 return each year it applies.
- Complete the taxpayer information and Part 1 affiliate information. Use a separate Form IE for each affiliate if expenses were paid to more than one.
- Report the intangible expense add-back on FAE170, Schedule J, Line 2, or FAE174, Schedule J, Line 5. The add-back is reported on the tax return, not on Form IE.
- Enter eligible deductions in Part 2. Include the foreign nation for Line 2 and the exemption or other reason for using Line 3, as applicable.
- Add Lines 1 through 3 and enter the total on Line 4.
- Take the deduction computed on Form IE on FAE170, Schedule J, Line 23, or FAE174, Schedule J, Line 27.
Common mistakes
- Skipping the add-back on the original return. The instructions warn that failing to report the required add-back on the initially filed return will result in a negligence penalty.
- Claiming a deduction without filing Form IE. The Department will disallow the deduction. Excise tax, interest, and penalties may also apply.
- Including deductions that are not allowed. Part 2 should include only intangible expense deductions specifically allowed by statute.
- Using Line 3 without meeting its conditions. Use this line only when the affiliate is exempt under the cited Tennessee law or lacks substantial nexus in Tennessee. Entering an amount certifies that condition, and you must state the applicable exemption or other reason.
- Omitting the foreign nation on Line 2. Enter the nation’s name whenever you report an amount on that line.
Questions people ask
What is an intangible expense?
It is an expense connected with acquiring, using, maintaining, managing, owning, selling, exchanging, licensing, or otherwise disposing of intangible property, to the extent it is allowed or allowable as a deduction or cost when determining federal taxable income on a separate-entity basis. Certain interest expenses connected with intangible property also qualify.
What counts as intangible property?
Examples listed in the instructions include patents, patent applications, trade names, trademarks, service marks, franchise rights, copyrights, licenses, research, formulas, designs, patterns, processes, and formats, as well as similar intangible assets.
When may an expense disclosed on Form IE be deducted?
The instructions allow a deduction when the affiliate is registered for and paying Tennessee excise tax, is in a foreign nation that has a comprehensive income tax treaty with the United States, or is otherwise not required to register for or pay Tennessee excise tax. Enter the applicable amounts in Part 2.
Can I claim the deduction if I forgot to file Form IE?
You may file Form IE with an amended return to claim the deduction. However, failing to report the required intangible expense add-back on the initially filed return still subjects you to a negligence penalty.