Instructions For Schedule Rc (Form 41a720rc(I)) - Application For Income Tax/llet Credit For Recycling And/or Composting Equipment Or Major Recycling Project Page 3

41A720RC(I) (10-11)

Page 3

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

the total amount of Columns E and F should equal the

The credit for a Major Recycling Project may be claimed

cost basis allowable for Kentucky depreciation purposes.

against the LLET (corporations and limited liability pass-

Invoices, installation contracts and any other documentation

through entities) and income tax (entities subject to the

necessary to verify cost of equipment and installation must

tax imposed under KRS 141.020 or 141.040). The amount of

be submitted to the Department of Revenue at the time the

credit claimed for each tax may be different, and separate

application is submitted.

balances must be maintained.

Column G—Do not complete Column G. This column is to be

Line 3—Enter the tax liability for the most recent tax year

completed by the Department of Revenue to determine the

ending prior to January 1, 2005. The LLET baseline is

total expense qualifying for the tax credit.

zero (-0-).

PART II—Credit Approved

Line 7—Once the amount of credit is determined, enter here

and in Part VI, Column C, LLET. Next, combine the LLET

Do not complete this part. It will be used by the Department

credit claimed here with the LLET credit claimed in Part

of Revenue to show the amount of tax credit approved.

II and enter the total on Schedule TCS, Part II, Column E.

The credit claimed cannot reduce the LLET below the $175

PART III—Amount of Credit Claimed

minimum.

(Do not record the credit for a Major Recycling Project in

Line 8—Once the amount of credit is determined, enter

Part III.) Entities subject to the LLET record the amount of

here and in Part VI, Column C, Income. Next, combine the

approved credit claimed against the LLET in the LLET column

income tax credit claimed here with the income tax credit

for each taxable year. Individuals or entities other than

claimed in Part II and enter the total on Schedule TCS, Part

pass-through entities record the amount of approved credit

II, Column F .

claimed against the income tax in the Income Tax column

for each taxable year. Enter the current year credit claimed

PART VI—Amount of Credit Claimed

against the LLET and/or income tax on the appropriate line

of the Kentucky tax return or Schedule TCS.

Individuals or entities other than general partnerships

use this part to record the amount of the approved major

Attach a copy of the approved application, including the

recycling project credit and the amount of credit claimed for

entries made to date in this part, to the Kentucky tax return

each taxable year. If no credit is taken, enter zero (-0-). The

credit is limited to a period of 10 years commencing with the

for each year for which any approved credit reflected by

approval of the recycling credit application. Attach a copy

this application is claimed.

of the approved application, including the entries made to

Recording the Tax Credit—Enter in the applicable column(s)

date, to the Kentucky tax return for each year for which any

on Schedule TCS, Part II, the recycling/composting and major

approved credit reflected by this application is claimed.

recycling project credits being claimed against the LLET and/

or income tax on Form 720. Enter on Schedule TCS, Part II,

Column B—In the year the credit is approved, enter in both

Column E, the recycling/composting and major recycling

the LLET column and Income column the major recycling

project credits being claimed against the LLET on Form

project credit approved by the Department of Revenue.

720S, 725 or 765. Credits cannot exceed the limitations set

The approved credit is the same for LLET and income tax

forth in KRS 141.390 or reduce the LLET tax liability below

purposes. For subsequent years, the balance of the LLET

the $175 minimum.

credit and Income credit will be the amount of Column B

less Column C for the LLET column and Income column,

For income tax purposes, pass-through entities must enter

respectively.

the credit approved by the Department of Revenue on

Schedule K.

Note: The 2007 beginning balance of the Major Recycling

Project tax credit for LLET will be the same as the balance

MAJOR RECYCLING PROJECT

for income tax purposes.

PART IV—Requirements Questionnaire

Column C—For each year the credit is claimed against LLET,

enter in the LLET column the amount of the credit from Part

Answer all questions. If yes to all three questions, continue

V, Line 7. For each year the credit is claimed against income

to Part V.

tax, enter in the Income column the amount of the credit

from Part V, Line 8 or 9.

PART V—Credit Calculation

Complete this part once you have received the approved

application from the Department of Revenue. Partners /

members/shareholders will complete this part based upon their

specific tax information. Their share of the approved credit will

be reported on Kentucky Schedule K-1.

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