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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