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41A720-S81 (8874(K)–A) (6-12)

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Commonwealth of Kentucky

DEPARTMENT OF REVENUE

INSTRUCTIONS—NOTICE OF KENTUCKY NEW MARKETS

DEVELOPMENT PROGRAM TAX CREDIT AND CERTIFICATION

As provided by KRS 141.433(4), cash in the amount of the certified purchase price of the qualified equity investment

must be received by the qualified community development entity (CDE) from each taxpayer in exchange for the

taxpayer’s qualified equity investment within ninety (90) days after receipt of the approved application (Form

8874(K)) by the CDE. The CDE shall provide the department with evidence of the receipt of the cash in exchange for

the qualified equity investment within ten (10) business days after receipt of the cash. If the CDE does not receive

cash in the amount of certified purchase price of the qualified equity investment within ninety (90) days following

receipt of the application approved by the department, the certification of the taxpayer shall lapse and the CDE may

not issue a qualified equity investment without filing a new application with the department.

A CDE shall file this form (Form 8874(K)-A) with the department for each taxpayer as evidence of the receipt of the

cash for the taxpayer’s qualified equity investment.

If the department is satisfied that the cash amount of the qualified equity investment was received by the CDE, a

copy of Form 8874(K)-A will be returned to the taxpayer and CDE with the department’s approval of the tax credit

available to the taxpayer for each of the next seven years.

A taxpayer shall attach a copy of the approved Form 8874(K)-A to the tax return each year to claim the tax credit

against the taxes imposed by KRS 141.020, 141.040, 141.0401, 136.320, 136.330, 136.340, 136.350, 136.370, 136.390 or

304.3-270. For the tax credit against taxes imposed by KRS 141.020, 141.040 or 141.0401, the ordering of the credits

shall be as provided by KRS 141.0205. An insurance company claiming a tax credit against the insurance premium

tax is not required to pay additional retaliatory tax levied pursuant to KRS 304.3-270.

A partner, member or shareholder claiming the tax credit shall attach a copy of Schedule K-1, Form 720S; Schedule

K-1, Form 765; or Schedule K-1, Form 765-GP to the tax return each year to claim the tax credit.

If there is an event as provided by KRS 141.433(6) which would result in the recapture of any portion of the tax credit

previously approved: (i) the CDE shall notify the department upon discovery of such event; or (ii) the department

upon discovery of such event or after receiving notice from the CDE of such event shall provide written notice (via

certified mail) of the proposed recapture to the CDE as provided by KRS 141.433(6)(b).

If the CDE fails or is unable to cure the deficiency as provided by KRS 141.433(6)(b), the department shall notify the

CDE and each taxpayer of the amount of the recapture or the balance of the tax credit on Form 8874(K)-B.

Form 8874(K)-A (State Form 41a720-S81) - Notice Of Kentucky New Markets Development Program Tax Credit And Certification Page 2