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141.414 Computation of tax and credit.
(1)
(2)
A qualified farming operation which is an individual sole proprietorship subject
to tax under KRS 141.020 or a corporation or pass-through entity treated as a
corporation for federal income tax purposes subject to tax under KRS 141.040
shall:
(a) 1.
Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net income as defined by KRS 141.010(11)
or taxable net income as defined by KRS 141.010(14), including
income from the qualified farming operation's participation in a
networking project.
2.
Compute the limited liability entity tax imposed under KRS
141.0401, including Kentucky gross profits or Kentucky gross
receipts from the qualified farming operation's participation in a
networking project; and
3.
Add the amounts computed under subparagraphs 1. and 2. of this
paragraph and, if applicable, subtract the credit permitted by KRS
141.0401(3) from that sum. The resulting amount shall be the net
tax for purposes of this paragraph;
(b) 1.
Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 applies on net income as defined by KRS
141.010(11) or taxable net income as defined by KRS 141.010(14),
excluding net income attributable to the qualified farming operation's
participation in a networking project;
2.
Using the same method used under paragraph (a)2. of this
subsection, compute the limited liability entity tax imposed under
KRS 141.0401, excluding Kentucky gross profits or Kentucky gross
receipts from the qualified farming operation's participation in a
networking project; and
3.
Add the amounts computed under subparagraphs 1. and 2. of this
paragraph and, if applicable, subtract the credit permitted by KRS
141.0401(3) from that sum. The resulting amount shall be the net
tax for purposes of this paragraph; and
(c) Be entitled to a tax credit in the amount by which the tax computed under
paragraph (a)3. of this subsection exceeds the tax computed under
paragraph (b)3. of this subsection. The credit shall not exceed the farming
operation's approved costs, as defined in KRS 141.410.
Notwithstanding any other provisions of this chapter, a qualified farming
operation which is a pass-through entity not subject to the tax imposed by KRS
141.040 or trust not subject to the tax imposed by KRS 141.040 shall be
subject to income tax on the net income attributable to its participation in a
networking project at the rates provided in KRS 141.020(2), and the amount of
the tax credit shall be the same as the amount of the tax computed in this
subsection. The credit shall not exceed the farming operation's approved costs,
as defined in KRS 141.410. If the tax computed in this subsection exceeds the
tax credit, the difference shall be paid by the pass-through entity or trust at the
times provided by KRS 141.160 for filing the returns.
(3)
(4)
(5)
(6)
(7)
Notwithstanding any other provisions of this chapter, the net income subject to
tax and the tax credit determined under subsection (2) of this section shall be
excluded in determining each partner's, member's, shareholder's, or
beneficiary's distributive share of net income or credit of a pass-through entity
or trust.
If the networking entity is a separate facility:
(a) Net income attributable to the project for the purposes of subsections (1),
(2), and (3) of this section shall be determined under the separate
accounting method reflecting only the gross income, deductions,
expenses, gains, and losses allowed under KRS Chapter 141 directly
attributable to the project and overhead expenses apportioned to the
facility; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the
project for the purposes of subsection (1) of this section shall be
determined under the separate accounting method reflecting only the
Kentucky gross receipts or Kentucky gross profits directly attributable to
the facility.
If the networking project is an expansion to a previously existing farming
operation:
(a) Net income attributable to the entire operation shall be determined under
the separate accounting method reflecting only the gross income,
deductions, expenses, gains, and losses allowed under this chapter
directly attributable to the farming operation's participation in the
networking project and overhead expenses apportioned to the networking
project, and the net income attributable to the networking project for the
purposes of subsections (1), (2), and (3) of this section shall be
determined by apportioning the separate accounting net income of the
entire networking project to the networking project by a formula approved
by the Department of Revenue; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the
entire facility shall be determined under the separate accounting method
reflecting only the Kentucky gross receipts or Kentucky gross profits
directly attributable to the facility, and Kentucky gross receipts or
Kentucky gross profits attributable to the economic development project
for the purposes of subsection (1) of this section shall be determined by
apportioning the separate accounting Kentucky gross receipts or
Kentucky gross profits of the entire facility to the economic development
project by a formula approved by the Department of Revenue.
If an approved company can show to the satisfaction of the Department of
Revenue that the nature of the operations and activities of the approved
farming operation are such that it is not practical to use the separate
accounting method to determine the net income, Kentucky gross receipts, or
Kentucky gross profits from the networking project, the approved farming
operation shall determine net income, Kentucky gross receipts, or Kentucky
gross profits from its participation in the networking project using an alternative
method approved by the Department of Revenue.
The Department of Revenue may promulgate administrative regulations
pursuant to KRS Chapter 13A and require the filing of forms designed by the
Department of Revenue necessary to effectuate KRS 141.0101 and KRS
141.410 to 141.414 and the allowable income tax credit which an approved
farming operation may retain under the provisions of KRS 141.412 and this
section.
Effective:June 28, 2006
History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 30, effective June
28, 2006. -- Amended 2006 Ky. Acts ch. 252, Pt. XIII, sec. 12, effective April 25,
2006. -- Amended 2005 Ky. Acts ch. 85, sec. 510, effective June 20, 2005; and
ch. 168, sec. 30, effective March 18, 2005. -- Created 1994 Ky. Acts ch. 390,
sec. 18, effective July 15, 1994.
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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