Schedule Rr-I (Form 41a720rr-I) - Railroad Maintenance And Improvement Tax Credit (Page 2 of 2) in pdf

41A720RR–I (10–13)

Page 2

Commonwealth of Kentucky

INSTRUCTIONS FOR SCHEDULE RR–I

DEPARTMENT OF REVENUE

The railroad maintenance and improvement credit provided by KRS 141.385 is a nonrefundable credit that can be applied against

the taxes imposed by KRS 141.020 or 141.040, and KRS 141.0401. The tax credit shall 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 as provided by KRS 141.385 and the railroad expansion tax

credit as provided by KRS 141.386, the taxpayer must claim either the credit provided by KRS 141.385 or the credit provided by

KRS 141.386, but not both.

Purpose of Schedule—This schedule is used to compute the

taxpayer on the same qualified expenditures, you do not

railroad maintenance and improvement credit. An eligible

qualify for this credit.

taxpayer means: (i) the owner of any Class II railroad or

Class III railroad located in Kentucky; or (ii) any person who

Part II—Computation of the Credit

transports property using the rail facilities of a Class II railroad

or Class III railroad located in Kentucky or furnishes railroad–

Line 1—Enter the amount of qualified expenditures paid or

related property or services to a Class II railroad or Class III

incurred by the taxpayer during the tax year.

railroad located in Kentucky, but only with respect to miles

of railroad track assigned to the person by a Class II railroad

Line 2—Enter fifty percent (50%) of Line 1.

or Class III railroad for purposes of the tax credit.

Line 3—Enter the number of miles of railroad track in Kentucky

Class II railroad means a railroad company classified as a

owned or leased by the eligible taxpayer as of the close of

Class II carrier by the federal Surface Transportation Board.

the taxable year.

Class III railroad means a railroad company classified as

Line 4—Enter the number of miles of railroad track in Kentucky

a Class III carrier by the federal Surface Transportation

assigned for purposes of the tax credit provided by KRS

Board.

141.385 to the eligible taxpayer by a Class II railroad or Class

III railroad which owns or leases the railroad track as of the

Qualified expenditures means expenditures, whether or not

close of the taxable year.

otherwise chargeable to a capital account, that are made to

maintain or improve railroads located in Kentucky, including

Line 5—Enter total of Lines 3 and 4.

roadbeds, bridges, and related structures, that are owned

or leased as of January 1, 2008, by a Class II or Class III

Line 6—Enter the amount on Line 5 multiplied by $3,500.

railroad.

Line 7—Enter the lesser of Line 2 or Line 6.

The railroad maintenance and improvement tax credit is an

amount equal to 50% of the qualified expenditures paid or

Part III—Railroad Maintenance and Improvement Credit

incurred by the taxpayer during the tax year, but shall not

Used by Taxpayer

exceed the product of $3,500 multiplied by the sum of: (i)

the number of miles of railroad track in Kentucky owned or

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

leased by the eligible taxpayer as of the close of the taxable

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

year; and (ii) the number of miles of railroad track in Kentucky

The credit amount cannot reduce the LLET below the $175

assigned for purposes of KRS 141.385 to the eligible taxpayer

minimum.

by a Class II railroad or Class III railroad which owns or leases

the railroad track as of the close of the taxable year.

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

year against the corporation income tax on Schedule TCS,

If a credit is taken as provided by KRS 141.385(2), the basis of

Part II, Column F.

the track shall be reduced by the amount of credit taken.

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

Part I—Qualifications

year on Form 740, 740-NP or 741.

Qualified expenditures must be made on property that was

owned or leased on January 1, 2008, by a Class II or Class III

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

railroad. If you have taken the railroad expansion tax credit

the partner’s, member’s or shareholder’s pro rata share of

permitted by KRS 141.386 on the same qualified expenditures,

the approved credit.

you do not qualify for this credit. If a tax credit was claimed

under the provisions of KRS 141.385 or 141.386 by another

Attach Schedule RR-I to the tax return claiming the credit.

Schedule Rr-I (Form 41a720rr-I) - Railroad Maintenance And Improvement Tax Credit Page 2

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