{"data":{"id":"us-ky/krs-154.60-040","jurisdiction":"us-ky","citation":"KRS 154.60-040","heading":"Selling Farmer Tax Credit Program -- Definitions -- Purposes --","body":"Eligibility -- Application requirements -- Incentives to be negotiated by\nCabinet for Economic Development -- Approval by the authority -- Authority\nto transmit required informati on to the Department of Revenue -- Penalty --\nSunset.\n(1) As used in this section:\n(a) \"Actively engaged farmer\" means a person who makes a significant\ncontribution of:\n1. Land, capital, and equipment to a farming operation; and\n2. Active personal labor or management to a farming operation;\n(b) 1. \"Agricultural assets\" means:\na. Agricultural land which has been appraised by an individual\ncertified by the Real Property Appraisers Board created under\nKRS 324A.015; and\nb. Buildings, facilities, machinery, equipment, agricultural products,\nor horticultural products, if:\ni. Owned by the same seller owning the agricultural land sold\nto an actively engaged farmer or beginning farmer;\nii. Purchased at the same time and in the sa me transaction with\nthe agricultural land; and\niii. Purchased with the intent to be used on the purchased\nagricultural land.\n2. \"Agricultural assets\" does not mean:\na. A personal residence or any other residential structures;\nb. Any agricultural assets tha t have been previously included in an\napproved application for the Kentucky selling farmer tax credit;\nand\nc. Any land which has, is, or will be used in the production of solar\npower for personal or commercial purposes;\n(c) \"Agricultural land\" means:\n1. Any land located entirely in Kentucky that is zoned or permitted for\nfarming, if the jurisdiction where the land is located has enacted an\nordinance for zoning or permitting; and\n2. a. Is a tract of land of at least ten (10) contiguous acres in area for a\nfarming operation for agricultural products; or\nb. Is a tract of land of at least five (5) contiguous acres in area for a\nfarming operation for aquaculture or horticultural products;\nowned by the seller prior to the sale;\n(d) \"Agricultural products\" means:\n1. Livestock or livestock products;\n2. Poultry or poultry products;\n3. Milk or milk products; or\n4. Field crops and other crops, including timber if approved by the\nauthority;\n(e) \"Aquaculture\" means the farming of fish, crustaceans, mollusks, aquatic\nplants, algae, or other similar organisms;\n(f) \"Beginning farmer\" means an actively engaged farmer who has not previously\nheld an ownership interest in agricultural land used for a farming operation for\na period exceeding twenty (20) years prior to entering in to an agreement to\npurchase agricultural assets from a seller;\n(g) \"Buyer\" means an actively engaged farmer or beginning farmer who\npurchases agricultural assets from a seller;\n(h) \"Department\" means the Department of Revenue;\n(i) \"Farm product\" means aqua culture, agricultural products, or horticultural\nproducts;\n(j) 1. \"Farming operation\" means the management and operation of\nagricultural assets for the purpose of pursuing a profitable commercial\nbusiness venture to produce agricultural products, horticultural products,\nor both for sale.\n2. \"Farming operation\" does not mean any:\na. Nonprofit venture;\nb. Farm used primarily for storing agricultural products or\nhorticultural products; or\nc. Farm used to grow or raise agricultural products or horticultural\nproducts primarily for use by the immediate family members or\nowners of the agricultural assets;\n(k) \"Horticultural products\" means orchards, fruits, vegetables, nuts, flowers, or\nornamental plants;\n(l) \"Immediate family member\" means any of the following in relation to any\nowner or spouse of the owner of the agricultural assets:\n1. Parent or grandparent;\n2. Children or their spouses; or\n3. Siblings or their spouses;\n(m) \"Seller\" means any individual or entity subject to the tax imposed by KRS\n141.020 or 141.040 and 141.0401; and\n(n) \"Significant contribution\" has the same meaning as in 7 C.F.R. sec. 1400.3.\n(2) Any incentive offered to an eligible company under the Selling Farmer Tax Credit\nProgram shall be negotiated by Cabinet for Economic Development officials and\nshall be subject to approval by the authority.\n(3) The purpose of the Selling Farmer Tax Cre dit Program is to promote the continued\nuse of agricultural land in Kentucky for farming purposes by granting a tax credit to\na seller who agrees to sell agricultural assets to an actively engaged farmer or a\nbeginning farmer.\n(4) A seller wanting to sell agricultural assets may be eligible for a tax credit up to five\npercent (5%) of the selling price of qualifying agricultural assets, subject to:\n(a) A twenty-five thousand dollar ($25,000) cap for each taxable year of the seller\nwhen agricultural assets ar e sold to an actively engaged farmer who does not\nmeet the definition of a beginning farmer;\n(b) A fifty thousand dollar ($50,000) cap for each taxable year of the seller when\nagricultural assets are sold to a beginning farmer;\n(c) A one hundred thousand d ollar ($100,000) lifetime cap for each seller selling\nto an actively engaged farmer;\n(d) A two hundred thousand dollar ($200,000) lifetime cap for each seller selling\nto a beginning farmer; and\n(e) A proration by the authority based on the overall cap shar ed between the\nSmall Business Tax Credit Program and the Selling Farmer Tax Credit\nProgram cap of three million dollars ($3,000,000) under KRS 154.60-020.\n(5) The tax credit allowed in subsection (4) of this section may be claimed under KRS\n141.3841.\n(6) In order to be eligible to receive approval for a tax credit, the seller shall, at a\nminimum:\n(a) 1. a. Be registered with the Kentucky Secretary of State; and\nb. Be in good standing with the Kentucky Secretary of State; or\n2. If not required to be register ed with the Kentucky Secretary of State, be\na taxpayer of Kentucky;\n(b) Prior to a sale of agricultural assets, be a small business with fifty (50) or\nfewer full-time employees and be the sole legal owner of agricultural assets\nsold to an actively engaged farmer or a beginning farmer;\n(c) Not be a farm equipment dealer, livest ock dealer, or similar entity primarily\nengaged in the business of selling agricultural assets for profit and not\nengaged in farming as a primary business activity;\n(d) Not be a bank or any other similar lending or financial institution;\n(e) Not be:\n1. An owner, partner, member, shareholder, or trustee;\n2. A spouse of an owner, partner, member, shareholder, or trustee; or\n3. An immediate family member of any of the owners, partners, members,\nshareholders, or trustees;\nof the actively engaged farmer or begi nning farmer to whom the seller is\nseeking to sell agricultural assets;\n(f) 1. Demonstrate management and operation of real and personal property\nfor the production of a farm product; and\n2. Execute and effectuate a purchase contract to sell agricultural l and with\nan actively engaged farmer or a beginning farmer for an amount\nevidenced by an appraisal; and\n(g) Sell, convey, and transfer ownership of related agricultural assets to an\nactively engaged farmer or a beginning farmer.\n(7) In order for the seller to qualify for the tax credit, an actively engaged farmer or a\nbeginning farmer shall, at a minimum:\n(a) 1. a. Be registered with the Kentucky Secretary of State; and\nb. Be in good standing with the Kentucky Secretary of State; or\n2. If not required to be registered with the Kentucky Secretary of State, be\na resident of Kentucky;\n(b) Possess all licenses, registrations, and experience needed to legally operate a\nfarming operation within the jurisdiction for the agricultural land purchased\nfrom a the seller;\n(c) Not have an ownership interest in any of the agricultural assets included in the\ntransaction with the seller; and\n(d) Provide a majority of the management, and materially participate in the\noperation of a for-profit farming operation located in Kentucky and purchased\nfrom a seller, with the intent to continue a for -profit farming operation on the\npurchased agricultural land for a minimum of ten (10) years after the sale\ndate.\n(8) The seller shall submit an application with all information necessary for  the\nauthority to determine eligibility for the tax credit.\n(9) The authority may consider applications prior to the consummation of the sale,\ntransfer of title, and conveyance of agricultural assets.\n(10) An application for the selling farmer tax credit s hall contain, at a minimum,\ninformation about the:\n(a) Seller and buyer;\n(b) Purchase contract and closing statement;\n(c) Documentation, such as a deed, title conveyance for the transfer of assets,\nincluding verification of Kentucky residency of the buyer; and\n(d) Any other information the authority may require to determine eligibility for\nthe credit.\n(11) For each approved application, the authority shall transmit to the department\nsufficient information about the seller to ensure compliance with this section and\nKRS 141.3841, including the amount of approved tax credit allowed to the seller.\n(12) If the bu yer fails to meet the requirements of this section, the department shall\nassess a penalty against the buyer in an amount equal to the tax credit awarded to\nthe seller. The department may assess an additional penalty in excess of the tax\ncredit awarded.\n(13) (a) The selling farmer tax credit shall sunset on December 31, 2031, and new\napplications shall not be accepted or considered on or after December 31,\n2031.\n(b) All outstanding applications with preliminary or final approval under this\nsubchapter as of D ecember 31, 2031, shall continue to be governed by the\nprovisions of this subchapter.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58036","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:57Z","sha256":"b03f15419d1fa1c820870eb154a9290b6b6e6f8b0d26aed0b6e2f6e529fbf47b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-154.60-030","next":"us-ky/krs-154.600"},"notice":"GroundRules: Original legal text. Not legal advice."}