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Schedule RR-E

INSTRUCTIONS FOR SCHEDULE RR–E

Page 2 of 2

(2017)

The railroad expansion credit per KRS 141.386 is a nonrefundable credit that can be applied against the taxes imposed by KRS 141.040

and KRS 141.0401. The tax credit must be used in the tax year of the qualified expenditures which generated the tax credit and cannot be

carried forward to a return for any other period. If a qualified expenditure qualifies for both the railroad maintenance and improvement

credit per KRS 141.385 and the railroad expansion tax credit per KRS 141.386, the taxpayer must claim either the credit per KRS 141.385

or the credit per KRS 141.386, but not both.

Purpose of Schedule— This schedule is used to compute the

General Instructions—Enter the name, mailing address, and

railroad expansion credit. An eligible taxpayer means: (i) a

business location address in applicable boxes. Enter the

corporation that owns fossil energy resources subject to tax

Federal Identification Number and Kentucky Corporation/LLET

under KRS 143.020 or 143A.020 or biomass resources and

Account Number in applicable boxes. Check the appropriate

transports these resources using rail facilities; or (ii) a railway

entity type.

company subject to tax under KRS 136.120 that serves a

This application must be signed and dated by an authorized

corporation that owns fossil energy resources subject to tax

corporate officer (if filing Form 720 or 720S) or partner or

under KRS 143.020 or 143A.020 or biomass resources.

member (if filing Form 765 or 765–GP).

Fossil energy resources means reserves of coal, oil shale,

Part I—Qualifications

and natural gas; and biomass resources means agriculture

The tax credit per KRS 141.386 must be claimed in the tax

materials that may be used for production of transportation

year that the qualified expenditures are paid or incurred

fuels such as biodiesel or ethanol or that may themselves be

by the eligible taxpayer. You must be: (i) a corporation that

used as a fuel, alone or in combination with a fossil fuel, for

owns fossil energy resources subject to tax per KRS 143.020

generation of electricity.

or 143A.020 or biomass resources and transports these re-

The railroad expansion tax credit is an amount equal to 25% of

sources using rail facilities; or (ii) a railway company subject

the qualified expenditures paid or incurred by the corporation

to tax per KRS 136.120 that serves a corporation that owns

or railway company during the tax year to expand or upgrade

fossil energy resources subject to tax per KRS 143.020 or

railroad track, including roadbeds, bridges, and related track

143A.020 or biomass resources. If you have taken the railroad

structures, to accommodate the transport of fossil energy

maintenance and improvement tax credit per KRS 141.385 on

resources or biomass resources.

the same qualified expenditures, you do not qualify for this

The credit amount approved for a calendar year for all taxpayers

credit. If a tax credit was claimed per KRS 141.385 or 141.386

per KRS 141.386 is limited to $1,000,000. If the total amount

by another taxpayer on the same qualified expenditures, you

of approved credit exceeds $1,000,000, the department will

do not qualify for this credit.

determine the amount of credit each corporation and railway

Part II—Computation of the Credit

company receives by multiplying the $1,000,000 by a fraction,

Line 1—Enter the “qualified expenditures” paid or incurred

the numerator of which is the amount of the approved credit

by the corporation or railway company for the calendar year.

for a corporation or railway company and the denominator

Qualified expenditures are expenditures paid or incurred to

of which is the total approved credit for all corporations and

expand or upgrade railroad track, including roadbeds, bridges,

railway companies.

and related track structures, to accommodate the transport of

Each corporation or railway company eligible for the credit

fossil energy resources or biomass resources.

must file a railroad expansion tax credit claim on this form by

the fifteenth day of the first month following the close of the

Line 2—Enter twenty–five percent (25%) of Line 1.

preceding calendar year.

Part III—Railroad Expansion Approved Credit Certificate

To ensure proper processing, fax or email Schedule RR-E to

the Department of Revenue no later than January 15 follow-

The Department of Revenue determines each corporation’s

or railway company’s approved credit. If the total approved

ing the close of the preceding calendar year. Schedules post-

credit for all corporations and railway companies exceeds

marked or sent after January 15 are void. Credit certification

the railroad expansion tax credit cap of $1,000,000 for the

cannot be guaranteed for schedules sent through regular mail.

calendar year, the department will determine the amount

of credit each corporation or railway company receives by

multiplying the $1,000,000 by a fraction, the numerator (Line

Fax number:

1(a)) of which is the amount of the approved credit for a

502–564–0058

corporation or railway company and the denominator (Line

1(b)) of which is the total approved credit for all corporations

Email address:

and railway companies.

KRC.WEBResponseEconomicDevelopmentCredits@ky.gov

Part IV—Railroad Expansion Credit Used By Taxpayer

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

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

The Department of Revenue will confirm receipt of the application.

The credit amount cannot reduce the LLET below the $175

If you do not receive confirmation within two weeks of submitting

minimum.

the application, contact the Division of Corporation Tax at 502–

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

564–8139.

year against the corporation income tax on Schedule TCS,

The Department of Revenue will issue the credit certificate,

Part II, Column F .

listing the amount of credit, by March 15 following the close

of the preceding calendar year. Attach the credit certificate

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

(Schedule RR–E) to the tax return claiming the credit.

partner’s or member’s pro rata share of the approved credit.

41A720RR-E (21JUN17-DRAFT)

Form 41a720rr-E Draft - Schedule Rr-E - Application And Credit Certificate Of Income Tax/llet Credit Railroad Expansion - 2017 Page 2

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