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A taxpayer is entitled to claim the recycling credits in KRS

141.0401. The credit reflected on this line must equal the sum

141.390(2)(a) and (b), but cannot claim both for the same

of the credits reflected on the attached GED–Incentive Program

recycling and/or composting equipment. KRS 141.390

Final Reports. This credit may be claimed only in the year during

which the learning contract was completed and unused portions

Coal Conversion Tax Credit—A corporation which converts

of the credit may not be carried forward or back. For information

boilers from other fuels to Kentucky coal or which substitutes

regarding the program, contact the Education and Workforce

Kentucky coal for other fuels in a boiler capable of burning

Development Cabinet, Kentucky Adult Education, Council on

coal and other fuels to produce energy for specific purposes

Postsecondary Education. The GED–Incentive Program Final

may be entitled to a credit against the taxes imposed by KRS

Report (DAEL–31) for each employee that completed a learning

141.040 and KRS 141.0401 equal to 4.5 percent of expenditures

contract during the tax year must be attached to the tax return

for Kentucky coal (less transportation costs). Unused portions

claiming the credit. KRS 151B.127

of this credit may not be carried forward or back. Schedule

CC must be attached to the tax return claiming this credit.

Voluntary Environmental Remediation Tax Credit—The

KRS 141.041

taxpayer must have an agreed order and be approved by the

Energy and Environment Cabinet under the provisions of KRS

Kentucky Investment Fund Tax Credit—A taxpayer which makes

224.01–518. Maximum tax credit allowed to be claimed per

a cash contribution to an investment fund approved by KEDFA

taxable year is 25 percent of the approved credit. This credit

in accordance with KRS 154.20–250 to 154.20–284 is entitled

may be claimed against the taxes imposed by KRS 141.020,

to a nonrefundable credit equal to 40 percent of the investor’s

KRS 141.040 and KRS 141.0401. For more information regarding

proportional ownership share of all qualified investments made

credit for voluntary environmental remediation property,

by the investment fund and verified by the authority. The credit

contact the Energy and Environment Cabinet at (502) 564–3350.

may be applied against the taxes imposed by KRS 141.020, KRS

Schedule VERB must be attached to the tax return claiming

141.040, KRS 141.0401, KRS 136.320, KRS 136.300, KRS 136.310,

this credit. KRS 141.418

KRS 136.505 and KRS 304.3–270. A copy of the notification from

KEDFA reflecting the amount of credit granted and the year

Biodiesel Tax Credit—The 2007 Second Extraordinary Session

in which the credit may first be claimed must be attached to

amended KRS 141.422 to include renewable diesel to be subject

the tax return claiming this credit.

to the biodiesel tax credit. Producers and blenders of biodiesel

and producers of renewable diesel are entitled to a tax credit

The tax credit amount that may be claimed by an investor in

against the taxes imposed by KRS 141.020, KRS 141.040 and

any tax year shall not exceed 50 percent of the initial aggregate

KRS 141.0401. The taxpayer must file a claim for biodiesel

credit amount approved by the authority for the investment

credit with the Department of Revenue by January 15 each year

fund which is proportionally available to the investor. Example:

for biodiesel produced or blended and the renewable diesel

An investor with a 10 percent investment in a fund which has

produced in the previous calendar year. The department shall

been approved for a total credit to all investors of $400,000 is

issue a credit certification (Schedule BIO) to the taxpayer by

limited to $20,000 maximum credit in any given year ($400,000

April 15. The credit certification must be attached to the tax

x 10% x 50%).

return claiming this credit. KRS 141.423 and 103 KAR 15:140

If the amount of credit that may be claimed in any tax year

Kentucky Environmental Stewardship Tax Credit—For tax

exceeds the tax liabilities, the excess credit may be carried

years beginning on or after January 1, 2006, an approved

forward, but the carryforward of any excess tax credit shall

company may be entitled to a credit against the taxes imposed

not increase the limitation that may be claimed in any tax year.

by KRS 141.020, KRS 141.040 or KRS 141.0401 on the income

Any credit not used in 15 years, including the year in which the

and the LLET of the approved company generated by or

credit may first be claimed, shall be lost.

arising out of a project as determined under KRS 154.48–020.

An “environmental stewardship product” means any new

Information regarding the approval process for these credits

manufactured product or substantially improved existing

may be obtained from the Cabinet for Economic Development,

manufactured product that has a lesser or reduced adverse

Department of Financial Incentives at (502) 564–4554. KRS

effect on human health and the environment or provides for

141.068

improvement to human health and the environment when

Coal Incentive Tax Credit—Effective for tax returns filed after

compared with existing products or competing products that

July 15, 2001, an electric power company or a company that

serve the same purpose. A company must have eligible costs

owns and operates a coal-fired electric generating plant may

of at least $5 million and within six months after the activation

be entitled to a coal incentive tax credit first against the taxes

date, the approved company compensates a minimum of 90

imposed by KRS 141.020, KRS 141.040 and KRS 141.0401

percent of its full–time employees whose jobs were created or

and then against tax imposed by KRS 136.120. Application

retained with base hourly wages equal to either: (1) 75 percent

for this credit is made on Schedule CI, Application for Coal

of the average hourly wage for the commonwealth; or (2) 75

Incentive Tax Credit, and a copy of the credit certificate issued

percent of the average hourly wage for the county in which

by the Kentucky Department of Revenue must be attached to

the project is to be undertaken. The maximum amount of

the tax return on which the credit is claimed. KRS 141.0405

negotiated inducement that can be claimed by a company for

any single tax year may be up to 25 percent of the authorized

Qualified Research Facility Tax Credit—A taxpayer is entitled

inducement. The agreement shall expire on the earlier of the

to a credit against the taxes imposed by KRS 141.020, KRS

date the approved company has received inducements equal

141.040 and KRS 141.0401 of 5 percent of the qualified costs of

to the approved costs of its project, or 10 years from the

construction, remodeling, expanding and equipping facilities

activation date. For more information, contact the Cabinet for

in Kentucky for “qualified research.” Any unused credit may

Economic Development, Department of Financial Incentives

be carried forward 10 years. Schedule QR, Qualified Research

at (502) 564–4554.

Facility Tax Credit, must be attached to the tax return on which

KRS 141.430 was amended to provide that for tax years

this credit is claimed. Federal Form 6765, Credit for Increasing

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

Research Activities, must also be attached if applicable. See

by 50 percent. The base tax year is the combined income tax

instructions for Schedule QR for more information regarding

and LLET for the first taxable year after December 31, 2005,

this credit. KRS 141.395

that ends immediately prior to the activation date. If the base

tax year is for a taxable year beginning before January 1, 2007,

GED Incentive Tax Credit—A taxpayer is entitled to a credit

the LLET will not apply. KRS 141.430

against the taxes imposed by KRS 141.020, KRS 141.040 and KRS

Instructions For Form 725 - Kentucky Single Member Llc Individually Owned Llet Return - 2011 Page 10

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