Form 740-Np - Kentucky Income Tax Return Nonresident Or Part-Year Resident - 2012 Page 9
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60the 30 percent or the 50 percent special depreciation allowance
Lines 7 and 12, Profit or (Loss) from Business or Farming—
or the increased 179 deduction will have a different deprecia-
For income taxable to Kentucky, complete and attach federal
tion and Section 179 deduction for Kentucky purposes than for
Schedule C or C-EZ for business income or federal Schedule F
federal purposes. The differences will continue through the life
for farming and Form 4562, Depreciation and Amortization. Do
of the assets. There will be recapture and basis differences for
not adjust wages by the federal work opportunity credit from
Kentucky and federal income tax purposes until the assets are
federal Form 5884. For passive activities, see Form 8582-K.
Do not include income from the national tobacco settlement
sold or fully depreciated.
agreement. Adjust income for the difference in allowable de-
INSTRUCTIONS FOR COLUMN B
preciation and report in Column B.
Depreciation, Section 179 Deduction and Gains/Losses From
Note: Individual owners of disregarded single member
LLCs (SMLLCs) that file on Schedules C, E, or F for federal
Disposition of Assets—Important: Follow the instructions for
Reporting Depreciation and Section 179 Deduction Differences
income tax shall file Form 725, Kentucky Single Member LLC
if you have elected for federal income tax purposes to take the
Individually Owned LLET Return, to compute and pay the
30 percent or the 50 percent special depreciation allowance
limited liability entity tax. The individual member shall report
or the increased Section 179 deduction for property placed
income or loss from the entity and determine credit in the same
in service after September 10, 2001. A copy of the federal
manner as other pass-through entities (PTEs).
Form 4562 if filed for federal income tax purposes must be
submitted with Form 740-NP to verify that no adjustments
Lines 8 and 9, Gain or (Loss) from Sale or Exchange of Assets—
are required.
Gains (losses) on sales of assets (including installment sales)
while a Kentucky resident must be reported on the Kentucky
Repor ting Depreciation and Sec tion 179 Deduc tion
return. Gains (losses) on sales of tangible assets located in
Differences for property placed in service after September
Kentucky must be reported regardless of state of residence.
10, 2001—Create a Kentucky Form 4562 by entering Kentucky
Generally, gains (losses) on sales of intangible assets are
at the top center of a federal Form 4562 above Depreciation
reported to the state of residence.
and Amortization. In Part I replace the $139,000 maximum
amount on Line 1 with the Kentucky limit of $25,000 and
Determining and Reporting Differences in Gain or Loss From
replace the $560,000 threshold amount on Line 3 with the
Disposition of Assets—If during the year you dispose of assets
Kentucky phase-out threshold of $200,000. In Part II, strike
placed in service after September 10, 2001, on which the 30
through and ignore Line 14, Special depreciation allowance
percent or the 50 percent special depreciation allowance or the
for qualified property placed in service during the tax year.
increased Section 179 deduction was taken for federal income
Use the created Kentucky Form 4562 to compute Kentucky
tax purposes, you will need to determine and report the differ-
depreciation and Section 179 deduction in accordance with
ence in the amount of gain or loss on the assets as follows:
the IRC in effect on December 31, 2001.
Create a Kentucky form by entering Kentucky at the top center
Note: In determining the Section 179 deduction for Kentucky,
of a federal Schedule D, federal Form 4797 and other applicable
the income limitation on Line 11 is Kentucky net income
federal forms. Compute Kentucky gain or loss from the dis-
before the Section 179 deduction, instead of federal taxable
posed assets using the Kentucky basis. Enter the Kentucky gain
income. Adjust federal Schedules C, E and F for the difference
or loss on the appropriate line. Attach the created Kentucky
in allowable depreciation and report in Column B the Kentucky
Schedule D, Kentucky Form 4797 and other forms or schedules
income (loss) from business, farming or rental property. Attach
to support the deduction.
Kentucky Form 4562 and, if filed, federal Form 4562.
Line 1, Wages, Salaries, Tips, etc.—Enter all wages, salaries,
Line 10(a), Federally Taxable IRA Distributions, Pensions
tips, bonuses, commissions or other compensation received
and Annuities—Enter on Line 10(a), Column A, the total of
for personal services from Kentucky sources while a nonresi-
IRA distributions, pensions and annuities received for the
dent and from all sources while a resident of Kentucky. Do
entire year. Enter on Line 10(a), Column B, the total of IRA
not include in this amount any reimbursement for moving
distributions, pensions and annuities received while a resident
expenses included in Kentucky wages on your wage and tax
of Kentucky.
statement.
Line 10(b), Pension Income Exclusion—You may exclude up to
Line 2, Moving Expense Reimbursement—See instructions
$41,110 of pension income reported on Line 10(a), Column B.
for Schedule ME.
If Line 10(a), Column B, is more than $41,110 and is from the
federal government, Commonwealth of Kentucky or Kentucky
Line 3, Interest—Interest income received while a Kentucky
local governments, complete Schedule P.
resident must be reported, except for the following: (a) income
from bonds issued by the Commonwealth of Kentucky and
Line 11, Income from Schedule E—Enter income from rents,
its political subdivisions; and (b) income from U.S. govern-
royalties, partnerships, estates, trusts, limited liability compa-
ment bonds or securities. Interest income from bonds issued
nies (LLC), S corporations and REMICs. Nonresident individuals
by other states and their political subdivisions is taxable to
receiving a Kentucky Schedule K-1 from a partnership, estate,
Kentucky and must be included on Line 3.
trust, LLC or S corporation must report their distributive
share of the income, gains or losses, etc., as reflected on the
Line 4, Dividends—Report dividends received while a resident
Schedule K-1. Shareholders and partners should multiply
of Kentucky and the distributive share of the dividend income
their distributive share items by the taxable percentage from
reflected on the Schedule K-1.
Schedule K-1; Form 720S, Line B(2); Form 765, Line D(2) and
Form 765-GP, Line C(2).
Line 5, Taxable Refunds, Credits or Offsets of State or Local
Income Taxes—Enter the amount of taxable local income tax
Part-year residents not receiving a Kentucky Schedule K-1,
refund or credit reported on your federal return only if you
but receiving a federal K-1 from a partnership, estate, trust or
received a tax benefit in a prior year. Do not include state
S corporation, must report the same amount of distributive
income tax refunds.
income, gains or losses, etc., as reported for federal income
tax purposes from entities whose taxable years end during
Line 6, Alimony Received—Enter alimony payments received
while a Kentucky resident.
their period of residence.
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