Kentucky Kentucky Pass-Through Entity Income and LLET Return - Instructions

Kentucky Pass-Through Entity Income and LLET Return - Instructions
Form PTE Instructions
INSTRUCTIONS

PTE
Commonwealth of Kentucky
Department of Revenue

KENTUCKY PASS-THROUGH
ENTITY INCOME AND LLET RETURN

2023

PURPOSE OF THE INSTRUCTIONS

HOW TO OBTAIN ADDITIONAL FORMS

These instructions have been designed for pass-through
entities: S-corporations, partnerships, and general
partnerships , which are required by law to file a Kentucky
income tax and LLET return. Form PTE is complementary
to the federal forms 1120S and 1065.

Forms and instructions are available at all Kentucky
Taxpayer Service Centers (see page 24). They may also
be obtained by writing FORMS, Department of Revenue,
501 High Street, Station 23B, Frankfort, KY 40601, or by
calling 502–564–3658. Forms can be downloaded from
www.revenue.ky.gov.

KENTUCKY TAX LAW CHANGES
Enacted by the 2023 Regular Session of the Kentucky
General Assembly
Internal Revenue Code (IRC) Update—House Bill (HB)
360 updated the Internal Revenue Code reference date to
December 31, 2022, for taxable years beginning on or after
January 1, 2023.
Treatment of Research and Experimental (R&E)
Expenses—The update to the IRC conformity date means
that, for taxable years beginning on or after January 1,
2023, Kentucky conforms to the IRC Section 174 changes
requiring taxpayers to capitalize and amortize R&E
expenses rather than deduct them.
Treatment of Restaurant Revitalization Grants—For
tax years beginning on or after January 1, 2020, but before
March 11, 2023, HB 360 provides that Kentucky will treat
Restaurant Revitalization Grants in the same manner as the
IRS. This means that the grants are not included in gross
income and expenses paid for by funds from the grants are
fully deductible.
Pass–Through Entity Tax and Tax Credit— HB 5
established a new Section of KRS Chapter 141 allowing
an authorized person to make an annual election to have
the income tax under KRS 141.020 imposed at the entity
level. To make the election for a taxable year beginning
on or after January 1, 2022, but before January 1, 2023,
an authorized person must file Form 740-PTET or Form
740-PTET-ELECT. The election for this taxable year must
be made after March 31, 2023, but before August 31, 2024.
For taxable years beginning on or after January 1, 2023,
an authorized person must file Form 740-PTET or Form
740-PTET-ELECT to make the election. The election must

be made at any time during the taxable year or after the end
of the taxable year. If the election is made after the end of
the taxable year, it must be made by:
•	

The 15th day of the fourth month after the close of the
taxable year, or

•	

The extended due date if an extension is filed.

Once the election has been made for a taxable year, it is
irrevocable and binding upon all entity owners. Under the
election, the income tax will be calculated at the passthrough entity level. The tax is based upon the ordinary
income and separately stated items of income calculated
under KRS 141.206.
Tax Credit Changes:
Pass–Through Entity Tax Credit—HB 5 also established
a 100% refundable pass-through entity tax credit. This
credit may be claimed on a return filed by an entity owner
against the tax imposed under KRS 141.020 and is based
on the entity owner’s proportionate share of income from
the pass-through entity.
Distilled Spirits Tax Credit—HB 5 modified the distilled
spirits (DS) tax credit, which provides for a credit against
LLET and income tax of up to 100% of the property tax
timely paid on distilled spirits inventory. Changes to this tax
credit will not impact the 2023 tax year.
Decontamination Tax Credit—HB 360 reduced the
amount of anticipated qualifying expenditures per property
to $6 million from $10 million and capped the total credit to
be awarded at $30 million for fiscal years 2022-2023 and
2023-2024.

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INSTRUCTIONS

Kentucky Entertainment Incentive (KEI) Tax Credit—
House Bill 303 made various changes to the KEI tax credit,
allocating $25 million for approved continuous production
film companies and clarifying that payroll expenditures of
loan-out entities can be included in the credit calculation.
Wage Assessments—HB 303 modified the wage
assessment language in the tax credit provisions that utilize
wage assessments to bring it in line with the reduction in the
individual income tax rate.
Kentucky Revised Statutes—Kentucky Revised Statutes
are referred to in these instructions as “KRS” and can be
found online at legislature.ky.gov/Law/Statutes/Pages/
default.aspx .
Kentucky
Administrative
Regulations—Kentucky
Administrative Regulations are referred to in these
instructions as “KAR” and can be found online at legislature.
ky.gov/Law/kar/Pages/default.aspx .
CURRENT YEAR INTEREST RATE
Pursuant to KRS 131.183, the 2024 tax interest rate has
been set at 9 percent (9%). The rate charged by the
Kentucky Department of Revenue on unpaid taxes is 11
percent  (11%) and when interest is due on a refund, the rate
is 7 percent  (7%).

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KENTUCKY FORM CHANGES
New:
Form 740–PTET—Created to allow an electing pass-through
entity to report the amount of income and income tax paid.
Form PTET–CR—Created to allow an electing passthrough entity to report to each of its partners, members,
or shareholders their proportionate share of the income
tax paid by the entity. The PTET-CR must be filed with the
partner’s, member’s, or shareholder’s return to claim the
PTET credit.
Form KPTET–V—Payment voucher created for electing
pass-through entities that choose to pay the PTE Tax with
a paper check.
Form 740 PTET–ES—Created to allow an electing passthrough entity to report estimated PTE tax payments.
NOTE: Estimated payments are not required for tax years
beginning on or after January 1, 2022, but before January
1, 2024.
Form 740 PTET–EXT—Created to allow an electing passthrough entity to request a six-month extension and make
a payment.
Form 740 PTET–ELECT—Created to allow for making an
election to pay income tax at the entity level.

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INSTRUCTIONS

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Helpful Tips for Electronic Filing and Paying
•	

Mandatory E-File and E-Pay if Gross Receipts ≥ $1,000,000—For tax years beginning on or after October 1, 2021, corporations
and pass-through entities are required to file and submit payments electronically if their federal gross receipts are one million dollars
($1,000,000) or greater. This applies to Forms 720, 720U, PTE, 725, and 740NP-WH.

•	

If your return or payment is rejected for an invalid Kentucky Corporation/LLET Account Number or Federal Employer Identification
Number (FEIN), please complete Form 20A100, "Declaration of Representative," and contact our Registration Section at 502-5643306 for instructions on how to obtain an account number.

•	

A person, taxpayer, or tax preparer required to electronically file a return, report, or statement may request a waiver as authorized
by KRS 131.250(2). Form 8948 (K-C): Request for Waiver of Electronic Filing Requirement must be submitted via e-mail to
[email protected] or [email protected] for approval before filing
on paper. A copy of the approved form must be attached to the paper-filed return.

•	

Online Payment Options—Visit www.revenue.ky.gov for details on how to electronically pay your tax. To make payments, the FEIN
is required along with the Kentucky Corporation/LLET six (6)-digit account number.

•	

Payment by Check—If an electronic payment is not possible, a Form KBR-V is required when submitting a paper check for payment
of the tax due on electronically filed and paper-filed returns.

•	

Direct debit is an option for electronically filed forms; however, direct deposit is not.

•	

To determine which forms are supported by your software, please consult with the company that develops your software.

Filing Tips and Checkpoints
The following list of filing tips is provided for your convenience to
help ensure that returns are processed accurately and promptly.
To avoid processing problems, please note the following:

•	

Extensions—Extensions are for extending the filing date
only; late payment penalties and interest apply to payments
made after the original due date.

•	

Account Closure—There are different requirements for the
Secretary of State and the Department of Revenue when
ceasing operations and closing an account. It is advised
that you consult with both agencies when closing a business
tax account.

•	

Corrected K-1’s—Adjustments to LLET or distributive
share require that corrected Kentucky K-1's are sent to all
partners, members, or shareholders for proper compliance
by taxpayers.

•	

Account Number/FEIN—Always ensure the correct
Kentucky Corporation/LLET account number and FEIN is
used on the return being filed.

•	

•	

Payments—If making payment by check, place payments
on the front of the return so that they are clearly visible. Do
not leave check stubs attached to checks. Check stubs will
delay the machines that sort incoming mail, which causes
longer processing times.

Schedule A—Do not check the box on Schedule A,
Apportionment and Allocation, indicating the use of an
alternative allocation and apportionment formula if the
corporation has not received written approval from the
Department of Revenue. If written approval has been
received, a copy of the letter from the Department of
Revenue must be attached to the return when filed.

•	

Incorrect Year Forms—Returns submitted on the wrong
year form on or before the due date will be accepted as
timely filed, but will require the return to be submitted on
the correct year form before the return can be processed.

•	

Additional errors that delay processing returns:

•	

Estimated Payments—Make estimated payments on a
timely basis to avoid penalty.

•	

EFT Payments—When making EFT payments online, use
the taxable year ending, NOT the due date of the payment.

•	

Form KBR-V- Form KBR-V is a payment voucher for e-filed
returns and for payments submitted separately for paper
filed returns. It is NOT an extension form. To extend a filing
date, use Form 720EXT, Extension of Time to File Kentucky
Corporation/LLET Return.

¡	 Incorrect form submitted
¡	 Incorrect tax exemption code
¡	 Incomplete information
¡	 Missing forms or schedules
¡	 Incorrect taxable year end
¡	 Failure to include payment of tax due with the return
¡	 Omitting Form 720EXT when paying with an extension

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IMPORTANT
Pass-through entities must create a Kentucky Form 4562,
Schedule D and Form 4797 by converting federal forms.
Schedule 4562
Depreciation—For property placed in service after September 10,
2001, Kentucky depreciation (§168) is determined per the Internal
Revenue Code (IRC) in effect on December 31, 2001.
Section 179 Deduction—For property placed in service after
September 10, 2001, but prior to January 1, 2020, only the expense
deduction ($25,000) allowed under §179 of the IRC in effect on
December 31, 2001, exclusive of any amendments made subsequent
to that date, is allowed.
For property placed in service on or after January 1, 2020, only the
expense deduction ($100,000) allowed under §179 of the IRC in
effect on December 31, 2003, exclusive of any amendments made
subsequent to that date, is allowed, except that the phase-out
provisions of §179 of the IRC limiting the qualifying investment in
property, shall not apply.
For 2020 returns and forward, any pass-through entity that for federal
purposes elects in the current taxable year or has elected in past
taxable years any of the following will have a different depreciation
and IRC §179 expense deduction for Kentucky:
•	
•	
•	

MACRS bonus depreciation;
IRC §179 expense deduction in excess of $25,000 for property
placed in service after September 10, 2001, but prior to January
1, 2020; or
IRC §179 expense deduction in excess of $100,000 for property
placed in service on or after January 1, 2020.

If a pass-through entity has taken MACRS bonus depreciation or
IRC §179 expense deduction in excess of the amounts outlined
above for any year, federal and Kentucky differences will exist and
the differences will continue through the life of the assets.
Important: If a pass-through entity has not taken MACRS bonus
depreciation or the IRC §179 expense deduction in excess of the
amounts outlined above for any taxable year, then no adjustment
will be needed for Kentucky income tax purposes. If federal Form
4562 is required to be filed for federal income tax purposes,
a copy must be submitted with Form PTE to substantiate that
no adjustment is required.
Determining and Reporting Depreciation and IRC §179
Deduction Differences—
1.	 The depreciation from federal Form 1120S, Line 14 or Form 1065,
Line 16(a) and depreciation claimed on federal Form 1125-A or
elsewhere on Form 1120S or Form 1065 must be included on
Form PTE, Part I, Line 3. If federal Form 4562 is required to
be filed for federal income tax purposes, a copy must be
attached to Form PTE.
2.	 Convert federal Form 4562 to a Kentucky form by entering
Kentucky at the top center of the form above Depreciation
and Amortization. Compute Kentucky depreciation (§168) per
the IRC in effect on December 31, 2001, by ignoring the lines
and instructions regarding the special depreciation allowance.
NOTE: For Kentucky purposes, for property placed into service
after September 10, 2001, but prior to January 1, 2020, the

maximum IRC §179 deduction amount on Line 1 is $25,000 and
the threshold cost of IRC §179 property on Line 3 is $200,000.
For property placed into service after September 10, 2001, but
prior to January 1, 2020, the maximum allowable IRC §179
deduction for Kentucky purposes is reduced dollar–for– dollar
by the amount by which the cost of qualifying IRC §179 property
placed in service during the year exceeds the threshold. In
determining the IRC §179 deduction for Kentucky the income
limitation on Line 11 should be determined by using Kentucky
net income before the IRC §179 deduction instead of federal
taxable income. For Kentucky purposes, for property placed
into service on or after January 1, 2020, the maximum IRC
§179 deduction amount on Line 1 is $100,000 and the phaseout threshold does not apply for purposes of determining
Kentucky depreciation.
3.	 The pass-through entity must attach the Kentucky Form 4562
to Form PTE, and the amount from Kentucky Form 4562, Line
22 must be included on Form PTE, Part I, Line 13. A Kentucky
Form 4562 must be filed for each year, even though a federal
Form 4562 may not be required.

Schedule 4797 and Schedule D
Gains/Losses from Disposition of Assets—Determining and
Reporting Differences in Gain or Loss From Disposition of Assets—If
during the year the pass-through entity disposes of assets on which
it has taken the special depreciation allowance or the additional IRC
§179 deduction for federal income tax purposes, the pass-through
entity will need to determine and report the difference in the amount
of gain or loss on such assets as follows:
1.	Convert federal Schedule D (Form 1120S or Form 1065) and
other applicable federal forms to Kentucky forms by entering
Kentucky at the top center of the form, and compute the
Kentucky capital gain or (loss) from the disposal of assets using
Kentucky basis. Enter the amount from Kentucky Schedule D,
Line 7 on Form PTE, Schedule K, Section A, Line 4(d) or 7.
Enter the amount from Kentucky Schedule D, Line 15 on Form
PTE, Schedule K, Section A, Line 4(e) or 7. Federal Schedule
D (Form 1120S or Form 1065) filed with the federal return
and the Kentucky Schedule D must be attached to Form
PTE.
2.	 If the amount reported on federal Form 1120S, Line 4 or Form
1065, Line 6 (from Form 4797, Line 17) is a gain, enter this
amount on Form PTE, Part I, Line 14. If the amount reported
on federal Form 1120S, Line 4 or 1065, Line 6 (from Form 4797,
Line 17) is a loss, enter this amount on Form PTE, Part I, Line 5.
Convert federal Form 4797 and other applicable federal forms
to Kentucky forms by entering Kentucky at the top center of
the form and compute the Kentucky gain or (loss) from the sale
of business property listing Kentucky basis. If the amount on
Kentucky Form 4797, Line 17 is a gain, enter this amount on
Form PTE, Part I, Line 6. If the amount on Kentucky Form 4797,
Line 17 is a loss, enter this amount on Form PTE, Part I, Line
15. Federal Form 4797 filed with the federal return and the
Kentucky Form 4797 must be attached to Form PTE.

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INSTRUCTIONS

Tax Treatment of S Corporation and Shareholder(s)
A corporation which elects S corporation treatment for federal
income tax purposes per §§1361(a) and 1361(b) of the IRC must file
as an S corporation for Kentucky income tax purposes. For taxable
years beginning on or after January 1, 2007, an S corporation
is classified as a limited liability pass–through entity per KRS
141.010(22). For taxable years beginning on or after January 1, 2007,
an annual limited liability entity tax (LLET) must be paid by every
corporation and every limited liability pass–through entity doing
business in Kentucky on all Kentucky gross receipts or Kentucky
gross profits per KRS 141.0401(2), unless specifically excluded. See
LLET Exemption Codes on page 10 of these instructions.

Register your business online at http://onestop.ky.gov using the
One Stop Business Services link.
1.	

Go to onestop.ky.gov .

2.	

Click on Dashboard Login.

3.	

Welcome to the Kentucky Online Gateway. If you do not already
have an account, click on Create An Account. Once a user
account has been created, an email will be sent to you with further
instructions to activate the account and login. You must use the
activation link in the email prior to logging in to your account.

4.	

Once logged in, launch the Kentucky Business One Stop App.

For tax years beginning on or after January 1, 2007, an S corporation
is required: (1) to submit installments of tax on the recapture of
LIFO reserves per IRC §1363(d); (2) pay tax on built-in gains per
IRC §1374; and (3) pay tax on net passive investment income per
IRC §1375. The tax rate imposed on the LIFO recapture, built–in
gains, and net passive investment income is five percent (5%).
KRS 141.040(4)
In determining tax per KRS Chapter 141, a resident individual that
is a shareholder of an S corporation must take into account the
shareholder’s total distributive share of the S corporation’s items of
income, loss, and deduction. In determining tax per KRS Chapter
141, a nonresident individual that is a shareholder of an S corporation
must take into account the shareholder’s total distributive share of
the S corporation’s items of income, loss, and deduction multiplied by
the apportionment fraction. KRS 141.206(11) and KRS 141.206(7)
and (8)
Resident and nonresident individual shareholders are entitled to a
nonrefundable LLET credit against tax imposed under KRS 141.020
(Kentucky individual income tax). The nonrefundable LLET credit
allowed shareholders is the shareholders’ proportionate share of
the LLET for the current year after the subtraction of any credits
identified in KRS 141.0205 and reduced by $175. The credit allowed
shareholders may be applied to the income tax assessed on income
from the S corporation. Any remaining credit from the S corporation
will be disallowed. KRS 141.0401(3)
GENERAL INFORMATION
Internal Revenue Code Reference Date—Kentucky’s Internal
Revenue Code (IRC) reference date is December 31, 2022,
exclusive of any amendments made subsequent to that date, other
than amendments that extend provisions in effect on December 31,
2022, that would otherwise terminate, for purposes of computing
corporation and individual income tax, except for depreciation
differences per KRS 141.0101. KRS 141.010(21)
Kentucky Tax Registration Application—Prior to doing business
in Kentucky, each pass-through entity should complete a Kentucky
Tax Registration Application, Form 10A100, to register for a Kentucky
Corporation/LLET Account Number. This account number will be used
for filing returns and remitting the corporation income tax per KRS
141.040 and the LLET per KRS 141.0401.

Page 6 of 24

•	

If your business needs to register with both the Secretary
of State and the Department of Revenue or only needs to
register with the Department of Revenue, use the Register
My Business option to register for tax accounts and your
Commonwealth Business Identifier (CBI).

•	

If the business is already registered with the Secretary of
State and you do not already have access to the business
on your Dashboard, choose the Link My Business option.
Enter the Commonwealth Business Identifier (CBI), Security
Token, and Business Name exactly as it appears on your
Kentucky articles of organization/incorporation, your
Kentucky Certificate of Authority, or your CBI letter (including
all punctuation) and link your business, click Send Invite
and follow the instructions sent to your email to register for
tax accounts.

The Link My Business option will require you to name at least one
“One-Stop Portal Business Administrator” (for example, the
business owner or representative).
Note: The administrator can then delegate access to other
individuals—for example, an attorney, accountant, or manager.
The administrator also determines the appropriate authority level
for delegates to make changes—this could range from filing
annual reports with the Secretary of State’s office, changing the
business address, or filing and paying taxes. Only the One Stop
business administrator(s) can grant, approve, withdraw, or revoke
access to the business.
5.	

Once you have linked your business, your business name
and CBI number will appear in the My Businesses box on the
dashboard, click on the CBI number, once your business loads,
click on the Tax Administration tab to register for tax accounts.

The paper application is available by calling the Department
of Revenue, Division of Registration at 502–564–3306, or
can be downloaded at www.revenue.ky.gov (click on Find a
Form, and search for 10A100). The application may be faxed
to 502–227–0772 or e-mailed to [email protected] .

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INSTRUCTIONS

Who Must File—LLET and Corporation Income Tax
LLET—The limitations imposed and protections provided by the
United States Constitution or Pub. L. No. 86–272 do not apply to
the limited liability entity tax imposed by KRS 141.0401. A Kentucky
Pass-Through Entity Income and LLET Return (Form PTE) must be
filed by every pass-through entity: (a) organized under the laws of
this state; (b) having its commercial domicile in this state; (c) owning
or leasing property in this state; (d) having one or more individuals
performing services in this state; (e) maintaining an interest in
a pass–through entity doing business in this state; (f) deriving
income from or attributable to sources within this state, including
deriving income directly or indirectly from a trust doing business
in this state, or deriving income directly or indirectly from a single
member limited liability company that is doing business in this state
and is disregarded as an entity separate from its single member for
federal income tax purposes; or (g) directing activities at Kentucky
customers for the purpose of selling them goods or services. KRS
141.010(13), KRS 141.0401, and KRS 141.206
Disregarded Entities—A Qualified Sub Chapter S Subsidiary
(QSSS) and a single member limited liability company (LLC) are
treated in the same manner as they are treated for federal income
tax purposes. Therefore, a QSSS or a single member LLC that is
disregarded for federal income tax purposes should be included
in the return filed by its single member (owner). All disregarded
entities included in the return should be listed on the Schedule DE
and attached to the return. KRS 141.010(13) and KRS 141.200(10)
Pass–through Entities—A pass-through entity doing business in
Kentucky solely as a partner or member in a pass-through entity
will file Form PTE per KRS 141.010, 141.120, and 141.206. (See
Schedule A—Apportionment and Allocation Instructions.)
Nonresident Withholding Return (Form 740NP–WH)
A partner or member that is a pass-through entity is not subject to
withholding. “Pass-through entity” is defined by KRS 141.010(28).
KRS 141.206(4) provides that every pass–through entity required
to file a return under KRS 141.206(1), except publicly traded
partnerships defined in KRS 141.0401(6)(a)18. and (b)14., must
withhold Kentucky income tax on the distributive share, whether
distributed or undistributed, of each nonresident individual partner,
member, or shareholder. Withholding is at the highest rate provided
in KRS 141.020.

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Withholding is not required if: (a) the partner, member, or shareholder
is exempt from withholding per KRS 141.206(6)(a); (b) the partner
or member is exempt from Kentucky income tax per KRS 141.020;
(c) the pass-through entity is a qualified investment partnership per
KRS 141.206(14), and the partner, member, or shareholder is an
individual; or (d) the partner or member is a pass-through entity.
A pass-through entity required to withhold and file a return on
Kentucky income tax per KRS 141.206 must make estimated
tax payments if required by KRS 141.207. If the pass-through
entity is required to make estimated tax payments visit www.
revenue.ky.gov for details on how to electronically pay your
tax. If unable to pay electronically, use Form 740NP-WH-ES
(Kentucky Estimated Tax Voucher).
The reporting of a nonresident individual’s net distributive share
income and withholding on Form 740NP–WH at the rate of 4.5%
(.045) will satisfy the filing requirements of KRS 141.180 for a
nonresident individual partner, member, or shareholder whose
only Kentucky source income is net distributive share income. The
partners’, members’, or shareholders’ distributive share of income
must include all items of income or deduction used to compute
adjusted gross income on the Kentucky return that are passed
through to the partner, member, or shareholder by the pass–through
entity, including but not limited to interest, dividends, capital gains
or losses, guaranteed payments, and rents (KRS 141.206(8)). The
nonresident individual partner, member, or shareholder may file a
Kentucky Individual Income Tax Return Nonresident or Part–Year
Resident (Form 740–NP) or a Kentucky Fiduciary Income Tax
Return (Form 741) to take advantage of the credits and deductions.
A pass–through entity must file Form 740NP–WH and complete a
Form PTE–WH for each nonresident individual partner, member, or
shareholder. Form 740NP–WH with a copy of each Form PTE–WH
must be filed and paid with the Department of Revenue by the 15th
day of the fourth month following the close of the taxable period.
Provide two copies of Form PTE–WH to each partner, member,
or shareholder.

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INSTRUCTIONS

Required Forms and Information—A pass-through entity must
enter all applicable information on Form PTE, enclose a schedule for
each line item or line item instruction which states “attach schedule,”
and include the following Kentucky forms or schedules, if applicable:
Kentucky Forms and Schedules
  1.	 Pass-through Entity Income and LLET Return (Form PTE)
  2.	 Kentucky Shareholder’s Share of Income, Credits,
	
Deductions, Etc.—Schedule K–1 (Form PTE)
  3.	 Apportionment and Allocation (Schedule A)
  4.	 Limited Liability Entity Tax—Continuation Sheet (Schedule L–C)
5.	 Cost of Goods Sold (Schedule COGS)
6.	 Tax Credit Summary Schedule (Schedule TCS)
7.	 Related Party Costs Disclosure Statement (Schedule RPC)
8.	 Disregarded Entity Schedule, if applicable (Schedule DE)
Required Federal Forms and Schedules
All pass-through entities must provide a copy of the following federal
forms submitted to the Internal Revenue Service. Not every form
below applies to every pass-through entity. Only attach the forms
and schedules that apply to your company’s specific tax situation.
  1.	 Form 1120S or 1065, all pages
  2.	 Form 1125-A—Cost of Goods Sold
3.	 Form 4797—Sales of Business Property
  4.	 Schedule D—Capital Gains and Losses
  5.	 Schedules for items on Form 1120S or 1065, Schedule L, which
state, “attach schedule.”
  6.	 Form 4562—Depreciation and Amortization
  7.	 Form 8825—Rental Real Estate Income and Expenses of a
Partnership or an S Corporation
Electronic Funds Transfer (EFT)—The Department of Revenue
accepts electronically filed Corporation Income Tax/Limited Liability
Entity Tax estimated tax voucher payments and extension payments
for corporation income tax and limited liability entity tax. Before
paying by EFT, the pass-through entity must have a valid six-digit
Kentucky Corporation/LLET account number and have registered
with the Department of Revenue to pay using EFT. Using an
incorrect account number, such as an account number for
withholding or sales and use tax, may result in the payment
being credited to another taxpayer’s account. When making
EFT payments online, use the taxable year ending, NOT the due
date of the payment.
For more information, contact the Department of Revenue at
800–839–4137 or 502–564–6020. The EFT registration form is
available at www.revenue.ky.gov.

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Accounting Procedures—Kentucky income tax law requires a
pass-through entity to report income on the same calendar or fiscal
year and to use the same methods of accounting required for federal
income tax purposes. Any federally approved change in accounting
periods or methods must be reported to the Department of Revenue.
Check the applicable box on page 1, Item G, and attach a copy of
the federal approval to the return when filed. KRS 141.140
Mailing/Payment—Only include payment for corporation income
tax and/or LLET. No payment is due for general partnerships filing
Form PTE.
Mail the return with payment to:
	
	

Kentucky Department of Revenue
Frankfort, KY 40620-0021

Make the check(s) payable to the Kentucky State Treasurer.
Mail returns with no tax due or refund requests to:
	
	

Kentucky Department of Revenue
Frankfort, KY 40618-0010

Filing/Payment Date—A pass-through entity return must be filed
and payment must be made on or before the 15th day of the fourth
month following the close of the taxable year. KRS 141.160, KRS
141.220, and 103 KAR 15:050
If the filing/payment date falls on a Saturday, Sunday, or a legal
holiday, the filing/payment date is deemed to be on the next business
day. KRS 446.030
Kentucky Extensions—A six-month extension of time to file a
Kentucky Pass-through Entity Income and LLET Return (Form PTE)
may be obtained by filing Form 720EXT by the original due date of
the return. If a payment is made with an extension, Kentucky Form
720EXT must be used. For further information, see the instructions
for Form 720EXT. 103 KAR 15:050
A General Partnership may file Form 40A102, Application for
Extension of Time to File Individual, General Partnership, and
Fiduciary Income Tax Returns, by the original due date of the return.
Include a copy of the submitted Form 40A102 with the return when
filed.
Federal Extension—An S corporation or limited liability pass-through
entity granted an extension of time for filing a federal income tax
return will be granted the same extension of time for filing a Kentucky
Pass-through Entity Income and LLET Return for the same taxable
year if a copy of the federal Form 7004 is attached to the Kentucky
return when it is filed. A copy of the federal extension submitted
after the return is filed does not constitute a valid extension,
and late filing penalties will be assessed. A copy of the federal
Form 7004 should not be mailed to the Department of Revenue
before filing the return. 103 KAR 15:050
NOTE: An extension of time to file a return does not extend the
due date for payment of tax.

PTE
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INSTRUCTIONS

Estimated Taxes
The Corporation Income/Limited Liability Entity Tax Estimated
Tax Voucher, Form 720ES, is used to submit estimated tax
payments for corporation income tax and LLET. See Electronic
Funds Transfer (EFT). If the pass-through entity is required to make
estimated tax payments and needs Form 720ES vouchers, contact
the Department of Revenue at 502–564–3658.
Estimated Tax Payments—A pass-through entity must make
estimated tax installments if its combined tax liability under KRS
141.040 and KRS 141.0401 can reasonably be expected to exceed
$5,000. Estimated tax installments are required as follows:
If the estimated tax is reasonably expected to exceed $5,000, 25%
of the estimated tax must be paid by the 15th day of the 4th month,
15th day of the 6th month, 15th day of the 9th month, and the 15th
day of the 12th month of the tax year.
Recalculating Estimated Tax—If after the pass-through entity
calculates and pays its estimated tax, it finds that its tax liability for
the year will be more or less than originally estimated, it may have
to recalculate its required installments. If earlier installments were
underpaid, the pass-through entity may owe a penalty. An immediate
payment should be made to reduce the amount of penalty resulting
from the underpayment of earlier installments, whether caused by a
change in estimate, failure to make a payment, or a mistake.
Penalty—Failure to make estimated installments, pay an estimated
installment in full, or pay estimated installments timely will result
in an addition to tax that will be considered a penalty under KRS
141.044. The tax interest rate plus 2 percent identified under KRS
131.183 is the underpayment rate used to calculate the penalty.
The entity should use Form 2220-K to determine the penalty. KRS
141.044 and KRS 141.990
Amended Return—To correct Form PTE as originally filed,
file an amended Form PTE and check the appropriate box on
page 1, Item G. If the amended return results in a change in income
or a change in the distribution of any income or other information
provided to partners or shareholders, an amended Schedule K–1
(Form PTE) must also be filed with the amended Form PTE and
a copy given to each partner or shareholder. Check Item E(2) on
each Schedule K–1 to indicate that it is an amended Schedule K–1.
Internal Revenue Service Audit Adjustments—Partnerships
and partners must report final federal adjustments arising from a
partnership level audit or an administrative adjustment request and
make any required payments no later than ninety (90) days after the
final determination date by filing with the department a completed
federal adjustments report. Use Form PTE or prior year’s Form 765
for reporting federal audit adjustments, check the Amended Return
box, and attach the complete Revenue Agent Report (RAR) and all
other information required by the department. An audited partnership
must also notify each of its direct partners of their distributive share
of the final federal adjustments, including all information required
by the department, and it must file an amended withholding return
for direct partners as required under KRS 141.206 and pay the
additional amount of tax that would have been due had the final
federal adjustments been reported properly as required. No later than

Page 9 of 24

180 days after the final determination date, each direct partner taxed
under KRS 141.020 or KRS 141.040 must file a federal adjustments
report showing their distributive share of the adjustments reported
to them by the partnership and pay any additional tax due as if final
federal adjustments had been properly reported, plus any applicable
penalty and interest. The direct and indirect partners of an audited
partnership that are tiered partners and all of the partners of those
tiered partners that are subject to tax under KRS 141.020 and
141.040 are subject to these reporting and payment requirements.
If an audited partnership properly reports final federal adjustments
within 90 days of the final determination date, it may make an election
to pay, within 180 days of the final determination date, an amount
in lieu of taxes, as determined under KRS 141.211(4)(b), owed by
its direct and indirect partners.
S-Corporations must report and pay income tax due resulting from
final federal adjustments arising from any action by the Internal
Revenue Service or reported by the taxpayer on a timely filed
amended federal income tax return by filing a federal adjustments
report with the department for the reviewed year and, if applicable,
paying any additional tax owed within 180 days after the final
determination date. Use Form PTE or prior year’s Form 720S for
reporting federal audit adjustments, check the Amended Return box,
and attach the complete Revenue Agent Report (RAR) and all other
information required by the department.
The department may assess any amount of tax, interest, and
penalties due arising from the federal adjustments for a timely
filed federal adjustments report or amended Kentucky tax return
up to one year following the date the federal adjustments report
or amended Kentucky return was filed. If a taxpayer fails to file the
federal adjustments report, or the filed federal adjustment report
omits final federal adjustments or understates the correct amount of
tax owed, the department may assess any amounts of tax, interest,
and penalties arising from the federal adjustments up to six years
following the final determination date. A taxpayer may request a
refund or credit of tax arising from federal adjustments made by the
IRS by the later of four years after the date the tax was paid or up to
one year from the date the federal adjustments report was required
to be reported to the department. KRS 141.210, KRS 141.211, KRS
141.235, and KRS 134.580
Mail returns with federal audit adjustments (RAR) to:
	
	
	

Corporate Governmental Programs Section
P. O. Box 1074, Station 68
Frankfort, KY 40602-1074

Interest — Interest  at  the  ta x  interest  rate plus t wo
percent  is  applied  to corporation income and LLET liabilities not
paid by the date prescribed by law for filing the return (determined
without regard to extensions thereof). See page 2 for the current
year rate.

PTE
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INSTRUCTIONS

Penalties—Refer below.
Failure to file a Kentucky Pass-Through Entity Income Tax and
LLET Return by the filing date including extensions—2 percent
of the tax due for each 30 days or fraction thereof that the return is
late (maximum 20 percent). The minimum penalty is $10 for each
tax. KRS 131.180(1)
Failure to pay at least 75 percent of income tax and/or LLET
determined due by the payment due date—2 percent of the tax
due for each 30 days or fraction thereof that the payment is overdue
(maximum 20 percent). The minimum penalty is $10 for each tax.
KRS 131.180(2)
Failure to make estimated installments, pay an estimated
installment in full, or pay estimated installments timely—The
addition to tax is considered a penalty under KRS 141.044. The
underpayment rate is the tax interest rate plus 2 percent identified
under KRS 131.183. KRS 141.044

•	

Page 10 of 24

End on the last day of the calendar month ending nearest to
the last day of the 52/53-week tax year.

Item A—Check the box that applies to the entity type filing this return.
Item B—Enter the pass-through entity’s federal identification number
(FEIN). See federal Publication 583 if the pass-through entity has
not obtained this number.
Item C—Enter the six-digit Kentucky Corporation/LLET Account
Number on the applicable line at the top of each form and schedule
and on all checks and correspondence. This number was included
in correspondence received from the Department of Revenue at the
time of registration.
Using an incorrect account number, such as an account number
for withholding or sales and use tax or the Kentucky Secretary
of State organization number, may result in the payment and/or
return being credited to another taxpayer’s account.

Failure or refusal to file a Kentucky Pass-Through Entity
Income Tax and LLET Return or furnish information requested
in writing—5 percent of the tax assessed for each 30 days or
fraction thereof that the return is not filed or the information is not
submitted (maximum 50 percent). The minimum penalty is $100.
KRS 131.180(3)

If the Kentucky Corporation/LLET Account Number is not known,
complete Form 20A100, “Declaration of Representative,” and
contact Registration at 502–564–3306 for instructions on how
to obtain an account number.

Negligence—10 percent of the tax assessed. KRS 131.180(6)

If the pass-through entity is exempt from LLET, enter one of the
following two–digit codes in the space provided. Failure to include
a valid code will delay the processing of the tax return and
may result in a tax notice for assessment of tax, penalties, and
interest.

Fraud—50 percent of the tax assessed. KRS 131.180(7)
Cost of Collection Fees—Fee percentage determined per KRS
131.440(1)(a) on all taxes which become due and owing for any
reporting period, regardless of when due. These collection fees are
in addition to all other penalties provided by law. KRS 131.440(1)(a)
Records Retention—The Department of Revenue deems acceptable
virtually any records retention system which results in an essentially
unalterable method of records storage and retrieval, provided: (a)
authorized Department of Revenue personnel are granted access,
including any specialized equipment; (b) taxpayer maintains
adequate back–up; and (c) taxpayer maintains documentation to
verify the retention system is accurate and complete.
FORM PTE—SPECIFIC INSTRUCTIONS
Period Covered—File the 2022 return for calendar year 2022 and
fiscal years that begin in 2022. For a fiscal year, fill in the taxable
period beginning and ending at the top of Form PTE.
NOTE: For 52/53 week filers, fill in the taxable period beginning
and ending dates as specified below:
•	

Begin on the first day of the calendar month beginning nearest
to the first day of the 52/53-week tax year.

Item D—LLET Exemption Code

	

	REASON
	CODE		

REASON

	

10	

A public service corporation subject to tax under KRS
136.120. (S corporations only)

	

12	

A property or facility which has been certified as a
fluidized bed energy production facility as defined in
KRS 211.390.

	

13	

An alcohol production facility as defined in KRS
247.910.

	

18	

	

21	

A personal service corporation as defined in
§ 269A(b)(1) of the Internal Revenue Code.
		 (S corporations only)
A qualified investment partnership as defined in KRS
141.206(14)(a).

NOTE: LLET Exempt codes are not applicable to general
partnerships.

PTE
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INSTRUCTIONS

Item E—Income Tax Exemption Code
If the pass-through entity is exempt from income tax, enter the
following two–digit code in the space provided. Failure to include
a valid code will delay the processing of the tax return and
may result in a tax notice for assessment of tax, penalties, and
interest.
	 REASON
	 CODE		
	

22	

Item F—3–Factor Apportionment Codes
If the entity is defined in KRS 141.121 and required to use a three
(3)-factor apportionment, it must enter one of the following two-digit
codes in the space provided. These entities continue to use a three
(3)-factor apportionment formula as provided in KRS 141.901 for
tax years beginning on or after January 1, 2018.
Failure to include a valid code will delay the processing of the
tax return and may result in a tax notice for assessment of tax,
penalties, and interest.

	REASON
	 CODE	

Revenue Service to change its taxable year, attach a copy of
the document.
•	

Amended Return—This is an amended tax return. Provide an
explanation of all changes in Part V—Explanation of Amended
Return Changes.

•	

Short–period Return—This return is for a period of less than
one year and not an initial return or a final return. Check the
appropriate box in Part IV—Explanation of Final Return and/
or Short-Period Return.

•	

Final Return—This is the pass-through entity’s final Kentucky
tax return. Check the appropriate box in Part IV—Explanation
of Final Return and/or Short-Period Return.

REASON

This return contains only the LLET as the S corporation
is exempt from income tax as provided by Public Law
86–272.

3–FACTOR APPORTIONMENT CODES

	

31	

Communications service as defined in KRS 136.602;

	

32	

Cable service as defined in KRS 136.602;

	

33	

Internet service as defined in 47 U.S.C. sec. 151; or

	

34	

Other (attach statement)

Item G—Check the applicable boxes:
•	

Publicly Traded Partnership—The pass-through entity is a
publicly traded partnership as provided by KRS 141.0401(6)
(b)(14).

•	

Qualified Investment Partnership—The pass-through entity
is a qualified investment partnership per KRS 141.206(14)(a).

•	

LLC—The pass-through entity is a Limited Liability Company
(LLC).

•	

LP—The pass-through entity is a Limited Partnership (LP).

•	

LLP—The pass-through entity is a Limited Liability Partnership
(LLP).

•	

Initial Return—This is the pass-through entity’s first Kentucky
tax return filed. Complete questions 1 and 2 on Schedule
Q—Questionnaire.

•	

Change of Accounting Period—The entity has changed its
accounting period since it filed its prior year Kentucky tax
return. Attach a statement to the tax return showing the entity’s
taxable year end before the change and the new taxable year
end. If the entity received written approval from the Internal

Page 11 of 24

Item H—Enter the number of K-1’s issued or received and the
number of owners included in this return.
Name and Address—Print or type the pass-through entity’s name
as set forth in the charter or articles of organization. For the address,
include the suite, room, or other unit number after the street address.
If the U.S. Postal Service does not deliver mail to the street address
and the entity has a P.O. Box, show the box number instead of the
street address.
Change of Name—Check the box if the pass-through entity’s name
has changed since the filing of the prior year Kentucky tax return.
Attach a statement to the tax return providing the pass-through
entity’s name reflected on the prior year Kentucky tax return.
Telephone Number—Enter the business telephone number of the
principal officer or chief accounting officer signing this return.
State of Organization—Enter the state of organization.
Date of Organization—Enter the date of organization.
Principal Business Activity in Kentucky—Enter the entity’s
principal business activity in Kentucky.
North American Industrial Classification System (NAICS)—
Enter your six–digit NAICS code. To view a complete listing of
NAICS  codes, visit the Census Bureau at www.census.gov/eos/
www/naics .
PART I—ORDINARY INCOME (LOSS) COMPUTATION
Line 1—Enter the amount from federal Form 1120S, Line 22, or
Form 1065, Line 23 ordinary income (loss) from trade or business
activities. Attach Form 1120S or Form 1065, all pages.
Additions to Federal Ordinary Income—Lines 2 through 10
itemize additional income or disallowed deductions which are
differences between federal ordinary income and Kentucky ordinary
income.
Line 2—Enter state taxes measured in whole or in part by gross or
net income. “State” means any state of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States or any foreign country or political
subdivision thereof. Attach a schedule reflecting the total taxes
deducted on federal Form 1120S or 1065. KRS 141.039(2)(c)

PTE
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INSTRUCTIONS

Page 12 of 24

Line 3— See instructions on page 5 regarding depreciation and
IRC §179 deduction differences, and if applicable, include the total
of depreciation amounts from Form 1120S, Line 14 or Form 1065,
Line 16(a), Form 1125-A and elsewhere on the return (do not include
the IRC §179 deduction). If federal Form 4562 is required to be
filed for federal income tax purposes, a copy must be attached.

Line 16—Enter Kentucky allowable depletion using Kentucky
taxable income and deductions. If the depletion is the same for
both federal and Kentucky, do not make an entry on this line. To
determine the allowable depletion deduction for Kentucky
purposes, the percentage limitations per the IRC must be
applied using Kentucky taxable income and deductions.

Line 4—Enter related party expense additions from Schedule RPC,
Part II, Section B, Line 1.

Line 17—Enter the difference of the federal distributive share
income amounts from federal Schedule(s) K-1 in excess of Kentucky
distributive share amounts from Kentucky Schedule(s) K-1.

Line 5—Enter the federal loss from federal Form 1120S, Line 4
or federal Form 1065, Line 6. If the loss from Form 4797, Line 17
is the same for both federal and Kentucky, do not make an entry
on this line.
Line 6—Enter the Kentucky gain from Kentucky Form 4797, Line
17. If the gain from Form 4797, Line 17 is the same for both federal
and Kentucky, do not make an entry on this line.
Line 7—Enter federal allowable depletion from federal Form 1120S,
Line 15 or federal Form 1065, Line 17. Do not deduct depletion for oil
and gas properties as each partner, member, or shareholder figures
depletion on oil and gas properties. If the depletion is the same
for both federal and Kentucky, do not make an entry on this line.
Line 8—Enter the difference of the Kentucky distributive share
income amounts from Kentucky Schedule(s) K-1 in excess of federal
distributive share amounts from federal Schedule(s) K-1.
Line 9—Enter the addition to federal taxable income equal to the
excess of Kentucky taxable income over federal taxable income
resulting from amendments to the IRC (excluding amendments
affecting depreciation and the IRC §179 deduction) subsequent to
the applicable IRC date. Attach a schedule to the tax return showing
the detail of the addition, including the related IRC section(s).

Line 18—Enter the subtraction from federal taxable income equal to
the excess of federal taxable income over Kentucky taxable income
resulting from amendments to the IRC (excluding amendments
affecting depreciation and the IRC §179 deduction) subsequent to
the applicable IRC date. Attach a schedule to the tax return showing
the detail of the subtraction, including the related IRC section(s).
Line 19—Enter any other subtractions from federal income not
reported on Lines 12 through 18, and attach an explanation to the
tax return.
Line 20—Enter the total of Lines 12 through 19.
Line 21—Subtract Line 20 from Line 11.
PART II—LLET COMPUTATION
General Partnerships—Part II—LLET COMPUTATION is not
required. Except for Schedule L, Sections C, D, and E, the rest of
the return and schedules must be completed.
Line 1—Enter the amount from Schedule L, Section E, Line 1.

Line 10—Enter any other additions to federal income not reported
on Lines 2 through 9, and attach an explanation to the tax return.

Line 2—Enter the sum of all tax credit recapture amounts from
Schedule RC–R, Line 12, Form 8874(K)-B, Line 3, and/or Schedule
DS, page 2, Line 10. Attach Schedule RC–R, Form 8874(K)-B
and/or Schedule DS.

Line 11—Enter the total of Lines 1 through 10.

Line 3—Enter the total of Lines 1 and 2.

Subtractions from Federal Ordinary Income—Lines 12 through
19 itemize additional deductions allowed which are differences
between federal ordinary income and Kentucky ordinary income.

Line 4—Enter the nonrefundable LLET credit from Kentucky
Schedule(s) K–1. Copies of Kentucky Schedule(s) K–1 must be
attached to the tax return in order to claim the credit.

Line 12—Reserved for future use.

Line 5—Enter the total nonrefundable tax credits from Schedule
TCS, Part III, Column E, Line 1 (attach Schedule TCS).

Line 13—Enter Kentucky depreciation (do not include IRC §179
deduction). See instructions on page 5 regarding depreciation and
IRC §179 deduction differences, and if applicable, Kentucky Form
4562 must be attached.
Line 14—Enter the federal gain from federal Form 1120S, Line 4
or federal Form 1065, Line 6. If the gain from Form 4797, Line 17
is the same for both federal and Kentucky, do not make an entry
on this line.
Line 15—Enter the Kentucky loss from Kentucky Form 4797, Line
17. If the loss from Form 4797, Line 17 is the same for both federal
and Kentucky, do not make an entry on this line.

Line 6—Enter the greater of Line 3 less Lines 4 and 5, or $175
minimum.
Line 7—Enter the total estimated LLET payments made for the
taxable year. Do not include the amount credited from the prior year.

PTE
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INSTRUCTIONS

Page 13 of 24

Line 8—Enter the total refundable tax credits from Schedule TCS,
Part IV, Line 4 (attach Schedule TCS).

Line 1—Enter tax from the Excess Net Passive Income Tax
Worksheet, Line 13. (See instructions and worksheet on page 19.)

Line 9—Reserved for future use.

If the S corporation has accumulated earnings and profits at the
close of its tax year, has passive investment income for the tax year
that is in excess of twenty-five percent of gross receipts, and has
excess passive income, the S corporation must pay a tax on the
excess net passive income per KRS 141.040(4)(c). Complete Lines
1 through 3 and Line 9 of the worksheet on page 19 to make this
determination. If Line 2 is greater than Line 3 and the S corporation
has taxable income (see instructions for Line 9 of worksheet), it
must pay the tax. Attach completed worksheet to the return.

Line 10—Enter the amount of LLET paid with Form 720EXT,
Extension of Time to File Kentucky Corporation/LLET Return.
Line 11—Enter the amount credited to 2023 LLET from Form PTE,
Part II, Line 21 of the 2022 return.
Line 12—Enter the income tax overpayment from Part III, Line 13
credited to the 2023 LLET. If filing an amended return, enter the
amount from the original return.
Line 13—Enter the LLET paid on the original return. This line is
used only when filing an amended return.
Line 14—Enter the LLET overpayment on the original return. This
line is used only when filing an amended return.
Line 15—Enter the Estimated Tax Penalty and attach Form 2220-K.
Line 16—If the total of Lines 6, 14, and 15 is greater than the total
of Lines 7 through 13, enter the LLET due on this line and pay the
amount due by the prescribed due date.
Note: For entities with tax due on project income carried from
Schedules KREDA-SP, KIDA-SP, KIRA-SP, KJDA-SP, KRA-SP,
KJRA_SP, IEIA-SP, IEBA-SP, KBI-SP, and FON-SP, add the tax
due from specified credit schedule(s) to the tax due line.
Line 17—If the total of Lines 6, 14, and 15 is less than the total of
Lines 7 through 13, enter the difference on this line as a positive
number.
Line 18—If an underpayment exists on Part III, Line 11, Income tax
due, enter the portion of the overpayment on Line 17 to be credited
to the 2023 corporation income tax. Enter the amount on this line
and on Part III, Line 8.
Line 19—If Line 17 reflects an overpayment, enter the portion of
Line 17 to be credited to 2023 LLET interest due.
Line 20—If Line 17 reflects an overpayment, enter the portion of
Line 17 to be credited to the 2023 LLET penalty due.
Line 21—If Line 17 reflects an overpayment, enter the portion of
Line 17 to be credited to 2024 LLET.
Line 22—If Line 17 reflects an overpayment, enter the portion of
Line 17 to be refunded (Line 17 less Lines 18 through 21).
PART III – INCOME TAX COMPUTATION
For S Corporations: Complete Lines 1 through 3
Partnerships: If checking the box, the Partnership elects to
pay the tax on behalf of its partners due to an IRS audit per
KRS 141.211(4). Skip to Line 4

Line 2—Enter the built–in gains tax from the Built–In Gains Tax
Worksheet, Line 8. Attach completed worksheet to the return.
(See instructions and worksheet on page 19.)
If the S corporation for the taxable year has built-in gains per IRC
§1374, the S corporation must pay a built-in gains tax as provided
by KRS 141.040(4)(c).
IRC §1374 provides that the built-in gains tax may apply to
the following S corporations: (1) An S corporation that was a C
corporation before it elected to be an S corporation; or (2) An S
corporation that acquired an asset with a basis determined (in whole
or in part) by reference to its basis (or the basis of any other property)
in the hands of a C corporation per IRC §1374(d)(8).
An S corporation may owe tax if it has net recognized built-in gain
during the applicable recognition period. The applicable recognition
period is the five (5) year period beginning: (1) For an asset held
when the S corporation was a C corporation, on the first day of the
first tax year for which the corporation is an S corporation; or (2)
For an asset with a basis determined by reference to its basis (or
the basis of any other property) in the hands of the C corporation,
on the date the asset was acquired by the S corporation.
A corporation must compute the built-in gains tax separately for the
group of assets it held at the time its S election became effective
and for each group of assets it acquired from a C corporation with
the basis determined (in whole or in part) by reference to the basis
of the asset (or any other property) in hands of the C corporation.
For details, see §1.1374-8 of the Treasury Regulations.
Line 3—Enter the amount of Tax installment on LIFO recapture.
The first installment is paid on the C corporation’s final return, and
the remaining three installments are paid on the S corporation’s first
three tax returns. Attach a schedule showing the amounts and
dates of the installments paid by the S corporation.
Line 4—Total
S Corporation: Enter the total of Lines 1 through 3, but not less
than zero.
Partnership: Enter the tax due that the partnership elects to pay
on behalf of its partners resulting from an IRS audit.
Line 5—Enter the total of the estimated income tax payments made
for the taxable year. Do not include the amount credited from the
prior year.

PTE
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INSTRUCTIONS

Line 6—Enter the amount of income tax paid with Form 720EXT,
Extension of Time to File Kentucky Corporation/LLET Return.
Line 7—Enter the amount credited to the 2023 income tax from
Form PTE, Part III, Line 16 of the 2022 return.
Line 8—Enter the LLET overpayment credited to the 2023 income
tax from Part II, Line 18. If filing an amended return, enter the amount
from the original return.
Line 9—Enter the income tax paid on the original return. This line
is used only when filing an amended return.
Line 10—Enter the income tax overpayment on the original return.
This line is used only when filing an amended return.
Line 11—If the total of Lines 4 and 10 is greater than the total of
Lines 5 through 9, enter the difference on this line and pay the
amount due by the prescribed due date.
Line 12—If the total of Lines 4 and 10 is less than the total of Lines
5 through 9, enter the difference on this line as a positive number.
Line 13— If an underpayment exists on Part II, Line 16, LLET due,
enter the portion of the overpayment on Line 12 to be credited to the
2023 LLET. Enter the amount on this line and on Part II, Line 12.
Line 14— If Line 12 reflects an overpayment, enter the portion of
Line 12 to be credited to 2023 corporation income tax interest due.
Line 15— If Line 12 reflects an overpayment, enter the portion of
Line 12 to be credited to the 2023 corporation income tax penalty
due.

Page 14 of 24

A pass-through entity must use Form PTE(K), Kentucky Schedule K
For Pass-Through Entities With Economic Development Project(s), if
the pass-through entity has one or more projects under the Kentucky
Rural Economic Development Act (KREDA), Kentucky Industrial
Development Act (KIDA), Kentucky Jobs Retention Agreement
(KJRA), Kentucky Industrial Revitalization Act (KIRA), Kentucky
Jobs Development Act (KJDA), Kentucky Business Investment
Program (KBI), Kentucky Reinvestment Act (KRA), Incentives for
Energy Independence Act (IEIA), Incentives for Energy-related
Business Act (IEBA), or Farming Operation Networking Project
(FON).
Section A—Income (Loss) and Deductions
Line 1—Enter Kentucky ordinary income (loss) from Form PTE,
Part I, Line 21.
Line 2—Enter net income (loss) from rental real estate activities
reported on federal Schedule K, Form 1120S or Form 1065, adjusted
to reflect any differences in Kentucky and federal income tax laws.
Attach federal Form 8825.
Line 3(a)—Enter the gross income from other rental activities
reported on federal Schedule K, Form 1120S or Form 1065.
Line 3(b)—Enter the expenses from other rental activities reported
on federal Schedule K, Form 1120S or Form 1065, adjusted to
reflect any differences in Kentucky and federal income tax laws.
Line 3(c)—Enter the difference of Line 3(a) and Line 3(b).

Line 16— If Line 12 reflects an overpayment, enter the portion of
Line 12 to be credited to 2024 corporation income tax.

Line 4(a)—Enter interest income from federal Schedule K,
Form 1120S or Form 1065, adjusted to exclude tax-exempt
U.S. government interest, if any, and to include interest income
from obligations of states other than Kentucky and their political
subdivisions.

Line 17— If Line 12 reflects an overpayment, enter the portion of
Line 12 to be refunded (Line 12 less Lines 13 through 16).

Lines 4(b) and 4(c)—Enter the amount of dividend and royalty
income reported on federal Schedule K, Form 1120S or Form 1065.

PART IV—EXPLANATION OF FINAL RETURN AND/OR SHORT–
PERIOD RETURN

Line 4(d)—See instructions on page 5 regarding differences in
gain or loss from disposition of assets, and if applicable, enter
the amount from Line 7 of the Kentucky Schedule D that is portfolio
income. Report any gain or loss that is not portfolio income on Line 7,
Schedule K, Form PTE. Kentucky Schedule D must be attached
to Form PTE. Otherwise, enter the amount from Line 7 of the federal
Schedule D (Form 1120S or Form 1065) that is portfolio income.

If a final return and/or short-period return is being filed, check the
box next to the reason why the return was filed. If the box for Other
is checked, please provide details in the space provided.
PART V—EXPLANATION OF AMENDED RETURN CHANGES
If an amended return is being filed, please provide a detailed
explanation for any return changes in the space provided. If
additional space is needed, attach a supporting statement.
SCHEDULE Q—Answer all applicable questions on Schedule Q.
SCHEDULE K (FORM PTE)
General Instructions—Complete all applicable lines by entering
the total pro rata share amount for each item listed. Federal
instructions for Form 1120S or 1065 and federal Schedule K provide
additional information which will assist the pass-through entity in
completing Schedule K, Form PTE.

Line 4(e)—See instructions on page 5 regarding differences in
gain or loss from disposition of assets, and if applicable, enter
the amount from Line 15 of the Kentucky Schedule D that is portfolio
income. Report any gain or loss that is not portfolio income on
Line 7, Schedule K, Form PTE. Kentucky Schedule D must be
attached to Form PTE. Otherwise, enter the amount from Line
15 of the federal Schedule D (Form 1120S or Form 1065) that is
portfolio income.
Line 4(f)—Enter any other portfolio income not reported on Lines
4(a) through 4(e), Schedule K, Form PTE.
Line 5—Partnerships Only—Guaranteed payments to partners

PTE
(2023)

INSTRUCTIONS

Line 6—See instructions on page 5 regarding differences in gain
or loss from disposition of assets. If applicable, enter the amount
from Line 7 of the Kentucky Form 4797, and Kentucky Form 4797
must be attached to Form PTE. Otherwise, enter net gain (loss)
under IRC §1231 from federal Form 4797. Do not include net gains
(losses) from involuntary conversions due to casualties or thefts
on this line. Instead, report them on Kentucky Schedule K, Line 7.
Line 7—Enter all other items of income (loss) of the pass-through
entity not included on Lines 1 through 6. See federal instructions
for Schedule K, Form 1120S or Form 1065.
Line 8—Enter total contributions paid by the pass-through entity
during its taxable year and attach a schedule showing separately
the contributions subject to the 50 percent, 30 percent, and 20
percent limitations. These percentage limitations must be applied
to the Kentucky amounts rather than the federal amounts.
Line 9—See instructions on page 5 regarding depreciation and
IRC §179 deduction differences, and if applicable, include the
amount from Line 12 of the Kentucky Form 4562. Kentucky Form
4562 must be attached. Otherwise, enter IRC §179 deduction
from federal Form 4562.

Page 15 of 24

CR—Certified Rehabilitation tax credit per KRS 171.397; attach a
copy of the Kentucky Heritage Council certification(s).
UTC—Kentucky Unemployment tax credit per KRS 141.065;
attach Schedule UTC.
RC—Recycling/Composting Equipment tax credit per KRS
141.390; attach Schedule RC.
KIFA—Kentucky Investment Fund tax credit per KRS 154.20-258;
attach a copy of the Kentucky Economic Development Finance
Au