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Tennessee Excise Tax and Franchise Tax (Tenn. Code Ann. § 67-4-2007 and Tenn. Code Ann. § 67-4- 2104)


When purchasing commercial real estate, it is common, for tax and liability reasons, to form a single purpose entity to own the property. Many times, the entity that is formed is a limited liability company. Forming an LLC is generally relatively cheap, fast, and shields the members of the LLC from liability.  However, when forming an LLC in Tennessee, or any other entity that provides limited liability to owners there are tax implications to consider that may not arise in other states. Tennessee does not collect income tax from individuals on most forms of income. Instead of imposing income taxes, Tennessee imposes various other taxes, including two forms of taxes for the privilege of doing business in the state. In Tennessee an excise tax and franchise tax are imposed on corporations, subchapter S corporations, limited liability companies, professional limited liability companies, real estate investment trusts, limited partnerships, and registered limited […]

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Forming a General Partnership in Tennessee


  What is a Statement of Partnership Authority? In Tennessee, most types of business entities require specific documents to be filed with the Secretary of State in order to be recognized as a legitimate legal entity. One major exception exists for general partnerships, however, which can exist with no formal documentation. Under the Revised Uniform Partnership Act (the “RUPA”), a “partnership” is “an association of two (2) or more persons to carry on as co-owners of a business or other undertaking for profit.” Tenn. Code Ann. § 61-1-101 (7).  By this definition, individuals carrying on a business together may form a partnership without intending to, or even being aware that they are partners. See In re Copeland, 291 B.R. 740 (2003) (“under Tennessee law, there is no requirement that the parties actually intended to become partners”). In situations where it is unclear whether a partnership has formed, courts will consider […]

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Seven Things to Consider When Buying a Triple Net Property


Purchasing a property with single tenant triple net lease (“Triple Net Property”) is a common investment tool for investors seeking a passive stream of income. Triple Net Properties can be a great investment for both sophisticated real estate investors and people who are new to the real estate investment world. Regardless of your experience level, when looking to purchase a Triple Net Property, there are a number of factors to consider.   The Creditworthiness of the Tenant. In the short term, the creditworthiness of the tenant is one of the most important factors when considering whether to purchase a Triple Net Property. When purchasing a Triple Net Property, you are generally purchasing the property for the steam of income generated by the rent under the lease. A creditworthy tenant is more likely to make timely rent payments, ensuring the Property has a constant payment stream.  Generally, publicly traded companies are […]

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Tennessee Mortgage Tax (Tenn. Code Ann. § 67-4-409)


The Tennessee Recordation Tax (also referred to as the “Indebtedness Tax” or “Mortgage Tax”) is codified at Tennessee Code Annotated § 67-4-409.  This statute requires that “prior to public recordation of any instrument evidencing indebtedness” there shall be a state tax of 11.5¢ per $100 (the “Recordation Tax Formula”) of “the indebtedness so evidenced.”  Common instruments of indebtedness subject to this tax include, but are not limited, to mortgages, deeds of trust, and conditional sales contracts. Documents that are exempt from this tax include, but are not limited to, the recordation of “judgment liens, contractors’ liens, subcontractors’ liens, furnishers’ liens, laborers’ liens, and mortgages or deeds of trust issued under the Home Equity Conversion Mortgage Act.” § 67-4-409(b)(1). In Tennessee, for each instrument, the first two thousand ($2,000) dollars of total indebtedness is exempt from the Recordation Tax.  However, this exemption can only be taken once in relation to a particular […]

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Walt Burton appears at Community Hearing for Howe Garden Apartments


Thompson Burton partner, Walt Burton, recently appeared at a community hearing on behalf of the owners of Howe Garden Apartments in East Nashville.  The news story from Nashville Fox 17 can be viewed here.

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