{"data":{"id":"us-ky/krs-141.415","jurisdiction":"us-ky","citation":"KRS 141.415","heading":"Computation of income tax and credit for approved company.","body":"(1) As used in this section, unless the context requires otherwise:\n(a) \"Approved company\" means the same as defined in KRS 154.32 -010 or\n154.34-010;\n(b) \"Economic development project\" means the same as defined in KRS 154.32 -\n010;\n(c) \"Reinvestment project\" means the same as defined in KRS 154.34-010;\n(d) \"Tax credit\" means the tax credit allowed in KRS 154.34 -120 or the credit\nallowed in KRS 154.32-070, as the case may be;\n(e) \"Kentucky gross receipts\" means the same as defined in KRS 141.0401; and\n(f) \"Kentucky gross profits\" means the same as defined in KRS 141.0401.\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 subject 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 in come, including\nincome from a reinvestment project or 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\nreinvestment project or 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(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 a reinvestment project or economic development\nproject;\n2. Using the same method used under paragraph (a)2. of this subsec tion,\ncompute the limited liability entity tax imposed under KRS 141.0401,\nincluding Kentucky gross profits or Kentucky gross receipts from the\nreinvestment project or 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 tax computed under paragraph\n(a)3. of this subsection exceeds the tax computed under paragraph (b)3. of this\nsubsection; however, the credit shall not exceed the limits set forth in KRS\n154.32-070 or 154.34-120, as the case may be.\n(4) (a) Notwithstanding any other provisions of this chapter, an approved company\nwhich is a pass-through entity not subject to the tax imposed by KRS 141.040\nor trust not subject to the tax imposed by KRS 141.040 shall be subject to\nincome tax on the net income attributable to a reinvestment project or\neconomic development project at the rates provided in 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 partners, members, shareholders, or\nbeneficiaries.\n(c) The tax credit or estimated payment shall not exceed the limits set forth in\nKRS 154.32-070 or 154.34-120, as the case may be.\n(d) If the tax computed in this section exceeds the tax credit, the difference shall\nbe paid by the pass -through entity or trust at the times provided by KRS\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 treated 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 under subsection (4) of\nthis section shall be excluded in determining each partner's, member's,\nshareholder's, or beneficiary's distributive share of net inco me or credit of a pass -\nthrough entity or trust.\n(6) If the reinvestment project or economic development project is a totally separate\nfacility:\n(a) Net income attributable to the project for the purposes of subsections (3), (4),\nand (5) of this section sha ll be determined under the separate accounting\nmethod reflecting only the gross income, deductions, expenses, gains, and\nlosses allowed under KRS Chapter 141 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 the purposes of subsection (3) 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(7) If the reinvestment project or economic development project is an expansion to a\npreviously existing facility:\n(a) Net income attributable to the entire facility shall be determined under the\nseparate accounting me thod reflecting only the gross income, deductions,\nexpenses, gains, and losses allowed under KRS Chapter 141 directly\nattributable to the facility and overhead expenses apportioned to the facility,\nand the net income attributable to the reinvestment projec t or economic\ndevelopment project for the purposes of subsections (3), (4), and (5) of this\nsection shall be determined by apportioning the separate accounting net\nincome of the entire facility to the reinvestment project or economic\ndevelopment project by a formula approved by the department; 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 prof its directly\nattributable to the facility, and Kentucky gross receipts or Kentucky gross\nprofits attributable to the reinvestment project or economic development\nproject for the purposes of subsection (3) of this section shall be determined\nby apportioning the separate accounting Kentucky gross receipts or Kentucky\ngross profits of the entire facility to the reinvestment project or economic\ndevelopment project by a formula approved by the department.\n(8) If an approved company can show to the satisfaction o f the department that the\nnature of the operations and activities of the approved company are such that it is\nnot practical to use the separate accounting method to determine the net income,\nKentucky gross receipts, or Kentucky gross profits from the facil ity at which the\nreinvestment project or economic development project is located, the approved\ncompany shall determine net income, Kentucky gross receipts, or Kentucky gross\nprofits from the reinvestment project or economic development project using an\nalternative method approved by the department.\n(9) The department may promulgate administrative regulations and require the filing of\nforms designed by the department to reflect the intent of KRS 154.34 -010 to\n154.34-100 and Subchapter 32 of KRS Chapter 154, and the allowable income tax\ncredit which an approved company may retain under KRS 154.34 -010 to 154.34 -\n100 or Subchapter 32 of KRS Chapter 154.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47401","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"82ab7adbdd0eb7b09d23fbe22b01dec634be76b3029d4a12c07fbe3e90d2835c","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.414","next":"us-ky/krs-141.416"},"notice":"GroundRules: Original legal text. Not legal advice."}