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


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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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Seven Things to Consider When Buying a Triple Net Property


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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)


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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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Tennessee Statute of Frauds


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Most sophisticated business people are aware that all contracts do not have to be in writing. It is possible to have a verbal contract without any written terms at all. However, certain types of contracts are required to be in writing in order to be enforceable.  There are numerous reasons for this requirement, but the primary reason is to make sure that there is reliable evidence of the terms and conditions of contracts that are traditionally important or complex.  Tennessee, like most states, has a statute of frauds that stipulates which contracts must meet this writing requirement to be enforceable in Tennessee courts.  Tennessee’s statute of frauds is actually codified in two separate statutes, Tennessee Code Annotated Sections 29-2-101 and 47-2-201,which require that the following types of contracts be in writing and “signed by the party to be charged therewith:” Contracts of executors and administrators of estates; Contracts promising to answer for the […]

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The shopping truck trend: Commercial Real Estate on Wheels


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Undoubtedly, you have noticed the ubiquitous food trucks that have seemingly taken over parts of Nashville. There is even a food truck park, Wanderland Urban Food Park, where the food trucks can gather around the city. This trend is certainly not unique to Nashville. Food trucks and food truck parks have been popping up at a surprising rate around the country. Food trucks provide a variety of food options for business or entertainment districts that otherwise would only be served by the restaurants located in brick-and-mortar buildings in that area. What you may not have noticed around Nashville just yet are the fashion trucks that have started making their debuts around town. Fashion trucks, like food trucks, are simply trucks that bring their merchandise to their customers at their customers’ chosen location or at a designated location that is convenient for customers. The backs of these trucks have been renovated so […]

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