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41A720-S16 (10-11)

Page 2

INSTRUCTIONS—SCHEDULE KREDA

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

The KREDA tax credit is applied against 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 against each tax can be different; however, for

tracking purposes, the maximum amount of credit used against either tax is the amount that is used for the tax

year.

PURPOSE OF SCHEDULE—This schedule is used by

Investment Credit Program (KSBIC) must attach a copy of

a corporation which has entered into a tax incentive

the certification from the Kentucky Economic Development

agreement for a Kentucky Rural Economic Development

Finance Authority.

Act (KREDA) project that received preliminary or final

Alternative Methods—In accordance with KRS 141.347(8),

approval by KRS Chapter 154.22 on or before June

if the approved company can show that the nature of the

26, 2009, to determine the credit allowed against the

operations and activities of the approved company are

Kentucky corporation income tax and LLET attributable

such that it is not practical to use separate accounting

to the project in accordance with KRS 141.347.

to determine net income, Kentucky gross receipts or

GENERAL INSTRUCTIONS

Kentucky gross profits from the facility at which the project

is located, the approved company shall determine net

Part I—Computation of LLET Excluding KREDA Project

income, Kentucky gross receipts or Kentucky gross profits

attributable to the project using an alternative method

Line 2—Using Schedule LLET, create a new Schedule LLET

approved by the Department of Revenue. Thus, if any

to compute the LLET of the KREDA project using only the

method other than separate accounting is used, a copy of

Kentucky gross receipts and Kentucky gross profits of the

the letter from the Department of Revenue approving the

project. Enter “KREDA” at the top center of the Schedule

alternative method must be attached to this schedule.

LLET and attach it to the tax return.

If the corporation has operations other than the

* In accordance with KRS 141.347(6)(a), if the project

KREDA project, it must attach schedules reflecting the

is a totally separate facility, net income attributable

computation of Kentucky gross profits and Kentucky

to the project shall be determined by the separate

gross receipts from the KREDA project in accordance with

accounting method.

KRS 141.347(6)(b)** or KRS 141.347(7)(b).****

** In accordance with KRS 141.347(6)(b), if the project

Part II—Computation of Taxable Net Income Excluding

is a totally separate facility, Kentucky gross receipts

Net Income from KREDA Project and KREDA Tax Credit

or Kentucky gross profits attributable to the project

shall be determined under the separate accounting

Section B

method reflecting only the Kentucky gross receipts

Line 2—Enter net income for KREDA project. If the

or Kentucky gross profits directly attributable to the

corporation’s only operation in Kentucky is the KREDA

facility.

project, the amount entered on Line 1 must be entered

*** In accordance with KRS 141.347(7)(a), if the KREDA

on Line 2. If the corporation has operations other than

project is an expansion to a previously existing

the KREDA project, it must attach schedules reflecting the

facility, net income attributable to the entire facility

computation of the net income from the KREDA project

shall be determined under the separate accounting

in accordance with KRS 141.347(6)(a)* or KRS 141.347(7)

method and the net income attributable to the

(a).***

KREDA project shall be determined by apportioning

See form for computation.

the separate accounting net income of the entire

facility to the KREDA project income using a formula

Part III—Limitation

approved by the Department of Revenue. A copy of

Calculate KREDA tax credit based on the corporation’s tax

the letter from the Department of Revenue approving

liability, tax liability attributable to KREDA project, and

the percentage must be attached to this schedule.

credit limitation from Schedule KREDA-T. Enter credit on

**** In accordance with KRS 141.347(7)(b), if the KREDA

Schedule TCS, Part I, Column E and Column F .

project is an expansion to a previously existing

A corporation with more than one economic development

facility, Kentucky gross receipts or Kentucky gross

project must separately compute the tax credit derived

profits attributable to the entire facility shall be

from each project. Complete an applicable tax computation

determined under the separate accounting method

schedule (Schedule KREDA, Schedule KIDA, Schedule

and the Kentucky gross receipts or Kentucky gross

KEOZ, Schedule KJRA, Schedule KIRA, Schedule KJDA,

profits attributable to the KREDA project shall be

Schedule KBI, Schedule KRA or Schedule IEIA) for each

determined by apportioning the separate accounting

project. A corporation approved for the Skills Training

Kentucky gross receipts or Kentucky gross profits

Investment Credit Act (STICA) or Metropolitan College

of the entire facility to the KREDA project Kentucky

Consortium Tax Credit (MCC) must attach a copy of the

gross receipts or Kentucky gross profits. A copy of

certification(s) from the Bluegrass State Skills Corporation.

the letter from the Department of Revenue approving

A corporation approved for the Kentucky Small Business

the percentage must be attached to this schedule.

Schedule Kreda (Form 41a720-S16) - Tax Credit Computation Schedule (For A Kreda Project Of A Corporation) Page 2

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