Kentucky Statutes 141.402 – Taxing provisions governing approved companies under Subchapter 25 of KRS Chapter 154
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(1) As used in this section, unless the context requires otherwise:
(a) “Approved company” shall have the same meaning as set forth in KRS
154.25-010;
(b) “Jobs retention project” shall have the same meaning as set forth in KRS
154.25-010;
(c) “Kentucky gross receipts” means Kentucky gross receipts as defined in KRS
141.0401;
(d) “Kentucky gross profits” means Kentucky gross profits as defined in KRS
141.0401; and
(e) “Tax credit” means the tax credit allowed in KRS § 154.25-030.
(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(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 or taxable net income as defined by KRS § 141.010, including income from the jobs retention project;
2. Compute the limited liability entity tax imposed under KRS § 141.0401, including Kentucky gross profits or Kentucky gross receipts from the jobs retention 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 or taxable net income as defined by KRS § 141.010, excluding net income attributable to the jobs retention 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 profits or Kentucky gross receipts from the jobs retention 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 § 154.25-030.
(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 jobs retention 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 § 154.25-030.
(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) (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 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 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 jobs retention project is located, the approved company shall determine
net income, Kentucky gross receipts, or Kentucky gross profits from the jobs retention project using an alternative method approved by the Department of Revenue.
(8) The Department of Revenue may promulgate administrative regulations and require the filing of forms designed by the Department of Revenue to reflect the intent of this section and KRS § 154.25-010 to KRS § 154.25-050 and the allowable income tax credit which an approved company may retain under this section and KRS § 154.25-010 to
154.25-050.
Effective: June 27, 2019
History: Amended 2019 Ky. Acts ch. 151, sec. 54, effective June 27, 2019. — Created
2007 Ky. Acts ch. 91, sec. 6, effective March 23, 2007.
Legislative Research Commission Note (3/23/2007). In subsection (8) of Ky. Acts ch.
91, sec. 6, it appears from context and on advice of the drafter that two references to “this Act” should have been to “this section and Sections 1 to 5 of this Act.” The Reviser of Statutes has made these changes pursuant to KRS § 7.136.
(a) “Approved company” shall have the same meaning as set forth in KRS
Terms Used In Kentucky Statutes 141.402
- 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: means a corporation taxable under KRS §. See Kentucky Statutes 141.010
- 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.
- 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
154.25-010;
(b) “Jobs retention project” shall have the same meaning as set forth in KRS
154.25-010;
(c) “Kentucky gross receipts” means Kentucky gross receipts as defined in KRS
141.0401;
(d) “Kentucky gross profits” means Kentucky gross profits as defined in KRS
141.0401; and
(e) “Tax credit” means the tax credit allowed in KRS § 154.25-030.
(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(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 or taxable net income as defined by KRS § 141.010, including income from the jobs retention project;
2. Compute the limited liability entity tax imposed under KRS § 141.0401, including Kentucky gross profits or Kentucky gross receipts from the jobs retention 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 or taxable net income as defined by KRS § 141.010, excluding net income attributable to the jobs retention 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 profits or Kentucky gross receipts from the jobs retention 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 § 154.25-030.
(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 jobs retention 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 § 154.25-030.
(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) (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 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 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 jobs retention project is located, the approved company shall determine
net income, Kentucky gross receipts, or Kentucky gross profits from the jobs retention project using an alternative method approved by the Department of Revenue.
(8) The Department of Revenue may promulgate administrative regulations and require the filing of forms designed by the Department of Revenue to reflect the intent of this section and KRS § 154.25-010 to KRS § 154.25-050 and the allowable income tax credit which an approved company may retain under this section and KRS § 154.25-010 to
154.25-050.
Effective: June 27, 2019
History: Amended 2019 Ky. Acts ch. 151, sec. 54, effective June 27, 2019. — Created
2007 Ky. Acts ch. 91, sec. 6, effective March 23, 2007.
Legislative Research Commission Note (3/23/2007). In subsection (8) of Ky. Acts ch.
91, sec. 6, it appears from context and on advice of the drafter that two references to “this Act” should have been to “this section and Sections 1 to 5 of this Act.” The Reviser of Statutes has made these changes pursuant to KRS § 7.136.