Form 740-Np - Kentucky Income Tax Return Nonresident Or Part-Year Resident - 2012 Page 10
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60Do not include in Column B the net income from an S corpora-
or employee of the United States, any state or political
tion subject to the franchise tax imposed under KRS 136.505
subdivision thereof.
or the capital stock tax imposed under KRS 136.300.
(b) A written appraisal of the fair market value of the
Report income from real estate mortgage investment conduits
contributed property must be made by a qualified
(REMICs) as follows: (1) if the REMIC is a corporation, include
independent appraiser within one year of the date of the
only distributions of cash or property during the taxable year;
contribution. A copy of the appraisal must be attached
or (2) if other than a corporation, report the same amount as re-
to the tax return.
ported for federal income tax purposes for the taxable year.
(c) The contribution must be made to a qualified tax-exempt
Note: Individual owners of disregarded single member
organization.
LLCs (SMLLCs) that file on Schedules C, E, or F for federal
income tax shall file Form 725, Kentucky Single Member LLC
ADJUSTMENTS TO INCOME
Individually Owned LLET Return, to compute and pay the
limited liability entity tax. The individual member shall report
KRS 141.010(10) and (11) provide that deductions are limited
income or loss from the entity and determine credit in the same
to amounts allocable to income subject to taxation. If a de-
manner as other pass-through entities (PTEs).
duction or an adjustment to gross income is allowable based
upon the receipt of certain types of income or is limited to
Line 13, Unemployment Compensation—Report unemploy-
a maximum amount deductible for federal income tax pur-
ment compensation received while a resident of Kentucky.
poses, the Kentucky income used to determine the amount
allowable for Kentucky shall be the same type of income used
Line 14, Taxable Social Security Benefits—Social Security
to allow the deduction on the federal return. Persons who
benefits are not taxable for Kentucky.
move into or out of Kentucky during the year are limited to
either the adjustments to gross income paid during the period
Line 15, Gambling Winnings—Report income from lottery
of residence or that portion of adjustments to gross income
winnings and gambling received while a Kentucky resident
that Kentucky income bears to total income. Nonresidents
or from Kentucky sources while a nonresident.
are limited to that portion of adjustments to gross income
that Kentucky income bears to total income.
Line 16, Other Income—Report income from prizes, awards,
or any sources not listed above while a Kentucky resident or
Line 18, Reserved—Pending federal legislation.
from Kentucky sources while a nonresident. Also, include any
mortgage debt forgiveness excluded from federal adjusted
Line 19, Certain Business Expenses of Reservists, Performing
gross income.
Artists and Fee-Basis Government Officials—Do not include
out-of-pocket expenses for members of the National Guard
Retirement Income (For persons moving out of Kentucky)—
or Reserves.
Include differences in pension (3-year recovery rule) and IRA
bases received while a resident of Kentucky (also include
Line 20, Health Savings Account (HSA) Deduction—Federal
differences on Schedule P, Line 2).
limitations apply. Contributions deducted by full-year non-
residents are limited to the percentage of their Kentucky
Net Operating Loss Deduction—A Kentucky net operating
total income (Line 17, Column B) to their federal total income
loss deduction (KNOLD) must be computed using Kentucky
(Line 17, Column A). Do not claim amounts as an itemized
income and deduction amounts. The federal net operating loss
deduction.
deduction is not allowed. The KNOLD should be included as
a negative amount on Line 16. If the loss is from a business
Line 21, Moving Expenses—Enter allowable moving expense
outside Kentucky, none of the loss may be used. Kentucky
deduction (attach Schedule ME).
returns must be filed for the year of the loss and for all
years for which the loss is utilized. Attach schedule showing
Line 22, Deduction for One-Half of Self-Employment Tax—
computation.
You may deduct one-half of the self-employment tax based
upon the self-employment income reported in Column B as
Note: For 2005 and future years, the carryback of net operating
Kentucky income for the taxable year.
losses to prior years is no longer allowed. Net operating losses
may be carried forward for up to 20 years. Documentation to
Line 23, Self-Employed SEP, SIMPLE and Qualified Plans
substantiate any loss must be available to the Department of
Deduction—Self-employed persons may deduct qualified
Revenue upon request.
payments to a Keogh retirement plan, a Simplified Employee
Pension (SEP) or a SIMPLE plan based upon Kentucky self-
Artistic Charitable Contributions—A deduction is allowed for
employment earnings.
"qualified artistic charitable contributions" of any literary, musi-
cal, artistic or scholarly composition, letter or memorandum,
or similar property.
Line 24, Self-Employed Health Insurance Deduction—For
Kentucky purposes, see Section D, Line 32 for the allowable
health insurance deduction.
An amount equal to the fair market value of the property on
the date contributed is allowable as a deduction. However, the
deduction is limited to the amount of the taxpayer's Kentucky
Line 25, Penalty on Early Withdrawal of Savings—You may
artistic adjusted gross income for the taxable year. This amount
deduct the interest penalty only if the interest income has
should be included as a negative amount on Line 16.
been reported to Kentucky.
The following requirements for a deduction must be met:
Line 26, Alimony Paid—The alimony deduction cannot exceed
(a) The property must have been created by the personal
Kentucky income. Alimony paid by full-year nonresidents is
efforts of the taxpayer at least one year prior to the
limited to the percentage of their Kentucky total income to
date contributed. The creation of this property cannot
their federal total income. Enter the recipient's name and
be related to the performance of duties while an officer
Social Security number.
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