KRS 141.403 — Tax credit for company approved on or before June 30, 2021, under KRS 154.26-010 to 154.26-100 -- Administrative regulations

(1) If an eligible company has not yet received preliminary approval on or before June
30, 2021, the eligible comp any shall not receive final approval by the authority to
become an approved company and receive tax credits under Subchapter 26 of KRS
Chapter 154. Approved companies and outstanding eligible companies with
preliminary approval granted on or before June 30 , 2021, shall continue to be
governed by Subchapter 26 of KRS Chapter 154 and this section.
(2) As used in this section, unless the context requires otherwise:
(a) "Approved company" has the same meaning as in KRS 154.26-010;
(b) "Economic revitalization project" has the same meaning as in KRS 154.26 -
010;
(c) "Eligible company" has the same meaning as in KRS 154.26-010;
(d) "Final approval" has the same meaning as in KRS 154.26-010;
(e) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; and
(f) "Kentucky gross profits" has the same meaning as in KRS 141.0401
(g) "Preliminary approval" has the same meaning as in KRS 154.26-010; and
(h) "Tax credit" means the tax credit allowed in KRS 154.26-090.
(3) An approved company shall determine the inc ome tax credit as provided in this
section.
(4) An approved company which is an individual sole proprietorship subject to tax
under KRS 141.020 or a corporation or pass -through entity treated as a corporation
for federal income tax purposes subject to tax under KRS 141.040 shall:
(a) 1. Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net income or taxable net income, including
income from the economic revitalization project;
2. Compute the limited liability entity tax imposed under KRS 141.0401,
including Kentucky gross profits or Kentucky gross receipts from the
economic revitalization project; and
3. Add the amounts computed under subparagraphs 1. and 2. of this
paragraph and, if applicable, subtract the credit permitted by KRS
141.0401(3) from that sum. The resulting amount shall be the net tax for
purposes of this paragraph.
(b) 1. Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net inc ome or taxable net income, excluding net
income attributable to the economic revitalization project;
2. Using the same method used under subparagraph 2. of paragraph (a) of
this subsection, compute the limited liability entity tax imposed under
KRS 141.040 1, excluding Kentucky gross profits or Kentucky gross
receipts from the economic revitalization project; and
3. Add the amounts computed under subparagraphs 1. and 2. of this
paragraph and, if applicable, subtract the credit permitted by KRS
141.0401(3) from that sum. The resulting amount shall be the net tax for
purposes of this paragraph.
(c) The tax credit shall be the amount by which the net tax computed under
paragraph (a)3. of this subsection exceeds the tax computed under paragraph
(b)3. of this subs ection; however, the credit shall not exceed the limits set
forth in KRS 154.26-090.
(5) (a) Notwithstanding any other provisions of this chapter, an approved company
which is a pass-through entity not subject to the tax imposed by KRS 141.040
or trust not subject to the tax imposed KRS 141.040 shall be subject to income
tax on the net income attributable to an economic revitalization project at the
rates provided in KRS 141.020.
(b) The amount of the tax credit shall be determined as provided in subsection (4)
of this section. Upon the annual election of the approved company, in lieu of
the tax credit, an amount shall be applied as an estimated tax payment equal to
the tax computed in this section. Any estimated tax payment made pursuant to
this paragraph s hall be in satisfaction of the tax liability of the partners,
members, shareholders, or beneficiaries of the pass-through entity or trust, and
shall be paid on behalf of the partners, members, shareholders, or
beneficiaries.
(c) The tax credit or estimated payment shall not exceed the limits set forth in
KRS 154.26-090.
(d) If the tax computed in this section exceeds the tax credit, the difference shall
be paid by the pass -through entity or trust at the times provided by KRS
141.160 for filing the returns.
(e) Any estimated tax payment made by the pass -through entity or trust in
satisfaction of the tax liability of partners, members, shareholders, or
beneficiaries shall not be treated as taxable income subject to Kentucky
income tax by the partner, member, shareholder, or beneficiary.
(6) Notwithstanding any other provisions of this chapter, the net income subject to tax,
the tax credit, and the estimated tax payment determined under subsection (5) of
this section shall be excluded in determining each partner 's, member's,
shareholder's, or beneficiary's distributive share of net income or credit of a pass -
through entity or trust.
(7) If the economic revitalization project is a totally separate facility:
(a) Net income attributable to the project for the purpos es of subsections (4), (5),
and (6) of this section shall be determined under the separate accounting
method reflecting only the gross income, deductions, expenses, gains, and
losses allowed under KRS Chapter 141 directly attributable to the facility and
overhead expenses apportioned to the facility; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the project
for purposes of subsection (4) of this section shall be determined under the
separate accounting method reflecting only the Kentucky gross receipts or
Kentucky gross profits directly attributable to the facility.
(8) If the economic revitalization project is an expansion to a previously existing
facility:
(a) Net income attributable to the entire facility shall be determined un der the
separate accounting method reflecting only the gross income, deductions,
expenses, gains, and losses allowed under KRS Chapter 141 directly
attributable to the facility and overhead expenses apportioned to the facility,
and the net income attributa ble to the economic revitalization project for the
purposes of subsections (4), (5), and (6) of this section shall be determined by
apportioning the separate accounting net income of the entire facility to the
economic revitalization project by a formula approved by the department; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the entire
facility shall be determined under the separate accounting method reflecting
only the Kentucky gross receipts or Kentucky gross profits directly
attributable to the facility. Kentucky gross receipts or Kentucky gross profits
attributable to the economic revitalization project for purposes of subsection
(4) of this section shall be determined by apportioning the separate accounting
Kentucky gross receipts or Kentucky gross profits of the entire facility to the
economic revitalization project pursuant to a formula approved by the
department.
(9) If an approved company can show to the satisfaction of the department that the
nature of the operations an d activities of the approved company are such that it is
not practical to use the separate accounting method to determine the net income,
Kentucky gross receipts, or Kentucky gross profits from the facility at which the
economic revitalization project is l ocated, the approved company shall determine
net income, Kentucky gross receipts, or Kentucky gross profits from the economic
revitalization project using an alternative method approved by the department.
(10) The department may issue administrative regulations and require the filing of forms
designed by the department to reflect the intent of KRS 154.26 -010 to 154.26 -100
and the allowable income tax credit which an approved company may retain under
KRS 154.26-010 to 154.26-100.