Form 41a765(I) - Kentucky Partnership Income And Llet Return Instructions

Coal Conversion Tax Credit—A corporation which converts

and unused portions of the credit may not be carried forward

boilers from other fuels to Kentucky coal or which substitutes

or back. For information regarding the program, contact the

Kentucky coal for other fuels in a boiler capable of burning

Education and Workforce Development Cabinet, Kentucky Adult

coal and other fuels to produce energy for specific purposes

Education, Council on Postsecondary Education. The GED-

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

Incentive Program Final Report (DAEL-31) for each employee

141.040 and KRS 141.0401 equal to 4.5 percent of expenditures

that completed a learning contract during the tax year must be

for Kentucky coal (less transportation costs). Unused portions

attached to the tax return claiming the credit. KRS 151B.127

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

Voluntary Environmental Remediation Tax Credit—The

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

taxpayer must have an agreed order and be approved by the

KRS 141.041

Energy and Environment Cabinet under the provisions of KRS

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

Kentucky Investment Fund Tax Credit—A taxpayer which makes

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

a cash contribution to an investment fund approved by KEDFA

may be claimed against the taxes imposed by KRS 141.020,

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

KRS 141.040 and KRS 141.0401. For more information regarding

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

credit for voluntary environmental remediation property,

proportional ownership share of all qualified investments made

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

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

Schedule VERB must be attached to the tax return claiming

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

this credit. KRS 141.418

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

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

Biodiesel Tax Credit—The 2007 Second Extraordinary Session

KEDFA reflecting the amount of credit granted and the year

amended KRS 141.422 to include renewable diesel to be subject

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

to the biodiesel tax credit. Producers and blenders of biodiesel

the tax return claiming this credit.

and producers of renewable diesel are entitled to a tax credit

against the taxes imposed by KRS 141.020, KRS 141.040 and

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

KRS 141.0401. The taxpayer must file a claim for biodiesel

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

credit with the Department of Revenue by January 15 each year

credit amount approved by the authority for the investment

for biodiesel produced or blended and the renewable diesel

fund which is proportionally available to the investor. Example:

produced in the previous calendar year. The department shall

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

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

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

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

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

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

x 10% x 50%).

Kentucky Environmental Stewardship Tax Credit—For tax

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

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

exceeds the tax liabilities, the excess credit may be carried

company may be entitled to a credit against the taxes imposed

forward, but the carryforward of any excess tax credit shall

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

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

and the LLET of the approved company generated by or

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

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

credit may first be claimed, shall be lost.

An “environmental stewardship product” means any new

manufactured product or substantially improved existing

Information regarding the approval process for these credits

manufactured product that has a lesser or reduced adverse

may be obtained from the Cabinet for Economic Development,

effect on human health and the environment or provides for

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

improvement to human health and the environment when

141.068

compared with existing products or competing products that

serve the same purpose. A company must have eligible costs

Coal Incentive Tax Credit—Effective for tax returns filed after

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

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

date, the approved company compensates a minimum of 90

owns and operates a coal-fired electric generating plant may

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

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

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

imposed by KRS 141.020, KRS 141.040 and KRS 141.0401

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

and then against tax imposed by KRS 136.120. Application

percent of the average hourly wage for the county in which

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

the project is to be undertaken. The maximum amount of

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

negotiated inducement that can be claimed by a company for

by the Kentucky Department of Revenue must be attached to

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

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

inducement. The agreement shall expire on the earlier of the

date the approved company has received inducements equal

Qualified Research Facility Tax Credit—A taxpayer is entitled

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

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

activation date. For more information, contact the Cabinet for

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

Economic Development, Department of Financial Incentives

construction, remodeling, expanding and equipping facilities

at (502) 564-4554.

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

be carried forward 10 years. Schedule QR, Qualified Research

KRS 141.430 was amended to provide that for tax years

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

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

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

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

Research Activities, must also be attached if applicable. See

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

instructions for Schedule QR for more information regarding

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

this credit. KRS 141.395

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

the LLET will not apply. KRS 141.430

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

against the taxes imposed by KRS 141.020, KRS 141.040 and

Caution: An approved company under the Environmental

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

Stewardship Act shall not be entitled to the recycling credit

sum of the credits reflected on the attached GED-Incentive

provided under the provisions of KRS 141.390 for equipment

Program Final Reports. This credit may be claimed only in

used in the production of an environmental stewardship

the year during which the learning contract was completed

project.

Form 41a765(I) - Kentucky Partnership Income And Llet Return Instructions - 2011 Page 13

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