Tennessee Franchise and Excise Tax Exempt Entity Disclosure of Activity

Franchise and Excise Tax Exempt Entity Disclosure of Activity
r1320501
Tennessee Department of Revenue
Franchise and Excise Tax Exempt Entity
Disclosure of Activity
Exemption Period

Entity Name

Exempt Account No.

Organizational Structure
(a) Member/Partner Name

(b) Ownership Percentage

(c) Relationship

1.
2.
3.
4.



Part I

Family-Owned Non-Corporate Entity (“FONCE”)

(a) Passive Investment Income
Source of Income
Receipts
Royalties
Dividends
Annuities
Interest

Source of Income
Gain on sale/exchange of stock
Gain on sale/exchange of securities
Rent from residential property
Rent/income from farming

Receipts

(b) Non-Passive Income
Source of Income
Industrial & Commercial Real Estate Rental
Other (please describe):

Receipts

Total Non-Passive Income



Part II

Farming Activity

(a) Type of Income
Farm Income
Other Income
Total Income



Part III

$

(b) Assets at cost/FMV (see Instructions)
Assets used in farming
Other assets
Total assets

$
$
$

$
$
$

Holding a Personal Residence

(a) Description of Property

(b) Property Address

(c) Resident(s) / Number of days residing at
property during the exemption period

Contact Person:

Title:

Phone Number:

Email address:

Attach additional schedules as needed.
RV-F1320501

INTERNET (9-16)

Franchise and Excise Tax Exempt Entity
Instructions for Disclosure of Activity
Exemption Requirements Not Met
If the entity does not meet the exemption requirements in
any given year, it is taxable on all activities for that year. A
completed franchise and excise tax return (FAE170) must be
filed electronically with payment of any taxes due by the
th
th
15 day of the 4 month following the close of the taxable
year.

Definitions:
Family Member - To determine who is considered a family
member for the FONCE exemption, identify one person (either
an owner or non-owner, living or deceased) to whom the
owners are potentially related. With respect to that person, the
following are considered members of the family:
1.
2.
3.

4.
5.

Ancestor (Mother, grandfather, great grandmother, etc.)
Spouse or former spouse
Lineal descendent of such individual, their spouse or former
spouse or of their parent. (Brother, daughter, grandson,
niece, step-daughter, step-grandson, etc.)
Spouse or former spouse of #3 above.
The estate or trust (testamentary) of a deceased individual
who, while living, was one of the above

Relative – To determine who is considered a relative for the
farming/personal residence exemption, natural persons shall be
considered relatives, if, by blood or adoption, they are
descended from a common ancestor and their relationship with
each other is that of a first cousin or closer than that of a first
cousin, or if they are spouses of one another;
Farming – The growing of crops, nursery products, timber or
fibers, such as cotton, for human or animal use or consumption;
the keeping of horses, cattle, sheep, goats, chickens or other
animals for human or animal use or consumption; the keeping
of animals that produce products, such as milk, eggs, wool or
hides for human or animal use or consumption; or the leasing
of the land to be used for farming

Filing Requirement
The following entities must include this form with form
FAE183 – Annual Exemption Renewal that is due by the
th
15 day of the fourth month following the close of the
entity’s taxable year:
1.

2.

3.

Family-owned non-corporate entities (“FONCE”) qualifying
for exemption. Complete the Organizational Structure
section and Part I,
LLCs, LPs, and LLPs qualifying for the farming activity
exemption. Complete the Organizational Structure section
and Part II, or
LLCs, LPs, and LLPs qualifying for the holding a personal
residence exemption.
Complete the Organizational
Structure section and Part III.

Organizational Structure
(a) Provide the full names of all members or partners.

(b) Enter each member or partner’s percentage interest in
the entity. The total must equal 100%.
(c) Identify the relationship of each partner, (e.g. Spouse,
Daughter, etc.). See definition of “family member” and
“relative” above.

Part I – Family-Owned Non-Corporate Entity
Passive Investment Income
(a) Enter the gross amount received from each source.
However, enter the net gain for capital gains on the sale
of stock or securities. For a capital loss on the sale of
stock or securities, enter $0.
Non-Passive Income
(b) List the source and gross amount of non-passive income
received during the reporting period.
WARNING: In order for an entity to qualify for the FONCE
exemption: 1) at least 95% of its ownership must be held by
members/partners who are family members; and 2) at least
66.67% of its income must be from passive investments
and/or farming. If the entity has no income for the year, it
meets the passive investment income test.

Part II – Farming Activity
(a) Enter the amount of gross receipts earned by the entity
from farming activities and all other activities. Farm
income includes gross receipts derived from the property,
including capital gains from the sale of land and other
assets.
(b) Enter the original cost of assets owned by the entity. In
the event an asset’s original cost cannot be determined,
or there is no original cost to the entity, the property
should be reported at its fair market value at the time of
acquisition by the entity.
WARNING: In order for an entity to qualify for the Farming
exemption: 1) at least 66.67% of its income is from farming,
and 2) at least 66.67% of its assets must be used in farming,
and 3) at least 95% of the voting rights, capital interest or
profits must be owned by family members as defined above.

Part III – Holding a Personal Residence
(a) Enter a complete description of the property owned by
the entity, including how the property is used.
(b) Enter the complete address of the property.
(c) If the property listed is residential property, enter the
name of the person(s) residing at the property and the
length of time during the year that the person occupied
the dwelling.
WARNING: In order for an entity to qualify for the Holding a
Personal Residence exemption at least 66.67% of its activity
must be holding of one (1) or more personal residences
where one (1) or more of the members/partners reside. In
addition, at least 95% of the voting rights, capital interest or
profits must be owned by family members as defined above.