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41A720CELL (10–16)

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Commonwealth of Kentucky

INSTRUCTIONS FOR SCHEDULE CELL

DEPARTMENT OF REVENUE

The cellulosic ethanol tax credit is applied against the individual income tax imposed by KRS 141.020, 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

used if the total amount of approved credit for all cellulosic ethanol

schedule is to report the number of gallons of cellulosic ethanol

producers exceeds the annual cellulosic ethanol tax credit cap.

produced in this state meeting the current ASTM standards. The

Department of Revenue will certify the amount of cellulosic

Part II—Cellulosic Ethanol Gallons Approved

ethanol credit for each taxpayer. It is effective for cellulosic ethanol

produced on or after January 1, 2008. The taxpayer is not entitled

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

to the credit for cellulosic ethanol produced in another state.

by the Department of Revenue for credit. If the approved credit

exceeds the cellulosic ethanol tax credit cap, then the credit is

The credit rate is $1 per gallon with a total cap for all taxpayers

determined by the department in Part III. It is a nonrefundable

not to exceed $5,000,000 annually, except the cellulosic ethanol

credit.

tax credit cap shall be increased by the unused cap of the ethanol

tax credit. See Part III instructions for further explanation. There

is no carryforward for any unused credit.

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

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

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

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

Department of Revenue no later than January 15 following the close

notify the department electronically of all partners, members,

of the preceding calendar year. Schedules postmarked or sent after

shareholders or beneficiaries who may claim any amount of the

January 15 are void. Credit certification cannot be guaranteed for

approved credit. Failure to provide information to the department

schedules sent through regular mail.

in the following manner may constitute the forfeiture of available

credits to all partners, members, shareholders or beneficiaries in

Fax number: (502) 564-0058

the pass-through entity.

Email address:

KRC.WEBResponseEconomicDevelopmentCredits@ky.gov

The Department of Revenue will confirm the receipt of the

The electronic mail shall contain a separate attachment in plain

application. If you do not receive confirmation within two weeks of

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

submitting the application, contact the Division of Corporation Tax

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

at (502) 564-8139.

Distributive share of the tax credit.

The Department of Revenue will issue the credit certificate, listing

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

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

Part III—Cellulosic Ethanol Approved Credit Certificate

return claiming the credit.

The Department of Revenue determines the total approved credit.

General Instructions—For the calendar year, enter the applicable

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

year.

department will compute each taxpayer’s approved credit based

upon a fraction the numerator (Line 1(a)) being the credit approved

Check the appropriate entity type. If taxed as an entity type other

for the taxpayer and the denominator (Line 1(b)) being the total

than corporation, limited liability pass-through entity, general

credit approved for all taxpayers. The cellulosic ethanol tax credit

partnership or individual, check the “Other” box and list the

cap is multiplied by this fraction to determine each producer’s

entity type.

approved credit.

Federal Identification Number—For an individual, enter the

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

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

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

approved applications for the cellulosic ethanol tax credit exceeds its

Testing—The regulation 103 KAR 15:120 provides that a copy of the

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

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

ethanol tax credit shall not exceed the amount necessary for all

shall be attached to the application, Schedule CELL, submitted to

applicants to receive the one dollar ($1) per gallon credit provided

the Department of Revenue. Failure to provide proof of meeting

by KRS 141.4244.

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

year with the application shall result in the denial of the credit for

Part IV—Cellulosic Ethanol Credit Used by Taxpayer

gallons of cellulosic ethanol back to the previous testing date of

July 1 or December 31.

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

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

Part I—Gallons Produced in Kentucky During the Calendar Year

amount cannot reduce the LLET below the $175 minimum.

Line 1—Enter the number of gallons of cellulosic ethanol produced

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

in this state for the calendar year.

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

F .

Part II and Part III

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

These parts are completed by the Department of Revenue to

Form 740, 740–NP or 741.

determine the cellulosic ethanol credit for each taxpayer. Part III is

Form 41a720cel - Schedule Cell - Application And Credit Certificate Of Income Tax/llet Credit Cellulosic Ethanol - 2016 Page 2

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