Kentucky Statutes 141.415 – Computation of income tax and credit for approved company
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(1) As used in this section, unless the context requires otherwise:
(a) “Approved company” means the same as defined in KRS § 154.32-010 or
154.34-010;
(b) “Economic development project” means the same as defined in KRS § 154.32-
010;
(c) “Reinvestment project” means the same as defined in KRS § 154.34-010;
(d) “Tax credit” means the tax credit allowed in KRS § 154.34-120 or the credit allowed in KRS § 154.32-070, as the case may be;
(e) “Kentucky gross receipts” means the same as defined in KRS § 141.0401; and
(f) “Kentucky gross profits” means the same as defined in KRS § 141.0401.
(2) An approved company shall determine the income tax credit as provided in this section.
(3) 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 shall:
(a) 1. Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net income or taxable net income, including income from a reinvestment project or 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 reinvestment project or 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 or taxable net income, excluding net income attributable to a reinvestment project or economic development 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, including Kentucky gross profits or Kentucky gross receipts from the reinvestment project or 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 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
154.32-070 or 154.34-120, as the case may be.
(4) (a) Notwithstanding any other provisions of this chapter, an approved company 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 a reinvestment project or economic development project at the rates provided in KRS § 141.020.
(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 § 154.32-070 or 154.34-120, as the case may be.
(d) If the tax computed in this section 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.
(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.
(5) 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.
(6) If the reinvestment project or 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 KRS Chapter 141 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 the 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.
(7) If the reinvestment project or 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 KRS Chapter 141 directly
attributable to the facility and overhead expenses apportioned to the facility, and the net income attributable to the reinvestment project or economic development project for the purposes of subsections (3), (4), and (5) of this section shall be determined by apportioning the separate accounting net income of the entire facility to the reinvestment project or economic development project by a formula approved by the department; 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 reinvestment project or 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 reinvestment project or economic development project by a formula approved by the department.
(8) If an approved company can show to the satisfaction of the department 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 reinvestment project or economic development project is located, the approved company shall determine net income, Kentucky gross receipts, or Kentucky gross profits from the reinvestment project or economic development project using an alternative method approved by the department.
(9) The department may promulgate administrative regulations and require the filing of forms designed by the department to reflect the intent of KRS § 154.34-010 to
154.34-100 and Subchapter 32 of KRS Chapter 154, and the allowable income tax credit which an approved company may retain under KRS § 154.34-010 to KRS § 154.34-
100 or Subchapter 32 of KRS Chapter 154.
Effective: April 27, 2018
History: Amended 2018 Ky. Acts ch. 171, sec. 93, effective April 14, 2018; and ch.
207, sec. 93, effective April 27, 2018. — Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 31, effective June 26, 2009. — Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 31, effective June 28, 2006. — Amended 2006 Ky. Acts ch. 252, Pt. XIII, sec. 13, effective April 25, 2006. — Amended 2005 Ky. Acts ch. 85, sec. 511, effective June 20, 2005; and ch. 168, sec. 31, effective March 18, 2005. — Created
2003 Ky. Acts ch. 148, sec. 11, effective June 24, 2003.
Legislative Research Commission Note (4/27/2018). This statute was amended by 2018
Ky. Acts chs. 171 and 207, which do not appear to be in conflict and have been codified together.
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.
(a) “Approved company” means the same as defined in KRS § 154.32-010 or
Terms Used In Kentucky Statutes 141.415
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means a corporation taxable under KRS §. See Kentucky Statutes 141.010
- Department: means the Department of Revenue. See Kentucky Statutes 141.010
- Federal: refers to the United States. See Kentucky Statutes 446.010
- Individual: means a natural person. See Kentucky Statutes 141.010
- Pass-through entity: means any partnership, S corporation, limited liability company, limited liability partnership, limited partnership, or similar entity recognized by the laws of this state that is not taxed for federal purposes at the entity level, but instead passes to each partner, member, shareholder, or owner their proportionate share of income, deductions, gains, losses, credits, and any other similar attributes. See Kentucky Statutes 141.010
- Statute: A law passed by a legislature.
- Year: means calendar year. See Kentucky Statutes 446.010
154.34-010;
(b) “Economic development project” means the same as defined in KRS § 154.32-
010;
(c) “Reinvestment project” means the same as defined in KRS § 154.34-010;
(d) “Tax credit” means the tax credit allowed in KRS § 154.34-120 or the credit allowed in KRS § 154.32-070, as the case may be;
(e) “Kentucky gross receipts” means the same as defined in KRS § 141.0401; and
(f) “Kentucky gross profits” means the same as defined in KRS § 141.0401.
(2) An approved company shall determine the income tax credit as provided in this section.
(3) 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 shall:
(a) 1. Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net income or taxable net income, including income from a reinvestment project or 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 reinvestment project or 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 or taxable net income, excluding net income attributable to a reinvestment project or economic development 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, including Kentucky gross profits or Kentucky gross receipts from the reinvestment project or 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 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
154.32-070 or 154.34-120, as the case may be.
(4) (a) Notwithstanding any other provisions of this chapter, an approved company 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 a reinvestment project or economic development project at the rates provided in KRS § 141.020.
(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 § 154.32-070 or 154.34-120, as the case may be.
(d) If the tax computed in this section 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.
(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.
(5) 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.
(6) If the reinvestment project or 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 KRS Chapter 141 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 the 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.
(7) If the reinvestment project or 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 KRS Chapter 141 directly
attributable to the facility and overhead expenses apportioned to the facility, and the net income attributable to the reinvestment project or economic development project for the purposes of subsections (3), (4), and (5) of this section shall be determined by apportioning the separate accounting net income of the entire facility to the reinvestment project or economic development project by a formula approved by the department; 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 reinvestment project or 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 reinvestment project or economic development project by a formula approved by the department.
(8) If an approved company can show to the satisfaction of the department 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 reinvestment project or economic development project is located, the approved company shall determine net income, Kentucky gross receipts, or Kentucky gross profits from the reinvestment project or economic development project using an alternative method approved by the department.
(9) The department may promulgate administrative regulations and require the filing of forms designed by the department to reflect the intent of KRS § 154.34-010 to
154.34-100 and Subchapter 32 of KRS Chapter 154, and the allowable income tax credit which an approved company may retain under KRS § 154.34-010 to KRS § 154.34-
100 or Subchapter 32 of KRS Chapter 154.
Effective: April 27, 2018
History: Amended 2018 Ky. Acts ch. 171, sec. 93, effective April 14, 2018; and ch.
207, sec. 93, effective April 27, 2018. — Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 31, effective June 26, 2009. — Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 31, effective June 28, 2006. — Amended 2006 Ky. Acts ch. 252, Pt. XIII, sec. 13, effective April 25, 2006. — Amended 2005 Ky. Acts ch. 85, sec. 511, effective June 20, 2005; and ch. 168, sec. 31, effective March 18, 2005. — Created
2003 Ky. Acts ch. 148, sec. 11, effective June 24, 2003.
Legislative Research Commission Note (4/27/2018). This statute was amended by 2018
Ky. Acts chs. 171 and 207, which do not appear to be in conflict and have been codified together.
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.