Looking for a Kentucky Tax Forms And Templates? Download it for free!

Page 2

41A720-S22 (10-12)

INSTRUCTIONS – SCHEDULE KIDA-SP

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

PURPOSE OF SCHEDULE—This schedule is used by a

to determine the net income, Kentucky gross receipts

pass-through entity which has entered into a tax incentive

and Kentucky gross profits from the facility at which the

agreement for a Kentucky Industrial Development Act (KIDA)

economic development project is located, the approved

project that received preliminary or final approval under KRS

company shall use an alternative method approved by

Chapter 154.28 on before June 26, 2009, to determine the

the Department of Revenue. A copy of the letter from the

credit allowed against the Kentucky income tax and LLET

Department of Revenue approving the alternative method

attributable to the project in accordance with KRS 141.400.

must be attached to this schedule.

Pass-through entities should first complete Form 720S, 765

Separate Accounting—If the economic development project

or 765-GP to determine net income (loss), deductions, etc.,

is a totally separate facility, net income shall reflect only

from the entire operations of the pass-through entity. The

the gross income, deductions, expenses, gains and losses

pass-through entity should then complete Schedule KIDA-

allowed under this chapter directly attributable to the

SP to determine the KIDA tax credit and the tax due, if any,

facility and overhead expenses apportioned to the facility;

from the KIDA project. A pass-through entity is subject to

and Kentucky gross receipts or Kentucky gross profits shall

tax as provided by KRS 141.020 and KRS 141.0401 on the net

reflect only Kentucky gross receipts or Kentucky gross

income and the Kentucky gross receipts or Kentucky gross

profits directly attributable to the facility.

profits from the project and the KIDA credit is applied against

the tax of the KIDA project. Consequently, the pass-through

If the economic development project is an expansion to

entity must use Form 720S(K), Form 765(K) or Form 765-

a previously existing facility, net income of the entire

GP(K) in lieu of Schedule K (Form 720S), Schedule K (Form

facility shall reflect only the gross income, deductions,

765) or Schedule K (Form 765-GP) in order to exclude the net

expenses, gains and losses allowed under this chapter

income from the KIDA project from the partners, members

directly attributable to the facility and overhead expenses

or shareholders’ distributive share income, and Schedule

apportioned to the facility; and Kentucky gross receipts and

LLET(K) in lieu of Schedule LLET in order to exclude the

Kentucky gross profits shall reflect only Kentucky gross

Kentucky gross receipts or the Kentucky gross profits of the

receipts and Kentucky gross profits directly attributable

KIDA project from the LLET at the entity level.

to the facility. Net income, Kentucky gross receipts and

Kentucky gross profits of the entire facility attributable to

Multiple Projects—A pass-through entity with multiple

the economic development project shall be determined

economic development projec ts must complete an

by apportioning the net income, Kentucky gross receipts

applicable schedule (Schedule KREDA-SP, Schedule KIDA-

and Kentucky gross profits by a formula approved by the

SP, Schedule KEOZ-SP, Schedule KJRA-SP, Schedule KIRA-

Department of Revenue.

SP, Schedule KJDA-SP, Schedule KBI-SP, Schedule KRA-SP

or Schedule IEIA-SP) to determine the credit and net tax

Line 2—Enter the net operating loss from the KIDA project,

liability, if any, for each project.

if any, being carried forward from previous years.

Line 1—If the pass-through entity’s only operation is the

Note: Just as the income from a KIDA project does not flow

KIDA project, the amount entered on Line 1 is the net

through to partners, members or shareholders, neither

income (loss) from Form 720S, 765 or 765-GP. If the pass-

do the losses. The project’s net operating loss from prior

through entity has operations other than the KIDA project,

years must be subtracted from the project income before

a schedule must be attached reflecting the computation of

calculating the KIDA credit.

the net income (loss) from the KIDA project in accordance

with the following instructions, and such amount entered

General Partnership—Lines 5 and 6 of this schedule shall

on Line 1.

not be completed by a general partnership as a general

partnership is not subject to LLET.

Separate Facility—In accordance with KRS 141.400(6), if the

project is a totally separate facility, net income, Kentucky

Line 5—Using Schedule LLET, create a new Schedule LLET

gross receipts and Kentucky gross profits attributable to

to compute the LLET of the KIDA project using only the

the project shall be determined by a separate accounting

Kentucky gross receipts and Kentucky gross profits of the

method.

project. Enter “KIDA” at the top center of the Schedule LLET

and attach it to the tax return.

Expansion of Existing Facility—In accordance with KRS

141.400(7), if the KIDA project is an expansion to a previously

existing facility, the net income, Kentucky gross receipts

Line 9—In lieu of the tax credit, the approved company

and Kentucky gross profits shall be determined under a

may elect, on an annual basis, to apply as an estimated

separate accounting method reflecting the entire facility,

tax payment an amount equal to the allowable tax credit.

and the net income, Kentucky gross receipts and Kentucky

Any estimated tax payment shall be in satisfaction of the

gross profits shall be determined by apportioning the net

tax liability of the partners, members or shareholders of

income, Kentucky gross receipts and Kentucky gross profits

the pass-through entity, and shall be paid on behalf of

of the entire facility to the economic development project by

the partners, members or shareholders. Enter an amount

a formula approved by the Department of Revenue. A copy

on either (a) or (b), but in no case shall there be an entry

of the letter from the Department of Revenue approving

on both (a) and (b). In accordance with KRS 141.400(5),

the percentage must be attached to the schedule.

this estimated tax payment is excluded in determining

each partner, member or shareholder’s distributive share

Alternative Methods—In accordance with KRS 141.400(8),

income or credit from a pass-through entity. Accordingly,

if the approved company can show that the nature of the

the partners, members or shareholders are not entitled to

operations and activities of the approved company are such

claim any portion of this estimated tax payment against

that it is not practical to use a separate accounting method

their Kentucky income tax liability.

Schedule Kida-Sp - Tax Computation Schedule (For A Kida Project Of A Pass-Through Entity) Page 2

Related Articles

Related forms

Related Categories