{"data":{"id":"us-ky/krs-143a.010","jurisdiction":"us-ky","citation":"KRS 143A.010","heading":"Definitions for chapter.","body":"As used in this chapter:\n(1) \"Department\" means the Department of Revenue;\n(2) \"Natural resource\" means all forms of minerals, including but not limited to rock,\nstone, limestone, shale, gravel, sand, clay, fluorspar, natural gas, and natural gas\nliquids, which are contained in or on the soils or waters of this state. For purposes\nof this chapter, \"natural resource\" does not include coal and oil which are taxed\nunder KRS 143.020 and 137.120;\n(3) \"Severing\" or \"severed\" means the physical removal of the natural resource from\nthe earth o r waters of this state by any means; however, \"severing\" or \"severed\"\nshall not include the removal of natural gas from underground storage facilities into\nwhich the natural gas has been mechanically injected following its initial removal\nfrom the earth;\n(4) (a) \"Taxpayer\" means and includes any individual, partnership, joint venture,\nassociation, corporation, receiver, trustee, guardian, executor, administrator,\nfiduciary, or representative of any kind engaged in the business of severing\nand/or processing natural resources in this state for sale or use. In instances\nwhere contracts, either oral or written, are entered into whereby persons,\norganizations, or businesses are engaged in the business of severing and/or\nprocessing a natural resource but do not ob tain title to or do not have an\neconomic interest therein, the party who owns the natural resource or has an\neconomic interest is the taxpayer.\n(b) For purposes of this chapter, a taxpayer possesses an economic interest in a\nnatural resource where the taxpayer has acquired by investment any interest in\na natural resource and secures, by any form of legal relationship, income\nderived from the severance or processing of the natural resource, to which the\ntaxpayer must look for a return of the taxpayer's capit al. A party who has no\ncapital investment in the natural resource or who only receives an arm's length\nroyalty shall not be considered as having an economic interest;\n(5) \"Gross value\" is defined as follows:\n(a) For natural resources severed and/or process ed and sold during a reporting\nperiod, gross value is the amount received or receivable by the taxpayer;\n(b) For natural resources severed and/or processed, but not sold during a reporting\nperiod, gross value shall be determined as follows:\n1. If the natural resource is to be sold under the terms of an existing\ncontract, the contract price shall be used in computing gross value; and\n2. If there is no existing contract, the fair market value for that grade and\nquality of the natural resource shall be used in computing gross value;\n(c) In a transaction involving related parties, gross value shall not be less than th e\nfair market value for natural resources of similar grade and quality;\n(d) In the absence of a sale, gross value shall be the fair market value for natural\nresources of similar grade and quality;\n(e) If severed natural resources are purchased for the purp ose of processing and\nresale, the gross value is the amount received or receivable during the\nreporting period reduced by the amount paid or payable to the taxpayer\nactually severing the natural resource;\n(f) If severed natural resources are purchased for the purpose of processing and\nconsumption, the gross value is the fair market value of processed natural\nresources of similar grade and quality reduced by the amount paid or payable\nto the taxpayer actually severing the natural resource;\n(g) In all instanc es, the gross value shall not be reduced by any taxes including\nthe tax levied in KRS 143A.020, royalties, sales commissions, or any other\nexpense; and\n(h) In all instances, transportation expense incurred in transporting a natural\nresource shall not be considered as gross income from the property;\n(6) \"Processing\" includes but is not limited to breaking, crushing, cleaning, drying,\nsizing, or loading or unloading for any purpose. \"Processing\" shall not include the\nact of unloading or loading for shipment n atural resources that have not been\nsevered, cleaned, broken, crushed, dried, sized or otherwise treated in Kentucky;\n(7) \"Related parties\" means two (2) or more persons, organizations, or businesses\nowned or controlled directly or indirectly by the same interests; and\n(8) (a) \"Transportation expense\" means:\n1. The amount paid by a taxpayer to a third party for transporting natural\nresources; and\n2. The expenses incurred by a taxpayer using the taxpayer's own facilities\nin transporting natural resources fro m the point of extraction to a\nprocessing plant, tipple, or loading dock.\n(b) \"Transportation expense\" shall not include:\n1. The cost of acquisition, improvements, and maintenance of real\nproperty;\n2. The cost of acquisition and operating expenses of mining and nonmining\nloading or unloading facilities; or\n3. The cost of acquisition and operating expenses of equipment used to\nload or unload the natural resource at the point of extraction, processing\nfacility, or mining and nonmining loading facility.","path":["KRS Chapter 143A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57926","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:37Z","sha256":"b910173b3708075bd5eb0e2eb111777bee4d0c2b12c3d273751e951dfcefac3d","source_id":"us-ky","stale":false,"prev":"us-ky/krs-143.990","next":"us-ky/krs-143a.020"},"notice":"GroundRules: Original legal text. Not legal advice."}