KRS 141.421 — Tax incentives for alternative fuel, gasification, and renewable energy facilities

(1) As used in this section:
(a) "Approved company" has the same meaning as in KRS 154.27-010;
(b) "Eligible project" has the same meaning as in KRS 154.27-010;
(c) "Kentucky gross receipts" has the same meaning as in KRS 141.0401;
(d) "Kentucky gross profits" has the same meaning as in KRS 141.0401; and
(e) "Tax credit" means the tax credit allowed in KRS 154.27-080.
(2) An approved company shall compute the inc ome tax credit as provided in this
section.
(3) 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(1) shall:
(a) 1. Compute the tax due at the applicable tax rates as provided by KRS
141.020 or 141.040 on net income as defined by KRS 141.010 or
taxable net income as defined by KRS 141.010, including income from
the eligible project;
2. Compute the limited liability entity tax imposed under KRS 141.0401,
including Kentucky gross profits or Kentucky gross receipts from the
eligible 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 income as defined by KRS 141.010 or
taxable net income as defined by KRS 141.010, excluding net income
attributable to the eligible project;
2. Using the same meth od used under paragraph (a)2. of this subsection,
compute the limited liability entity tax imposed under KRS 141.0401,
excluding Kentucky gross profits or Kentucky gross receipts from the
eligible project; and
3. Add the amounts computed under subparagraph s 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 subsection; however, the credit shall not exceed the limits set
forth in KRS 154.27-020.
(4) (a) Notwithstanding any other provisions of this chapter, an appro ved 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 by KRS 141.040 shall be subject to
income tax on the net income attributable to an eligible project at the rates
provided in KRS 141.020(2).
(b) The amount of the tax credit shall be determined as provided in subsection (3)
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 shall 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 behal f of the partners, members, shareholders, or
beneficiaries.
(c) The tax credit or estimated payment shall not exceed the limits set forth in
KRS 154.27-020.
(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 shal l not be treated as taxable income subject to Kentucky
income tax by the partner, member, shareholder, or beneficiary.
(5) Notwithstanding any other provisions of this chapter, the net income subject to tax,
tax credit, and estimated tax payment determined under subsection (4) 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.
(6) (a) Net income attributable to the project fo r the purposes of subsections (3), (4),
and (5) of this section shall be determined under the separate accounting
method reflecting only the gross income, deductions, expenses, gains, and
losses allowed under this chapter directly attributable to the facil ity and
overhead expenses apportioned to the facility; and
(b) Kentucky gross receipts or Kentucky gross profits attributable to the project
for purposes of subsection (3) 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.
(7) If an approved company can show to the satisfaction of the department that the
nature of the operations and activities of the approved company are such th at 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
eligible project is located, the approved company shall determine net income,
Kentucky gross receipts, or Kentucky gross profits from the eligible project using an
alternative method approved by the department.
(8) The department may promulgate administrative regulations and require the filing of
forms designed by the department to reflec t the intent of this section and KRS
154.27-080 and the allowable income tax credit which an approved company may
retain under this section and KRS 154.27-080.