KRS 143.025 — Determination of taxable gross value of severed coal

(1) Taxpayers severing coal in Kentucky and partially or wholly processing the coal
outside of Kentucky thereafter and taxpayers severing coal outside of Kentucky and
partially or wholly processing the coal in Kentucky thereafter shall determine and
report the gross value of the coal by application of the following formula:
(a) Determine the direct cost of severing or processing the coal in Kentucky as
defined in paragraphs (d) and (e) of this subsection.
(b) Determine the direct cost of severing or processing the coal outside of
Kentucky as defined in paragraphs (d) and (e) of this subsection.
(c) Exclude from paragraphs (a) and (b) of this subsection transportation expense
and overhead cost as defined in paragraph (f) of this subsection.
(d) Include in the dir ect cost of severing coal: black lung excise tax; contract
mining, less transportation expense contained therein; cost depletion;
depreciation; development; equipment rental; explosives; fuel; labor and
associated expenses; maintenance; reclamation; royalt ies when based on tons
severed; and wheelage.
(e) Include in the direct cost of processing coal: depreciation; equipment rental;
fee processing; fuel; labor and associated expense; maintenance; and refuse
disposal.
(f) Include in the overhead costs: commis sions; freight yard and siding expense;
general expense; general insurance and supervision; general office expense;
idle time expense; inventory adjustments; mine closing expense; officers'
salaries; percentage depletion; quality analysis; scale and weighman's expense;
transportation expense and taxes, including sales, coal severance, property,
franchises, and state income taxes.
(2) For purposes of computing the formula under this section, any expense which is not
directly attributable to either the severi ng or processing of the coal shall be
classified as an overhead cost.
(3) Direct cost determined in subsection (1)(a) of this section divided by the total of
direct cost determined in subsection (1)(a) of this section and the direct cost
determined in subsection (1)(b) of this section and the result multiplied by the gross
value of the coal shall equal the proportion of gross value which is subject to the tax
levied under KRS 143.020.
(4) Any taxpayer determining taxable gross value as provided in this sect ion shall
submit supporting computations and classifications of cost with each coal tax
return, unless the department authorizes the taxpayer to submit the supporting
information on a basis other than monthly.