Formed business (rental property) in 2016. Have federal EIN. Do I have to file a business return? Also need to file state (TN) and claim FONCE exemption. What software?

If you formed a single-member LLC (or two member LLC if both members are married and filing a joint return), it will not effect how you would ordinarily file without the business. Since the IRS sees your LLC as a disregarded entity, you still report your rental income & expenses on SCH E using TurboTax Premier.
Unless you have non-rental related income/expenses in your LLC, you have nothing to report for your LLC and a SCH C is not required.

In order to qualify for the FONCE franchise and excise tax exemption, the entity must meet two criteria:

1. at least 95% of the entity’s ownership must be directly held by family members, and
2. substantially all (66.67%) of the activity of the entity is either the production of passive investment income or the combination of the production of passive investment income and farming.

Passive investment income is gross receipts derived from royalties, rents from residential property or farm property, dividends, interest, annuities, and the amount of any gain on the sale or exchange of stock or securities. Residential property can’t have more than four residential units at any one location.

Below is a link to the Tennessee Department of Revenue that will explain what taxes need to be paid to the state of Tennessee: