Schedule 174SC/174NC: Consolidated Net Worth Apportionment Schedule for Financial Institutions/Captive REITs (Revision 2023-12)
Tennessee · Tennessee DOR · Used for tax years 2024
These schedules calculate the Tennessee franchise tax apportionment ratio for taxpayers electing to report net worth on a consolidated basis. Schedule 174SC reports receipts for financial institution affiliated groups, while Schedule 174NC reports property, payroll, and sales fac
Who files this form
Every taxpayer that belongs to an affiliated group that has elected to compute net worth on a consolidated basis must complete this form.
- Schedule 174SC: For members of a financial institution affiliated group.
- Schedule 174NC: For other taxpayers reporting consolidated net worth.
- Schedule 174NC1: For taxpayers that elected to continue using triple-weighted sales or are required to use triple-weighted sales under Tenn. Code Ann. § 67-4-2111(a).
A financial institution affiliated group receives more than 50% of its aggregate gross income from conducting the business of a financial institution, excluding dividends and receipts from transactions between members.
What you'll need
Have the following information and records available for the schedule you complete:
- Taxable year, taxpayer name, and account number or FEIN.
- Tennessee and consolidated everywhere gross receipts, including the receipt categories listed on Schedule 174SC if applicable.
- Property records showing original cost and beginning- and end-of-year values for Tennessee and everywhere property.
- Inventory records, including exempt finished goods inventory.
- Annual rental rates for rented property.
- Tennessee and affiliated-group everywhere compensation and business gross receipts for the payroll and sales factors.
- Federal Schedule K-1 and the partnership's balance sheet if reporting an ownership share of partnership property. Include that property only if the partnership is not required to file its own franchise and excise tax return.
Common mistakes
- Skipping the property section when using Schedule 174NC1. These filers must also complete Schedule 174NC, lines 1 through 10.
- Applying one finished goods inventory cap to the whole group. The $30,000,000 cap is calculated separately for each entity, not for the affiliated group as a whole.
- Including partnership property when the partnership must file its own return. Include an ownership share only if the partnership is not required to file its own franchise and excise tax return.
- Applying a manufacturer's single-sales-factor election to other group members. The election does not affect other members. They must still complete the property and payroll portions of Schedule 174NC and include the manufacturer's property, payroll, and sales in the denominators.
Questions people ask
Where do I enter the final apportionment ratio?
Enter it on the applicable schedule and on Schedule F2, line 2. The applicable lines are Schedule 174SC, line 15; Schedule 174NC, line 15; or Schedule 174NC1, line 5.
Which sales weighting does each net worth schedule use?
Schedule 174NC uses a five-times-weighted sales factor. Schedule 174NC1 uses a triple-weighted sales factor.
How do I value rented property?
For Schedule 174NC, line 10, multiply the annual rental rate by eight to determine the year-end value of rented property.
Does a financial institution group's consolidated net worth include affiliates that are not financial institutions?
Yes. Use the consolidated net worth of all affiliates, including those that are not financial institutions, and report it on Schedule F2, line 1.