{"data":{"id":"us-ky/krs-141.414","jurisdiction":"us-ky","citation":"KRS 141.414","heading":"Computation of tax and credit.","body":"(1) A qualified farming operation which is an individual sole proprietorship subject to\ntax under KRS 141.020 or a corporation or pass -through entity treated as a\ncorporation for 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 qualified farming operation's participation in a\nnetworking project.\n2. Compute the limited liability entity tax imposed under KRS 141.0401,\nincluding Kentucky gross profits or Kentucky gross receipts from the\nqualified farming operation's participation in a networking project; and\n3. Add the amounts computed under subparagraphs 1. and 2. of this\nparagraph and, if ap plicable, 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 applies on net income or taxable net income,\nexcluding net income attributable to the qualified farming operation's\nparticipation in a networking project;\n2. Using the same method used under paragraph (a)2. of this subsection,\ncompute the limited liability entity tax imp osed under KRS 141.0401,\nexcluding Kentucky gross profits or Kentucky gross receipts from the\nqualified farming operation's participation in a networking project; and\n3. Add the amounts computed under subparagraphs 1. and 2. of this\nparagraph and, if appli cable, 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; and\n(c) Be entitled to a tax credit in the amount by which the tax computed under\nparagraph (a)3. of this subse ction exceeds the tax computed under paragraph\n(b)3. of this subsection. The credit shall not exceed the farming operation's\napproved costs, as defined in KRS 141.410.\n(2) Notwithstanding any other provisions of this chapter, a qualified farming operation\nwhich is a pass -through entity not subject to the tax imposed by KRS 141.040 or\ntrust not subject to the tax imposed by KRS 141.040 shall be subject to income tax\non the net income attributable to its participation in a networking project at the rates\nprovided in KRS 141.020, and the amount of the tax credit shall be the same as the\namount of the tax computed in this subsection. The credit shall not exceed the\nfarming operation's approved costs, as defined in KRS 141.410. If the tax computed\nin this subsect ion exceeds the tax credit, the difference shall be paid by the pass -\nthrough entity or trust at the times provided by KRS 141.160 for filing the returns.\n(3) Notwithstanding any other provisions of this chapter, the net income subject to tax\nand the tax cr edit determined under subsection (2) of this section shall be excluded\nin determining each partner's, member's, shareholder's, or beneficiary's distributive\nshare of net income or credit of a pass-through entity or trust.\n(4) If the networking entity is a separate facility:\n(a) Net income attributable to the project for the purposes of subsections (1), (2),\nand (3) of this section shall be determined under the separate accounting\nmethod reflecting only the gross income, deductions, expenses, gains, and\nlosses allowed under KRS Ch apter 141 directly attributable to the project and\noverhead expenses apportioned to the facility; and\n(b) Kentucky gross receipts or Kentucky gross profits attributable to the project\nfor the purposes of subsection (1) of this section shall be determined under the\nseparate accounting method reflecting only the Kentucky gross receipts or\nKentucky gross profits directly attributable to the facility.\n(5) If the networking project is an expansion to a previously existing farming operation:\n(a) Net income attrib utable to the entire operation 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 farming operation's participation in t he networking project and overhead\nexpenses apportioned to the networking project, and the net income\nattributable to the networking project for the purposes of subsections (1), (2),\nand (3) of this section shall be determined by apportioning the separate\naccounting net income of the entire networking project to the networking\nproject by a formula approved by the Department of Revenue; and\n(b) Kentucky gross receipts or Kentucky gross profits attributable to the entire\nfacility shall be determined under the  separate accounting method reflecting\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 (1) 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(6) 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 farming operation are\nsuch that it is not practical to use the separate accounting method to determine the\nnet income, Kentucky gross receipts, or Kentucky gross profits from the networking\nproject, the approved farming operation shall determine net income, Kentucky gross\nreceipts, or Kentucky gross profits from its participation in the networking project\nusing an alternative method approved by the Department of Revenue.\n(7) The Department of Revenue may promulgate administrative regulations pursuant to\nKRS Chapter 13A and require the filing of forms designed by the Department of\nRevenue necessary to effectuate  KRS 141.0101 and KRS 141.410 to 141.414 and\nthe allowable income tax credit which an approved farming operation may retain\nunder the provisions of KRS 141.412 and this section.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47400","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"781d8617567e5b78f52b615ee2fd5833d12bc092f691e0fe6801d6e4bb100736","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.412","next":"us-ky/krs-141.415"},"notice":"GroundRules: Original legal text. Not legal advice."}