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41A720KESA-SP (10-14)

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

INSTRUCTIONS—SCHEDULE KESA-SP

The KESA tax credit is applied against the income tax imposed by KRS 141.020 or KRS 141.040 and the limited liability

entity tax (LLET) imposed by KRS 141.0401. The amount of tax credit against each tax can be different.

PURPOSE OF SCHEDULE—For taxable years ending

on the taxable net income of the pass-through entity

on or after June 4, 2010, this schedule is used by a

for the base year.

pass-through entity which has an approved Kentucky

Environmental Stewardship Act (KESA) project

Line 2—This is the LLET imposed by KRS 141.0401

as provided by KRS 154.48–025 to determine the

on the limited liability pass-through entity for the

environmental stewardship tax credit allowed against

base year (not applicable for years beginning before

its LLET attributable to the project in accordance with

January 1, 2007).

KRS 141.430 and distributed to its partners, members

or shareholders.

Line 3—This is the LLET credit permitted by KRS

141.0401(3) for the base year (not applicable for years

KRS 141.430(2) provides that for each taxable year

beginning before January 1, 2007).

beginning with the year in which the activation date

defined in KRS 154.48–010(1) occurs and ending

Part II—Current Year Net Tax

with the year in which the project terminates, a

limited liability pass-through entity’s environmental

Enter the tax computed before the application of any

stewardship tax credit is determined by subtracting

tax credits.

the base year tax from the current year combined

individual income tax and LLET; however, the tax credit

Line 1—This is the income tax imposed by KRS 141.020

claimed for any single tax year cannot exceed 25% of

on the taxable net income of the pass-through entity

the total authorized inducement. The base year tax is

for the current taxable year.

the combined individual income tax and LLET for the

first taxable year after December 31, 2005, that ends

Line 2—This is the LLET imposed by KRS 141.0401 on

immediately prior to the activation date. If the base

the limited liability pass-through entity for the current

year is for a taxable year beginning before January 1,

taxable year.

2007, the LLET will not apply. For taxable years ending

on or after June 4, 2010, the base year tax is reduced

Line 3—This is the LLET credit permitted by KRS

by fifty percent (50%).

141.0401(3) for the current taxable year.

GENERAL INSTRUCTIONS

Part III—KESA Credit

Part I—Base Year Net Tax

Line 3—This is the lesser of Part III, Line 1 or Line 2.

Enter the tax computed before the application of any

tax credits.

For this taxable year, enter on Schedule KESA-T,

Column C the greater of Part III, Line 3 or the tax credit

allowed against the applicable tax.

Line 1—This is the income tax imposed by KRS 141.020

Schedule Kesa-Sp (Form 41a720kesa-Sp) - Tax Credit Computation Schedule (For A Kesa Project Of A Pass-Through Entity) Page 2

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