{"data":{"id":"us-ky/krs-141.400","jurisdiction":"us-ky","citation":"KRS 141.400","heading":"Tax credit for company approved for economic development project under","body":"KRS 154.28-010 to 154.28-100.\n(1) As used in this section, unless the context requires otherwise:\n(a) \"Approved company\" shall have the same meaning as set forth in KRS\n154.28-010;\n(b) \"Economic development project\" shall have the same meaning as set forth in\nKRS 154.28-010;\n(c) \"Tax credit\" means the \"tax credit\" allowed in KRS 154.28-090;\n(d) \"Kentucky gross receipts\" means Kentucky gross receipts as defined in KRS\n141.0401; and\n(e) \"Kentucky gross profits\" means Kentucky gross profits as defined in KRS\n141.0401.\n(2) An approved company shall determine the income tax credit as provided in this\nsection.\n(3) An approved company which is an individual sole proprietorship subjec t to tax\nunder KRS 141.020 or a corporation or pass -through entity treated as a corporation\nfor federal income tax purposes subject to tax under KRS 141.040 shall:\n(a) 1. Compute the tax due at the applicable tax rates as provided by KRS\n141.020 or 141.040  on net income or taxable net income, including\nincome from the economic development project;\n2. Compute the limited liability entity tax imposed under KRS 141.0401,\nincluding Kentucky gross profits or Kentucky gross receipts from the\neconomic development project; and\n3. Add the amounts computed under subparagraphs 1. and 2. of this\nparagraph and, if applicable, subtract the credit permitted by KRS\n141.0401(3) from that sum. The resulting amount shall be the net tax for\npurposes of this paragraph.\n(b) 1. Compute the tax due at the applicable tax rates as provided by KRS\n141.020 or 141.040 on net income or taxable net income, excluding net\nincome attributable to the economic development project;\n2. Using the same method used under subparagraph 2. of paragra ph (a) of\nthis subsection, compute the limited liability entity tax imposed under\nKRS 141.0401, excluding Kentucky gross receipts or Kentucky gross\nprofits from the economic development project; and\n3. Add the amounts computed under subparagraphs 1. and 2.  of this\nparagraph and, if applicable, subtract the credit permitted by KRS\n141.0401(3) from that sum. The resulting amount shall be the net tax for\npurposes of this paragraph.\n(c) The tax credit shall be the amount by which the net tax computed under\nparagraph (a)3. of this subsection exceeds the tax computed under paragraph\n(b)3. of this subsection; however, the credit shall not exceed the limits set\nforth in KRS 154.28-090.\n(4) (a) Notwithstanding any other provisions of this chapter, an approved company\nwhich is a pass-through entity not subject to tax under KRS 141.040, or a trust\nnot subject to tax under KRS 141.040 shall be subject to income tax on the net\nincome attributable to an economic development project at the rates provided\nin KRS 141.020.\n(b) The amount of the tax credit shall be determined as provided in subsection (3)\nof this section. Upon the annual election of the approved company, in lieu of\nthe tax credit, an amount shall be applied as an estimated tax payment equal to\nthe tax computed in this section. Any estimated tax payment made pursuant to\nthis paragraph shall be in satisfaction of the tax liability of the partners,\nmembers, shareholders, or beneficiaries of the pass-through entity or trust, and\nshall be paid on behalf of the partner s, members, shareholders, or\nbeneficiaries.\n(c) The tax credit or estimated payment shall not exceed the limits set forth in\nKRS 154.28-090.\n(d) If the tax computed in this section exceeds the credit, the excess shall be paid\nby the pass-through entity or trust at the times provided by KRS 141.0401 or\n141.160 for filing the returns.\n(e) Any estimated tax payment made by the pass -through entity or trust in\nsatisfaction of the tax liability of partners, members, shareholders, or\nbeneficiaries shall not be tre ated as taxable income subject to Kentucky\nincome tax by the partner, member, shareholder, or beneficiary.\n(5) Notwithstanding any other provisions of this chapter, the net income subject to tax,\nthe tax credit, and the estimated tax payment determined und er subsection (4) of\nthis section shall be excluded in determining each partner's, member's,\nshareholder's, or beneficiary's distributive share of net income or credit of a pass -\nthrough entity or trust.\n(6) If the economic development project is a totally separate facility:\n(a) Net income attributable to the project for the purposes of subsections (3), (4),\nand (5) of this section shall be determined under the separate accounting\nmethod reflecting only the gross income, deductions, expenses, gains, and\nlosses allowed under this chapter directly attributable to the facility and\noverhead expenses apportioned to the facility; and\n(b) Kentucky gross receipts or Kentucky gross profits attributable to the project\nfor purposes of subsection (3) of this section shal l be determined under the\nseparate accounting method reflecting only the Kentucky gross receipts or\nKentucky gross profits directly attributable to the facility.\n(7) If the economic development project is an expansion to a previously existing\nfacility:\n(a) Net income attributable to the entire facility shall be determined under the\nseparate accounting method reflecting only the gross income, deductions,\nexpenses, gains, and losses allowed under this chapter directly attributable to\nthe facility and overhead  expenses apportioned to the facility, and the net\nincome attributable to the economic development project for the purposes of\nsubsections (3), (4), and (5) of this section shall be determined by\napportioning the separate accounting net income of the entir e facility to the\neconomic development project by a formula approved by the Department of\nRevenue; and\n(b) Kentucky gross receipts or Kentucky gross profits attributable to the entire\nfacility shall be determined under the separate accounting method reflec ting\nonly the Kentucky gross receipts or Kentucky gross profits directly\nattributable to the facility, and Kentucky gross receipts or Kentucky gross\nprofits attributable to the economic development project for the purposes of\nsubsection (3) of this section shall be determined by apportioning the separate\naccounting Kentucky gross receipts or Kentucky gross profits of the entire\nfacility to the economic development project by a formula approved by the\nDepartment of Revenue.\n(8) If an approved company can show to the satisfaction of the Department of Revenue\nthat the nature of the operations and activities of the approved company are such\nthat it is not practical to use the separate accounting method to determine the net\nincome, Kentucky gross receipts, or Ken tucky gross profits from the facility at\nwhich the economic development project is located, the approved company shall\ndetermine net income, Kentucky gross receipts, or Kentucky gross profits from the\neconomic development project using an alternative metho d approved by the\nDepartment of Revenue.\n(9) The Department of Revenue may issue administrative regulations and require the\nfiling of forms designed by the Department of Revenue to reflect the intent of KRS\n154.22-020 to 154.22-070 and KRS 154.28 -010 to 154.28-090 and this section and\nthe allowable tax credit which an approved company may retain under KRS 154.22-\n020 to 154.22-070 and KRS 154.28-010 to 154.28-090 and this section.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47395","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"eca0f159cb1ffd58601993a9a582f4d5929386e33e8e7c0e5bf3855b7371900b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.399","next":"us-ky/krs-141.401"},"notice":"GroundRules: Original legal text. Not legal advice."}