Tennessee DOR Determines Applicability of Franchise, Excise Tax on REITs Owned by Limited Partnerships

The Tennessee Department of Revenue (DOR) Feb. 14 determined in a revenue ruling the applicability of corporate income and excise taxes on Taxpayers’ Real Estate Investment Trusts (REITs). Taxpayers, limited partnerships (LP), owned over 99 percent of three REITs, each with its own portfolio of real estate loans obtained through an affiliated LLC serving as their investment manager. The LPs managed by the investment manager occasionally invested in Tennessee projects but they didn’t hold an office in the state. Taxpayers filed franchise and excise tax returns for their REIT revenue. Taxpayers inquired about the applicability of state franchise and excise ...