Schedule 174SC/174NC: Consolidated Net Worth Apportionment Schedule for Financial Institutions/Captive REITs (Revision 2025-09)
Tennessee · Tennessee DOR · Used for tax years 2025
These Tennessee schedules calculate the franchise tax apportionment ratio for taxpayers reporting net worth on a consolidated basis. They compare Tennessee receipts with consolidated receipts everywhere, or use property, payroll, and triple weighted sales when that method applies
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 or 174NC1: For all other taxpayers covered by this requirement. Use 174NC1 if you elected, or are required, to use the property, payroll, and triple-weighted sales method under Tenn. Code Ann. § 67-4-2111(a).
A financial institution affiliated group is a group in which more than 50% of aggregate gross income comes from conducting the business of a financial institution, excluding dividends and receipts from transactions between members.
What you'll need
Have your taxable year, taxpayer name, and account number or FEIN available, along with the information for your applicable schedule:
- 174SC: Tennessee and consolidated everywhere gross receipts by the receipt categories listed on the schedule, including everywhere business gross receipts of affiliates that are not financial institutions.
- 174NC: The separate entity’s Tennessee business gross receipts and the affiliated group’s everywhere business gross receipts.
- 174NC1: Beginning- and end-of-year property values, original costs of tangible property, inventory and exempt inventory amounts, annual rental rates, compensation paid, and business gross receipts for the applicable Tennessee and everywhere columns.
For a partnership property amount on 174NC1, Line 6, use the ownership percentage shown on federal Schedule K-1 and the partnership’s balance sheet. Include that property only if the partnership is not required to file its own franchise and excise tax return.
The calculated apportionment ratio is also entered on Schedule F2, Line 2.
Common mistakes
- Leaving nonfinancial affiliates out of consolidated net worth. The form says to include all affiliates, even those that are not financial institutions.
- Using values other than original cost for property on 174NC1, Lines 1–3. Complete all four columns using original cost.
- Including partnership property when the partnership must file its own return. Line 6 includes an ownership share only if the partnership is not required to file its own franchise and excise tax return.
- 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.
- Forgetting to triple-weight sales on 174NC1. Line 14 adds the property and payroll ratios plus the sales ratio multiplied by three.
Questions people ask
Does consolidated net worth include affiliates that are not financial institutions?
Yes. The financial institution affiliated group’s net worth uses the consolidated net worth of all affiliates, including those that are not financial institutions. That amount is reported on Schedule F2, Line 1.
How is the Schedule 174SC apportionment ratio calculated?
Add Lines 1 through 13 in each column. Divide total Tennessee receipts on Line 14(a) by total everywhere receipts on Line 14(b). Enter the result on Line 15 and Schedule F2, Line 2.
How is the Schedule 174NC sales ratio calculated?
Divide the separate entity’s Tennessee business gross receipts by the affiliated group’s everywhere business gross receipts. Enter the result on Schedule 174NC, Line 1, and Schedule F2, Line 2.
How is rented property valued on Schedule 174NC1?
For Line 10, multiply the annual rental rate by eight to determine the year-end value of rented property.
What counts as exempt inventory on Schedule 174NC1?
Exempt inventory is the amount above $30,000,000 of finished goods located in Tennessee that would otherwise be included in the franchise tax base. The cap applies separately to each entity.