2014 Kentucky Revised Statutes CHAPTER 141 - INCOME TAXES 141.400 Tax credit for company approved for economic development project under KRS 154.28-010 to 154.28-100.
Download as PDF
141.400 Tax credit for company approved for economic development project
under KRS 154.28-010 to 154.28-100.
(1)
(2)
(3)
As used in this section, unless the context requires otherwise:
(a) "Approved company" shall have the same meaning as set forth in KRS
154.28-010;
(b) "Economic development project" shall have the same meaning as set
forth in KRS 154.28-010;
(c) "Tax credit" means the "tax credit" allowed in KRS 154.28-090;
(d) "Kentucky gross receipts" means Kentucky gross receipts as defined in
KRS 141.0401; and
(e) "Kentucky gross profits" means Kentucky gross profits as defined in KRS
141.0401.
An approved company shall determine the income tax credit as provided in this
section.
An approved company 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(1) 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 economic development project;
2.
Compute the limited liability entity tax imposed under KRS
141.0401, including Kentucky gross profits or Kentucky gross
receipts from the economic development 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 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 economic development project;
2.
Using the same method used under subparagraph 2. of paragraph
(a) of this subsection, compute the limited liability entity tax imposed
under KRS 141.0401, excluding Kentucky gross receipts or
Kentucky gross profits from the economic development 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.
(c) The tax credit shall be the amount by which the net tax computed under
paragraph (a)3. of this subsection exceeds the tax computed under
paragraph (b)3. of this subsection; however, the credit shall not exceed
the limits set forth in KRS 154.28-090.
(4)
(5)
(6)
(7)
(a) Notwithstanding any other provisions of this chapter, an approved company
which is a pass-through entity not subject to tax under KRS 141.040, or a
trust not subject to tax under KRS 141.040 shall be subject to income tax
on the net income attributable to an economic development project at the
rates provided in KRS 141.020(2).
(b) The amount of the tax credit shall be determined as provided in
subsection (3) of this section. Upon the annual election of the approved
company, in lieu of the tax credit, an amount shall be applied as an
estimated tax payment equal to the tax computed in this section. Any
estimated tax payment made pursuant to this paragraph shall be in
satisfaction of the tax liability of the partners, members, shareholders, or
beneficiaries of the pass-through entity or trust, and shall be paid on
behalf of the partners, members, shareholders, or beneficiaries.
(c) The tax credit or estimated payment shall not exceed the limits set forth in
KRS 154.28-090.
(d) If the tax computed in this section exceeds the credit, the excess shall be
paid by the pass-through entity or trust at the times provided by KRS
141.0401 or 141.160 for filing the returns.
(e) Any estimated tax payment made by the pass-through entity or trust in
satisfaction of the tax liability of partners, members, shareholders, or
beneficiaries shall not be treated as taxable income subject to Kentucky
income tax by the partner, member, shareholder, or beneficiary.
Notwithstanding any other provisions of this chapter, the net income subject to
tax, the tax credit, and the estimated tax payment determined under subsection
(4) 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 economic development project is a totally separate facility:
(a) Net income attributable to the project for the purposes of subsections (3),
(4), and (5) of this section 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 facility and overhead expenses apportioned to the
facility; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the
project for purposes of subsection (3) 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 economic development project is an expansion to a previously existing
facility:
(a) Net income attributable to the entire facility 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 facility and overhead expenses apportioned to the
facility, and the net income attributable to the economic development
project for the purposes of subsections (3), (4), and (5) of this section
(8)
(9)
shall be determined by apportioning the separate accounting net income
of the entire facility to the economic development 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 (3) 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
company 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 facility at which the economic development project is
located, the approved company shall determine net income, Kentucky gross
receipts, or Kentucky gross profits from the economic development project
using an alternative method approved by the Department of Revenue.
The Department of Revenue may issue administrative regulations and require
the filing of forms designed by the Department of Revenue to reflect the intent
of KRS 154.22-020 to 154.22-070 and KRS 154.28-010 to 154.28-090 and this
section and the allowable tax credit which an approved company may retain
under KRS 154.22-020 to 154.22-070 and KRS 154.28-010 to 154.28-090 and
this section.
Effective:June 28, 2006
History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 23, effective June
28, 2006. -- Amended 2006 Ky. Acts ch. 252, Pt. XIII, sec. 6, effective April 25,
2006. -- Amended 2005 Ky. Acts ch. 85, sec. 505, effective June 20, 2005; and
ch. 168, sec. 24, effective March 18, 2005. -- Amended 1996 Ky. Acts ch. 194,
sec. 7, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 37,
effective July 15, 1994. -- Created 1992 Ky. Acts ch. 363, sec. 11, effective July
14, 1992.
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.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.