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171.397 Rehabilitation of certified historic structures -- Qualified
rehabilitation expenses -- Tax credit -- Penalty -- Administrative
regulations.
(1)
(2)
(a)
For all applications for a preliminary approval received prior to April 30,
2010, there shall be allowed as a credit against the taxes imposed by
KRS 141.020, 141.040, 141.0401, or 136.505, an amount equal to:
1.
Thirty percent (30%) of the qualified rehabilitation expenses, in the
case of owner-occupied residential property; and
2.
Twenty percent (20%) of the qualified rehabilitation expenses, in the
case of all other property.
In the case of an exempt entity that has incurred qualified rehabilitation
expenses, the credit provided in this subsection shall be available to
transfer or assign as provided under subsection (8) or (9) of this section.
(b) For applications for preliminary approval received on or after April 30,
2010, the credit shall be refundable if the taxpayer makes an election
under subsection (2)(b) of this section.
(a) A taxpayer seeking the credit provided under subsection (1) of this
section shall file an application for a preliminary determination of
maximum credit eligibility before April 30 of the year in which the
proposed project will begin. The application shall describe the project and
shall include documentation supporting the qualification of the project for
the credit, the proposed start date, the proposed completion date, the
projected qualified rehabilitation expenses, and any other information the
council may require. The council shall determine the preliminary
maximum credit available for each taxpayer and shall notify the taxpayer
of that amount by June 30 of the year in which the application was filed. If
total credits applied for in any year exceed the certified rehabilitation
credit cap, plus any amounts added to the cap pursuant to paragraph (c)
of this subsection, the provisions of subsection (5) of this section shall be
applied to reduce the approved credits for all taxpayers with qualifying
applications for that year.
(b) 1.
An application for a final determination of credit shall be submitted
to the council upon completion of the project.
2.
The application shall include an irrevocable election by the taxpayer
to:
a.
Use the credit, in which case, the credit shall be refundable; or
b.
Transfer the credit.
3.
The council shall determine the final amount of credit approved for
each taxpayer based upon the actual expenditures, preliminary
determination of maximum credit, and a determination that the
expenditures are qualified rehabilitation expenses.
4.
The council shall notify the taxpayer and Department of Revenue of
the final approved credit amount within sixty (60) days of the receipt
of a completed application from the taxpayer.
(c) 1.
If the total amount of credits finally approved for a taxpayer under
(3)
(4)
(5)
(6)
paragraph (b) of this subsection are less than the credits initially
approved for a taxpayer under paragraph (a) of this subsection, the
difference between the two (2) amounts shall be added to the
certified rehabilitation credit cap for the next calendar year.
2.
If the total amount of credits approved under paragraph (a) of this
subsection in any calendar year is less than the certified
rehabilitation credit cap, the difference between the credits actually
awarded and the certified rehabilitation credit cap shall be added to
the certified rehabilitation credit cap for the next calendar year.
(a) The maximum credit which may be claimed with regard to
owner-occupied residential property shall be sixty thousand dollars
($60,000) subject to subsection (5) of this section. The credit in this
section shall be claimed for the taxable year in which the certified
rehabilitation is completed.
(b) The maximum credit which may be claimed with regard to all other
property that is not owner-occupied residential shall be four hundred
thousand dollars ($400,000) subject to subsection (5) of this section. The
credit in this section shall be claimed for the taxable year in which the
certified rehabilitation is completed.
In the case of a husband and wife filing separate returns or filing separately on
a joint return, the credit may be taken by either or divided equally, but the
combined credit shall not exceed sixty thousand dollars ($60,000) if subject to
the limitation in subsection (3)(a) of this section, or four hundred thousand
dollars ($400,000) if subject to the limitation in subsection (3)(b) of this section,
subject to the provisions of subsection (5) of this section.
The credit amount approved for a calendar year for all taxpayers under
subsection (2)(a) of this section shall be limited to the certified rehabilitation
credit cap. When the total credits applied for and approved in any year under
subsection (2)(a) of this section exceed the certified rehabilitation credit cap,
the council shall apportion the certified rehabilitation credit cap as follows: The
certified rehabilitation credit cap for the year under consideration shall be
multiplied by a fraction, the numerator which is the approved credit amount for
an individual taxpayer for a calendar year and the denominator which is the
total approved credits for all taxpayers for a calendar year.
(a) For all applications received prior to April 30, 2010, if the credit amount
that may be claimed in any tax year as determined under subsections (3)
to (5) of this section exceeds the taxpayer's total tax liabilities under KRS
136.505, 141.020, or 141.040 and 141.0401, the taxpayer may carry the
excess tax credit forward until the tax credit is used, provided that any tax
credits not used within seven (7) years of the taxable year the certified
rehabilitation was complete shall be lost.
(b) For all applications received on or after April 30, 2010, if the credit
amount that may be claimed in any tax year as determined under
subsections (3) to (5) of this section exceeds the taxpayer's total tax
liabilities under KRS 136.505, 141.020, or 141.040 and 141.0401, the
taxpayer may receive a refund, if the taxpayer elected to take the credit
as required by subsection (2)(b) of this section.
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(a)
The credit shall apply against both the tax imposed by KRS 141.020 or
141.040 and the limited liability entity tax imposed by KRS 141.0401, with
the ordering of credits as provided in KRS 141.0205.
(b) 1.
For applications received prior to April 30, 2010, if the taxpayer is a
pass-through entity not subject to the tax imposed by KRS 141.040,
the taxpayer shall apply the credit at the entity level against the
limited liability tax entity imposed by KRS 141.0401, and shall also
pass the credit through in the same proportion as the distributive
share of income or loss is passed through.
2.
For applications received on or after April 30, 2010, if the taxpayer is
a pass-through entity not subject to the tax imposed by KRS
141.040, the taxpayer shall apply the credit at the entity level against
the limited liability tax entity imposed by KRS 141.0401, and may
receive a refund if the taxpayer elected to take the credit as required
by subsection (2)(b)2.a. of this section.
Credits received under this section may be transferred or assigned if an
election is made under subsection (2)(b) of this section, for some or no
consideration, along with any related benefits, rights, responsibilities, and
liabilities to any entity subject to the tax imposed by KRS 136.505. Within thirty
(30) days of the date of any transfer of credits, the party transferring the credits
shall notify the Department of Revenue of:
(a) The name, address, employer identification number, and bank routing
and transfer number, of the party to which the credits are transferred;
(b) The amount of credits transferred; and
(c) Any additional information the Department of Revenue deems necessary.
The provisions of this subsection shall apply to any credits that pass through to
a successor or beneficiary of a taxpayer.
For purposes of this section, a lessee of a certified historic structure shall be
treated as the owner of the structure if the remaining term of the lease is not
less than the minimum period promulgated by administrative regulation by the
council.
The taxes imposed in KRS 141.020, 141.040, and 141.0401 shall not apply to
any consideration received for the transfer, sale, assignment, or use of a tax
credit approved under this section.
The Department of Revenue shall assess a penalty on any taxpayer or exempt
entity that performs disqualifying work, as determined by the Kentucky Heritage
Council, on a certified historic structure for which a rehabilitation has been
certified under this section in an amount equal to one hundred percent (100%)
of the tax credit allowed on the rehabilitation. Any penalties shall be assessed
against the property owner who performs the disqualifying work and not
against any transferee of the credits.
The council may impose fees for processing applications for tax credits, not to
exceed the actual cost associated with processing the applications.
The council may authorize a local government to perform an initial review of
applications for the credit allowed under this section and forward the
applications to the council with its recommendations.
(14) The council and the Department of Revenue may promulgate administrative
regulations in accordance with the provisions of KRS Chapter 13A to establish
policies and procedures to implement the provisions of subsections (1) to (13)
of this section.
(15) The tax credit authorized by this section shall apply to tax periods ending on or
after December 31, 2005.
Effective:June 26, 2009
History: Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 34, effective June
26, 2009. -- Amended 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 68, effective
June 28, 2006. -- Amended 2006 Ky. Acts ch. 196, sec. 1, effective January 1,
2007. -- Created 2005 Ky. Acts ch. 168, sec. 151, effective March 18, 2005.
Legislative Research Commission Note (7/12/2006). 2006 Ky. Acts ch. 196,
sec. 2, provides that the amendments to KRS 171.397 in 2006 Ky. Acts ch. 196,
sec. 1, apply for taxable periods beginning on or after January 1, 2007.
Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky.
Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically
applies to an earlier tax year, the provisions of this Act shall apply to taxable
years beginning on or after January 1, 2007."
Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168,
sec. 165, provides that this section shall apply to tax years beginning on or after
January 1, 2005.
Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts chs. 11, 85,
95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory
references to agencies and officers whose names have been changed in 2005
legislation confirming the reorganization of the executive branch. Such a
correction has been made in this section.
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