Form 41a720s(I) - Kentucky S Corporation Income Tax And Llet Return

Section 1374 of the Internal Revenue Code provides that the

SCHEDULE K (FORM 720S)

built-in gains tax may apply to the following S corporations: (i)

An S corporation that was a C corporation before it elected to

General Instructions—Complete all applicable lines entering

be an S corporation; or (ii) An S corporation that acquired an

the total pro rata share amount for each item listed. Federal

asset with a basis determined (in whole or in part) by reference

instructions for Form 1120S and federal Schedule K provide

to its basis (or the basis of any other property) in the hands

additional information which will assist the S corporation in

of a C corporation as provided by Section 1374(d)(8) of the

completing Schedule K, Form 720S.

Internal Revenue Code.

An S corporation must use Form 41A720S(K), Kentucky

Schedule K For S Corporations With Economic Development

An S corporation may owe tax if it has net recognized built-in

Project(s), if the S Corporation has one or more projects

gain during the applicable recognition period. The applicable

under the Kentuck y Rural Economic Development Act

recognition period is the ten (10) year period beginning: (i) For

(KREDA), Kentucky Industrial Development Act (KIDA),

an asset held when the S corporation was a C corporation, on

Kentucky Economic Opportunity Zone Act (KEOZ), Kentucky

the first day of the first tax year for which the corporation is

Jobs Retention Agreement (KJRA), Kentucky Industrial

an S corporation; or (ii) For an asset with a basis determined

Revitalization Act (KIRA), Kentucky Jobs Development Act

by reference to its basis (or the basis of any other property)

(KJDA), Kentuck y Business Investment Program (KBI),

in the hands of the C corporation, on the date the asset was

Kentucky Reinvestment Act (KRA) and Incentives for Energy

acquired by the S corporation.

Independence Act (IEIA).

A corporation must compute the built-in gains tax separately

NOTE: Banks and savings and loan associations see special

for the group of assets it held at the time its S election became

instructions under Tax Treatment of S Corporation and

effective and for each group of assets it acquired from a C

Shareholder(s) on page 4 of these instructions.

corporation with the basis determined (in whole or in part) by

reference to the basis of the asset (or any other property) in

Section I—Income (Loss) and Deductions

hands of the C corporation. For details, see Section 1.1374-8

of the Treasury Regulations.

Line 1—Enter Kentucky ordinary income (loss) from Form

720S, Part I, Line 10.

Line 3—Enter the tax installment on LIFO recapture. The first

installment is paid on the C corporation’s final return, and the

Line 2—Enter net income (loss) from rental real estate activities

remaining three installments are paid on the S corporation’s

reported on federal Schedule K, Form 1120S, adjusted to reflect

first three tax returns. Attach a schedule showing the amounts

any differences in Kentucky and federal income tax laws.

and dates of the installments paid by the corporation.

Line 3(a)—Enter the gross income from other rental activities

Line 4—Enter the total of Lines 1, 2 and 3.

reported on federal Schedule K, Form 1120S.

Line 5—Enter the total of the estimated income tax payments

Line 3(b)—Enter the expenses from other rental activities

made for the taxable year. Do not include the amount

reported on federal Schedule K, Form 1120S, adjusted to reflect

credited from the prior year. Check the box if Form 2220–K

any differences in Kentucky and federal income tax laws.

is attached.

Line 3(c)—Enter the difference of Line 3(a) and Line 3(b).

Line 6—Enter the amount of income tax paid with Form

Line 4(a)—Enter interest income from federal Schedule K,

41A720SL, Application for Six–Month Extension of Time to

Form 1120S, adjusted to exclude tax-exempt U.S. government

File Kentucky Corporation or Limited Liability Pass–Through

interes t, if any, and to include interes t income from

Entity Return.

obligations of states other than Kentucky and their political

subdivisions.

Line 7—Enter the amount credited to the 2012 income tax from

Form 720S, Section III, Line 12 of the 2011 return.

Lines 4(b) and 4(c)—Enter the amount of dividend and royalty

income reported on federal Schedule K, Form 1120S.

Line 8—Enter the 2012 LLET overpayment credited to the 2012

income tax from Part II, Line 15.

Line 4(d)—See page 3 of the 2012 Form 720S instructions

regarding differences in gain or loss from disposition of

Line 9—If Line 4 is greater than the total of Lines 5 through 8,

assets, and if applicable, enter the amount from Line 7 of the

enter the difference on this line and enter the amount on the

Kentucky Schedule D that is portfolio income. Report any gain

Tax Payment Summary.

or loss that is not portfolio income on Line 6, Schedule K, Form

720S. Kentucky Schedule D must be attached to Form 720S.

Line 10—If Line 4 is less than the total of Lines 5 through 8,

Otherwise, enter the amount from Line 7 of the federal Schedule

enter the difference on this line.

D (Form 1120S) that is portfolio income.

Line 11—Enter the portion of Line 10 to be credited to the 2012

Line 4(e)—See page 3 of the 2012 Form 720S instructions

LLET. Enter the amount on this line and on Part II, Line 12.

regarding differences in gain or loss from disposition of

assets, and if applicable, enter the amount from Line 15 of

Line 12—Enter the portion of Line 10 to be credited to 2013

the Kentucky Schedule D that is portfolio income. Report any

corporation income tax.

gain or loss that is not portfolio income on Line 6, Schedule K,

Form 720S. Kentucky Schedule D must be attached to Form

720S. Otherwise, enter the amount from Line 15 of the federal

Line 13—Enter the portion of Line 10 to be refunded (Line 10

Schedule D (Form 1120S) that is portfolio income.

less Lines 11 and 12).

Form 41a720s(I) - Kentucky S Corporation Income Tax And Llet Return - 2012 Page 10

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