Tennessee Department of Revenue Revises Position on FDII
In a recently published overview of upcoming updates to its Franchise and Excise Tax Manual, the Tennessee Department of Revenue stated it has revised its position on foreign-derived intangible income (FDII).
Page 300 of the Franchise and Excise Tax Manual indicates that Tennessee has decoupled from the federal provision (IRC § 250) that allows a deduction for FDII. The Department has reviewed this issue and determined that while Tennessee has decoupled from section 250 for purposes of global intangible low-taxed income (GILTI), it has not decoupled for purposes of the FDII deduction. Therefore, in computing “net earnings” under Tenn. Code Ann. § 67-4-2006, taxpayers are entitled to the full amount of the section 250(a) deduction to which it is entitled under federal law as it relates to FDII.
For more information, see the Department’s Tax Manuals webpage.