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Schedule ETH

INSTRUCTIONS FOR SCHEDULE ETH

Page 2 of 2

(2017)

The ethanol tax credit is applied against individual income tax imposed by KRS 141.020 or the corporation income tax imposed by KRS 141.040

and/or the limited liability entity tax (LLET) imposed by KRS 141.0401. The amount of tax credit claimed against the corporation income tax and

LLET can be different.

Purpose of Schedule—The application and credit certification

Part II—Ethanol Gallons Approved

schedule is used to report the number of gallons of ethanol produced

in this state meeting the current ASTM standards. The Department of

Line 1—This is the amount of ethanol gallons approved by the

Revenue will certify the amount of ethanol credit for each taxpayer.

Department of Revenue for credit. If the approved credit exceeds

It is effective for ethanol produced on or after January 1, 2008. The

the ethanol tax credit cap, then the credit is determined by the

taxpayer is not entitled to the credit for ethanol produced in another

department in Part III. It is a nonrefundable credit.

state.

A pass-through entity must include on each Schedule K-1 the

The credit rate is $1 per gallon with a total cap for all taxpayers not to

partner’s, member’s, shareholder’s, or beneficiary’s pro rata share

exceed $5,000,000 annually, except the ethanol tax credit cap will be

of the approved credit. In addition, a pass-through entity must

increased by the unused cap of the cellulosic ethanol tax credit. See

notify the department electronically of all partners, members,

Part III Instructions for further explanation. There is no carryforward

shareholders, or beneficiaries who may claim any amount of the

for any unused credit.

approved credit. Failure to provide information to the department

in the following manner will constitute the forfeiture of available

To ensure proper processing, fax or email Schedule ETH to the

credits to all partners, members, shareholders, or beneficiaries

Department of Revenue no later than January 15 following the close

in the pass-through entity.

of the preceding calendar year. Schedules postmarked or sent after

January 15 are void. Credit certification cannot be guaranteed for

Email address:

schedules sent through regular mail.

KRC.WEBResponseEconomicDevelopmentCredits@ky.gov

Fax number: 502–564–0058

The electronic mail must contain a separate attachment in plain

format text or plain ASCII format that includes each partner’s,

Email address:

member ’s, shareholder ’s, or beneficiary’s: (a) Name; (b)

KRC.WEBResponseEconomicDevelopmentCredits@ky.gov

Address; (c) Telephone number; (d) Identification number; and

(e) Distributive share of the tax credit.

The Department of Revenue will confirm receipt of the application.

If you do not receive confirmation within two weeks of submitting

the application, contact the Division of Corporation Tax at

Part III—Ethanol Approved Credit Certificate

502–564–8139.

The Department of Revenue determines the total approved credit. If

The Department of Revenue will issue the credit certificate, listing

it exceeds the ethanol tax credit cap of $5,000,000, the department

the amount of credit available, by April 15 following the close of

will compute each taxpayer’s approved credit based upon a fraction,

the preceding calendar year. Attach the credit certificate to the tax

the numerator (Line 1(a)) being the credit approved for the taxpayer

return claiming the credit.

and the denominator (Line 1(b)) being the total credit approved for

all taxpayers. The ethanol tax credit cap is multiplied by this fraction

General Instructions—

to determine each producer’s approved credit.

Check the appropriate entity type. If the entity type is not listed, check

the “Other” box and list the entity type.

The annual ethanol tax credit cap of $5,000,000 will be increased

by the unused cap of the cellulosic ethanol tax credit if the total

Federal Identification Number—For an individual, enter the

approved applications for the ethanol tax credit exceeds its

Social Security number; for all other entities, enter the FEIN.

$5,000,000 cap. The amount of credit cap transferred to the ethanol

tax credit shall not exceed the amount necessary for all applicants

Testing—The regulation 103 KAR 15:110 provides that a copy of the

to receive the one dollar ($1) per gallon credit per KRS 141.4242.

laboratory results for July 1 and December 31 of each calendar year

must be attached to the application, Schedule ETH, submitted to

Part IV—Ethanol Credit Used by Taxpayer

the Department of Revenue. Failure to provide proof of meeting the

ASTM standard on July 1 and December 31 of each calendar year

Line 1—Enter the amount of credit claimed for the taxable year

with the application will result in the denial of the credit for gallons

against the LLET on Schedule TCS, Part II, Column E. The credit

of ethanol back to the previous testing date of July 1 or December 31.

amount cannot reduce the LLET below the $175 minimum.

Part I—Gallons Produced in Kentucky During the Calendar Year

Line 2—Enter the amount of credit claimed for the taxable year

against the corporation income tax on Schedule TCS, Part II, Column

Line 1—Enter the number of gallons of ethanol produced in this state

F .

for the calendar year.

Line 3—Enter the amount of credit claimed for the taxable year on

Form 740, 740–NP , or 741.

Part II and Part III

These parts are completed by the Department of Revenue to

determine the ethanol credit for each taxpayer. Part III is used if the

total amount of approved credit for all ethanol producers exceeds

the annual ethanol tax credit cap.

41A720ETH (19JUN17-DRAFT)

Form 41a720eth Draft - Schedule Eth - Application And Credit Certificate Of Income Tax/llet Credit Ethanol - 2017 Page 2

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