Kentucky Distilled Spirits Tax Credit - Form 41A720DS

Distilled Spirits Tax Credit - Form 41A720DS
Schedule DS
SCHEDULE

DS

DISTILLED SPIRITS TAX CREDIT

2023

			

Commonwealth of Kentucky
Department of Revenue

	 See instructions.

KRS 141.389

	 Attach to Form 720, 720U, PTE, 725, 740, 740-NP, or 741.
Name of Entity

Location Address of Capital Improvements

Federal Identification
Number

Kentucky Corporation/LLET
Account Number (if applicable)

__ __ __ __ __ __ __ __ __

__ __ __ __ __ __

	 Taxed as:	

Corporation

		

Limited Liability Pass-through Entity

		

General Partnership

		

Individual

		

Other

Part I—Capital Improvements
Construction, replacement, or remodeling of warehouses or facilities........................................................	1	
Purchase of barrels and pallets used for the storage and aging of distilled spirits in
maturing warehouses..................................................................................................................................	2	
Acquisition, construction, or installation of equipment for the use in the manufacture,
bottling, or shipment of distilled spirits.........................................................................................................	3	

00

4	 Addition or replacement of access roads or parking facilities.....................................................................	4	
5	 Construction, replacement, or remodeling of facilities to market or promote tourism,
	 including but not limited to a visitor’s center................................................................................................	5	

00

6	 Total Capital Improvements (Add lines 1 through 5)...................................................................................	6	

00

1	
2	
	
3	
	

00
00

00

Part II—Computation of the Credit
For all years of accumulated ad valorem tax list: 1) ad valorem taxable year ending, 2) date the ad valorem tax was assessed, 3) date
the ad valorem tax was paid, 4) amount of ad valorem tax paid, and 5) allowable percentage. Enter the total of line 6 in the Total column.
Include receipts per instructions.
Ad valorem

	 Taxable Year Ending
Date ad valorem

	 tax was assessed

1	

Date ad valorem
Amount of ad

	

Allowable
Percentage
Line 4 multiplied

	

_ _/_ _

	

_ _/_ _

	

_ _/_ _

		

Total

2	 ___/___/________/___/________/___/_____
	
	
	___/___/_____		

tax was paid
	3
valorem tax paid
	

_ _/_ _

___/___/________/___/________/___/_____ ___/___/_____

4	 00	 00	 00	 00		

5	

100%

	

100%

	

100%

	

100%

		

6	 00	 00	 00	 00	6	

00

7	Allowable distilled spirits tax credit (lesser of Part I, line 6 or Part II, line 6)...........................................	7	

00

by Line 5
	

230237 41A720DS (10-23)	

Page 1 of 4

Schedule DS
(2023)

Page 2 of 4

Part III—Description of Property and Computation of Tax Credit Recapture
Section A—Description of Property Sold or Disposed of Before the End of the Recapture Period
Item

Description of Capital Improvements

	A	
	B	
	C
	D
	E	
Section B—Computation of Tax Credit Recapture
 

1	 Taxable year end date the tax credit was claimed.................................................................................................	1	

/	 /	

  2	 Date the capital improvement was sold or disposed of..........................................................................................	2	

/	 /	

  3		 Total amount of tax credit associated with the dates referenced above................................................................ 	3	

00

  4		 Cost of capital improvement sold or disposed of................................................................................................... 	4	

00	

  5		 Total cost of all capital improvements associated with the credit reported on line 3.............................................. 	5	

00

  6		 Divide line 4 by the amount on line 5 (see instructions)......................................................................................... 	6	

.

%

7		 Multiply line 3 by line 6 and enter here.................................................................................................................. 	7	

00	

8		 Enter the amount of credit claimed against LLET for the taxable year referenced on line 1................................. 	8	

00

9		 Enter the amount of credit claimed against income tax for the taxable year referenced on line 1......................... 	9	
	
10		 LLET credit recapture: If the amount on line 8 is greater than line 7, enter the difference................................. 	10	
	
11		 Income tax credit recapture: If the amount on line 9 is greater than line 7, enter the difference........................ 	11	

00

230225 41A720DS (10-23)

00
00

Schedule DS
(2023)

INSTRUCTIONS FOR SCHEDULE DS

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The distilled spirits credit is a nonrefundable and nontransferable credit that may be claimed against income taxes imposed by
KRS 141.020 or KRS 141.040 and the limited liability entity tax imposed by KRS 141.0401 by taxpayers that pay Kentucky property
tax on distilled spirits per KRS 132.160. If the taxpayer is a pass-through entity, such as a partnership, S-corporation or limited liability
company classified as a pass-through entity for Kentucky income tax purposes, the taxpayer may apply the credit against the LLET, and
pass the credit through to its members, partners, shareholders, or beneficiaries in the same proportion as the distributive share of income
or loss is passed through.
Purpose of Schedule—This schedule is used to report the capital
improvements for which the credit is claimed, up to the amount of
distilled spirits ad valorem tax paid during the period the capital
improvements were made. The credit must be claimed on the
return filed for the year during which the credits were used, which
is the year the capital improvements are completed.
This schedule is also used to report any recapture of the distilled
spirits tax credit. KRS 141.389(4)(b) provides that the distilled
spirits credit allowed must be recaptured if the capital improvement
associated with the credit is sold or otherwise disposed of prior
to the exhaustion of the useful life of the asset for Kentucky
depreciation purposes. If the distilled spirits credit recapture is for
multiple taxable years, attach a schedule providing the information
on this Schedule for each taxable year.
How to File—Schedule DS must be attached to the tax return.

Line 2—Enter the date the ad valorem tax was assessed per
KRS 132.160.
Line 3—Enter the date the ad valorem tax was paid per KRS
132.180.
Line 4—Enter the amount of the ad valorem tax that was assessed
and paid on the dates entered on Lines 2 and 3, respectively.
Line 5—Enter the applicable percentage for the taxable year as
follows:
•	

For taxable years beginning on or after January 1, 2015,
and before December 31, 2015, the credit is equal to twenty
percent (20%) of the tax assessed under KRS 132.160 and
paid under KRS 132.180 on a timely basis.

•	

For taxable years beginning on or after January 1, 2016, and
before December 31, 2016, the credit is equal to forty percent
(40%) of the tax assessed under KRS 132.160 and paid under
KRS 132.180 on a timely basis.

•	

For taxable years beginning on or after January 1, 2017, and
before December 31, 2017, the credit is equal to sixty percent
(60%) of the tax assessed under KRS 132.160 and paid under
KRS 132.180 on a timely basis.

•	

For taxable years beginning on or after January 1, 2018,
and before December 31, 2018, the credit is equal to eighty
percent (80%) of the tax assessed under KRS 132.160 and
paid under KRS 132.180 on a timely basis.

•	

For taxable years beginning on or after January 1, 2019,
the credit is equal to one hundred percent (100%) of the tax
assessed under KRS 132.160 and paid under KRS 132.180
on a timely basis.

Maintaining Records—The taxpayer must maintain records
reflecting the verification of the capital improvements made that
are associated with the credit for a period of five years.
SPECIFIC INSTRUCTIONS
General Information—KRS 141.389(3) provides that the distilled
spirits credit may be accumulated for multiple taxable years, and
must be claimed on the return of the taxpayer filed for the taxable
year during which the credits were used for capital improvements
per KRS 141.389(2). If the distilled spirits ad valorem tax is for
multiple taxable years, attach a schedule providing the information
on Part II of this Schedule for each taxable year.
Part I—Capital Improvements
Lines 1 to 5—Enter the capital improvement amounts at the
premises of the distiller licensed per KRS Chapter 243 for each of
the categories provided on Lines 1 through 5 that were completed
and specifically associated with the ad valorem tax on Part II,
Line 4.
Line 6—Enter the total of Lines 1 through 5.
Part II—Computation of the Credit
Line 1—Enter the ad valorem taxable year ending. Enter the
2-digit month and 2-digit year. Begin with the earliest taxable
year ending date.

41A720DS (10-23)	

Line 6—Enter the amount on Line 4 multiplied by the percentage
on Line 5. Enter the total of line 6 in the Total column.
Line 7—Enter the lesser of Part I, line 6 or Part II, line 6; this is
the allowable distilled spirits tax credit.
Note: Submit a copy of the local ad valorem tax notice and
receipt from your local jurisdiction to substantiate the credit
claimed in Part II.

Schedule DS
(2023)

INSTRUCTIONS FOR SCHEDULE DS

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Part III—Description of Property and Computation of Tax
Credit Recapture

Line 2—Enter the date the capital improvement was sold or
disposed of.

SPECIFIC INSTRUCTIONS

Line 3—Enter the amount of the distilled spirits tax credit claimed
on the tax return for the taxable year entered on Line 1.

A taxpayer required to recapture a distilled spirits tax credit must
attach this schedule to the applicable tax return for the taxable year.
If the taxpayer is a pass-through entity, the taxpayer must apply
the recapture of the distilled spirits tax credit to the limited liability
entity tax imposed by KRS 141.0401, and must pass the tax credit
recapture to its partners, members, shareholders, or beneficiaries.
A copy of Schedule DS must be attached to each partner’s,
member’s, shareholder’s, or beneficiary’s Kentucky Schedule K-1.
A partner, member, shareholder, or beneficiary must enter its
pro rata share of the information from the Schedule DS when
completing the partner’s, member’s, shareholder’s, or beneficiary’s
applicable tax return.
Section A – Description of Property Sold or Disposed of Before
the End of the Recapture Period
For each item of capital improvements sold, transferred, or
disposed of before the end of its useful life, enter a description of
each item of capital improvement on Lines A, B, C, D, and E. If the
taxpayer disposed of more than five items of capital improvements
during the tax year, attach additional schedules as needed.
Section B—Computation of the Tax Credit Recapture
Line 1—Enter the year end of the taxable year that the distilled
spirits tax credit was claimed.

41A720DS (10-23)	

Line 4—Enter the cost of the capital improvement sold or disposed
of on the date entered on Line 2.
Line 5—Enter the total cost of all capital improvements associated
with the distilled spirits tax credit on Line 3.
Line 6—Divide the amount on Line 4 by the amount on Line 5 and
convert to a percentage carried out to four decimal places.
Line 7—Multiply the amount on Line 3 by the percentage on Line 6.
Line 8—Enter the amount of the distilled spirits tax credit on Line
3 claimed against LLET for the taxable year referenced on Line 1.
Line 9—Enter the amount of the distilled spirits tax credit on Line
3 claimed against income tax for the taxable year referenced on
Line 1.
Line 10—If the amount on Line 8 is greater than Line 7, enter
the difference on this line. This is the amount of the LLET credit
recapture.
Line 11—If the amount on Line 9 is greater than Line 7, enter the
difference on this line. This is the amount of the income tax credit
recapture.