{"data":{"id":"us-ky/krs-141.121","jurisdiction":"us-ky","citation":"KRS 141.121","heading":"Special rules for apportioning business income -- Management of a","body":"treasury function -- Passenger airlines -- Qualified air freight forwarders --\nAdministrative regulations regarding sourcing of receipts.\n(1) As used in this section:\n(a) \"Affiliated airline\" means an airline:\n1. For which a qualified air freight forwarder facilitates air transportation;\nand\n2. That is in the same affiliated group as a qualified air freight forwarder;\n(b) \"Affiliated group\" has the same meaning as in KRS 141.201;\n(c) \"Kentucky revenue passenger miles\" means the total revenue passenger miles\nwithin the borders of Kentucky for all flight stages that either originate or\nterminate in this state;\n(d) \"Passenger airline\" means a person or corporation engaged primarily in t he\ncarriage by aircraft of passengers in interstate commerce;\n(e) \"Provider\" means any corporation engaged in the business of providing:\n1. Communications service as defined in KRS 136.602;\n2. Cable service as defined in KRS 136.602; or\n3. Internet access as defined in 47 U.S.C. sec. 151;\n(f) \"Qualified air freight forwarder\" means a person that:\n1. Is engaged primarily in the facilitation of the transportation of property\nby air;\n2. Does not itself operate aircraft; and\n3. Is in the same affiliated group as an affiliated airline; and\n(g) \"Revenue passenger miles\" means miles calculated in accordance with 14\nC.F.R. Part 241.\n(2) (a) For purposes of apportioning business income to this state for taxable years\nbeginning prior to January 1, 2018:\n1. Passenger airlines shall determine the property, payroll, and sales factors\nas follows:\na. Except as modified by this subdivision, the property factor shall be\ndetermined as provided in KRS 141.901. Aircraft operated by a\npassenger ai rline shall be included in both the numerator and\ndenominator of the property factor. Aircraft shall be included in\nthe numerator of the property factor by determining the product of:\ni. The total average value of the aircraft operated by the\npassenger airline; and\nii. A fraction, the numerator of which is the Kentucky revenue\npassenger miles of the passenger airline for the taxable year\nand the denominator of which is the total revenue passenger\nmiles of the passenger airline for the taxable year;\nb. Except as modified by this subdivision, the payroll factor shall be\ndetermined as provided in KRS 141.901. Compensation paid\nduring the tax period by a passenger airline to flight personnel\nshall be included in the numerator of the payroll factor by\ndetermining the product of:\ni. The total amount paid during the taxable year to flight\npersonnel; and\nii. A fraction, the numerator of which is the Kentucky revenue\npassenger miles of the passenger airline for the taxable year\nand the denominator of which is the tota l revenue passenger\nmiles of the passenger airline for the taxable year; and\nc. Except as modified by this subdivision, the sales factor shall be\ndetermined as provided in KRS 141.901. Transportation\nrevenues shall be included in the numerator of the sales\nfactor by determining the product of:\ni. The total transportation revenues of the passenger airline for\nthe taxable year; and\nii. A fraction, the numerator of which is the Kentucky revenue\npassenger miles for the taxable year and the denominator of\nwhich is the total revenue passenger miles for the taxable\nyear; and\n2. Qualified air freight forwarders shall determine the property, payroll,\nand sales factors as follows:\na. The property factor shall be determined as provided in KRS\n141.901;\nb. The payroll fa ctor shall be determined as provided in KRS\n141.901; and\nc. Except as modified by this subparagraph, the sales factor shall be\ndetermined as provided in KRS 141.901. Freight forwarding\nrevenues shall be included in the numerator of the sales factor by\ndetermining the product of:\ni. The total freight forwarding revenues of the qualified air\nfreight forwarder for the taxable year; and\nii. A fraction, the numerator of which is miles operated in\nKentucky by the affiliated airline and the denominator of\nwhich is the total miles operated by the affiliated airline.\n(b) For purposes of apportioning income to this state for taxable years beginning\non or after January 1, 2018, except as modified by this paragraph, the\napportionment fraction shall be determined as prov ided in KRS 141.120,\nexcept that:\n1. Transportation revenues shall be determined to be in this state by\nmultiplying the total transportation revenues by a fraction, the numerator\nof which is the Kentucky revenue passenger miles for the taxable year\nand the  denominator of which is the total revenue passenger miles for\nthe taxable year; and\n2. Freight forwarding revenues shall be determined to be in this state by\nmultiplying the total freight forwarding revenues by a fraction, the\nnumerator of which is miles operated in Kentucky by the affiliated\nairline and the denominator of which is the total miles operated by the\naffiliated airline.\n(3) For purposes of apportioning income to this state for taxable years beginning on or\nafter January 1, 2018, the apportionment fraction for a provider shall continue to be\ncalculated using a three (3) factor formula as provided in KRS 141.901.\n(4) (a) A corporation may elect the allocation and apportionment methods for the\ncorporation's apportionable income pro vided for in paragraphs (b) and (c) of\nthis subsection. The election, if made, shall be irrevocable for a period of five\n(5) years.\n(b) All business income derived directly or indirectly from the sale of\nmanagement, distribution, or administration services  to or on behalf of\nregulated investment companies, as defined under the Internal Revenue Code\nof 1986, as amended, including trustees, and sponsors or participants of\nemployee benefit plans which have accounts in a regulated investment\ncompany, shall be apportioned to this state only to the extent that shareholders\nof the investment company are domiciled in this state as follows:\n1. Total apportionable income shall be multiplied by a fraction, the\nnumerator of which shall be Kentucky receipts from the serv ices for the\ntax period and the denominator of which shall be the total receipts\neverywhere from the services for the tax period;\n2. For purposes of subparagraph 1. of this paragraph, Kentucky receipts\nshall be determined by multiplying total receipts for the taxable year\nfrom each separate investment company for which the services are\nperformed by a fraction. The numerator of the fraction shall be the\naverage of the number of shares owned by the investment company's\nshareholders domiciled in this state at the beginning of and at the end of\nthe investment company's taxable year, and the denominator of the\nfraction shall be the average of the number of the shares owned by the\ninvestment company shareholders everywhere at the beginning of and at\nthe end of the investment company's taxable year; and\n3. Nonapportionable income shall be allocated to this state as provided in\nKRS 141.120.\n(c) All apportionable income derived directly or indirectly from the sale of\nsecurities brokerage services by a business which o perates within the\nboundaries of any area of the Commonwealth, which on June 30, 1992, was\ndesignated as a Kentucky Enterprise Zone, as described in KRS 154.655(2)\nbefore that statute was renumbered in 1992, shall be apportioned to this state\nonly to the e xtent that customers of the securities brokerage firm are\ndomiciled in this state. The portion of business income apportioned to\nKentucky shall be determined by multiplying the total business income from\nthe sale of these services by a fraction determined in the following manner:\n1. The numerator of the fraction shall be the brokerage commissions and\ntotal margin interest paid in respect of brokerage accounts owned by\ncustomers domiciled in Kentucky for the brokerage firm's taxable year;\n2. The denominator of the fraction shall be the brokerage commissions and\ntotal margin interest paid in respect of brokerage accounts owned by all\nof the brokerage firm's customers for that year; and\n3. Nonapportionable income shall be allocated to this state as provided in\nKRS 141.120.\n(5) Public service companies and financial organizations required by KRS 141.010 to\nallocate and apportion net income shall allocate and apportion that income as\nfollows:\n(a) Nonapportionable income shall be allocated to this state as provided  in KRS\n141.120;\n(b) Apportionable income shall be apportioned to this state as provided by KRS\n141.120. Receipts shall be determined as provided by administrative\nregulations promulgated by the department; and\n(c) An affiliated group required to file a co nsolidated return under KRS 141.201\nthat includes a public service company, a provider of communications services\nor multichannel video programming services as defined in KRS 136.602, or a\nfinancial organization shall determine the amount of receipts as pr ovided by\nadministrative regulations promulgated by the department.\n(6) A corporation:\n(a) That owns an interest in a limited liability pass-through entity; or\n(b) That owns an interest in a general partnership;\nshall include the proportionate share of re ceipts of the limited liability pass -through\nentity or general partnership when apportioning income. The phrases \"an interest in\na limited liability pass -through entity\" and \"an interest in a general partnership\"\nshall extend to each level of multiple-tiered pass-through entities.\n(7) The department shall promulgate administrative regulations to detail the sourcing of\nthe following receipts related to financial institutions:\n(a) Receipts from the lease of real property;\n(b) Receipts from the lease of tangible personal property;\n(c) Interest, fees, and penalties imposed in connection with loans secured by real\nproperty;\n(d) Interest, fees, and penalties imposed in connection with loans not secured by\nreal property;\n(e) Net gains from the sale of loans;\n(f) Receipts from fees, interest, and penalties charged to card holders;\n(g) Net gains from the sale of credit card receivables;\n(h) Card issuer's reimbursement fees;\n(i) Receipts from merchant discount;\n(j) Receipts from ATM fees;\n(k) Receipts from loan servicing fees;\n(l) Receipts from other services;\n(m) Receipts from the financial institution's investment assets and activity and\ntrading assets and activity; and\n(n) All other receipts.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=49914","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:34Z","sha256":"d591e67717257205e0d240e5099699519d3dccd75534821120a3bb8b02ea43af","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.120","next":"us-ky/krs-141.124"},"notice":"GroundRules: Original legal text. Not legal advice."}