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

41A720RR–I (10–11)

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

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

railroad maintenance and improvement credit. An eligible

under the provisions of KRS 141.385 or 141.386 by another

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

taxpayer on the same qualified expenditures, you do not

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

qualify for this credit.

transports property using the rail facilities of a Class II railroad

or Class III railroad located in Kentucky or furnishes railroad–

Part II—Computation of the Credit

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

railroad located in Kentucky, but only with respect to miles

Line 1—Enter the amount of qualified expenditures paid or

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

incurred by the taxpayer during the tax year.

or Class III railroad for purposes of the tax credit.

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

Class II railroad means a railroad company classified as a

Class II carrier by the federal Surface Transportation Board.

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

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

Class III railroad means a railroad company classified as

the taxable year.

a Class III carrier by the federal Surface Transportation

Board.

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

assigned for purposes of the tax credit provided by KRS

Qualified expenditures means expenditures, whether or not

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

otherwise chargeable to a capital account, that are made to

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

maintain or improve railroads located in Kentucky, including

close of the taxable year.

roadbeds, bridges, and related structures, that are owned

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

Line 5—Enter total of Lines 3 and 4.

railroad.

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

The railroad maintenance and improvement tax credit is an

amount equal to 50% of the qualified expenditures paid or

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

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

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

Part III—Railroad Maintenance and Improvement Credit

the number of miles of railroad track in Kentucky owned or

Used by Taxpayer

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

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

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

assigned for purposes of KRS 141.385 to the eligible taxpayer

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

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

The credit amount cannot reduce the LLET below the $175

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

minimum.

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

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

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

year against the corporation income tax on Schedule TCS,

Part II, Column F.

Part I—Qualifications

Qualified expenditures must be made on property that was

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

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

year on Form 740, 740-NP or 741.

railroad. If you have taken the railroad expansion tax credit

permitted by KRS 141.386 on the same qualified expenditures,

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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