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Kentucky Tax Credit Computation Schedule for a KIRA Project of a Corporation
Extracted from PDF file 2023-kentucky-schedule-kira.pdf, last modified May 2023Tax Credit Computation Schedule for a KIRA Project of a Corporation
41A720-S26 KIRA (PKG) (10-23) 2023 COMMONWEALTH OF KENTUCKY DEPARTMENT OF REVENUE FRANKFORT KIRA KENTUCKY INDUSTRIAL REVITALIZATION ACT t Only use this package if you have received final approval for the KIRA credit per KRS 154.26-010 to 125 by the Cabinet for Economic Development. t See instructions. t Attach to form 720, 720U, PTE, or 725. INSTRUCTIONS—PACKAGE KIRA 2023 Purpose of Package – Use this package to report KIRA tax incentives for which your business entity has been approved per KRS 154.26–010 to 125. You must have received preliminary or final approval in accordance with KRS 154.26 to determine the credit allowed. Schedule KIRA-T is used by the company which has entered into a tax incentive agreement for a Kentucky Industrial Revitalization Act (KIRA) project to maintain a record of the approved costs, wage assessment fees, and tax credits, including local wage assessment credit claimed. General Instructions – Only include one incentive project per Package KIRA. If your business entity files a form 720 or 720U with the state of Kentucky, you must complete Schedule KIRA (Page 3) and Schedule KIRA-T (Page 7). If your business entity files form PTE or 725, you must complete Schedule KIRA-SP (Page 5) and Schedule KIRA-T (Page 7). First and Last Year Prorations—Tax incentives are only available to be claimed during the term of the incentive agreement. Tax incentives claimed during the first and last years of an incentive agreement must be prorated accordingly. Separate period accounting is recommended, but a proration factor may be used if separate period accounting is not available. To determine the proration factor in the first year of the incentive agreement, divide the number of days from the activation date until the end of your taxable year by the total number of days in your taxable year. Multiply the total income by the proration factor to determine the project income when separate period accounting is not available. To determine the proration factor in the last year of the incentive agreement, divide the number of days from the first day of your taxable year through the end of the incentive agreement term by the total number of days in your taxable year. Multiply the total income by the proration factor to determine the project income when separate period accounting is not available. 41A720-S26 KIRA (PKG) (10-23) Page 2 of 8 SCHEDULE KIRA TAX CREDIT COMPUTATION SCHEDULE (FOR A KIRA PROJECT OF A CORPORATION) Commonwealth of Kentucky Department of Revenue 2023 Taxable Year Ending __ __ / __ __ Name of Corporation Federal Identification Number __ __ __ __ __ __ __ __ __ Location of Project City Activation Date of KIRA Incentive Agreement County Mo. / / Day Mo. Yr. Kentucky Corporation/LLET Account Number __ __ __ __ __ __ Economic Development Project Number Yr. PART I—Computation of LLET Excluding KIRA Project 1 LLET from Form 720, Part II, line 1 or Form 720U, Schedule U8, Section E, line 1............................... 1 2 LLET on KIRA project from Schedule L-ECON (see instructions)........................................................... 2 3 LLET excluding LLET on KIRA project (line 1 less line 2)....................................................................... 3 PART II—Computation of Taxable Net Income Excluding Net Income from KIRA Project and KIRA Tax Credit Section A–Computation of Corporation Tax 1 Enter income tax from Form 720, Part III, line 1 or Form 720U, Schedule U5, Section D, line 8........... 1 2 LLET of corporation (Part I, line 1).......................................................................................................... 2 3 Nonrefundable LLET credit allowed per KRS 141.0401(3) (line 2 less $175, but not more than line 1). 3 4 Total corporation tax (lines 1 and 2 less line 3)....................................................................................... 4 Section B–Computation of Tax Excluding KIRA Project 1 Enter taxable net income from Form 720, Part I, line 43 or Form 720U, Schedule U5, Section D, line 7...................................................................................................................................... 1 2 Enter net income from KIRA project; if loss, enter -0-............................................................................. 2 3 Taxable net income excluding net income from KIRA project (line 1 less line 2). If line 2 is greater than line 1, enter -0-.................................................................................................................... 3 4 Income tax liability excluding KIRA project (line 3 multiplied by the tax rate of 5%)............................... 4 5 LLET excluding LLET on KIRA project (Part I, line 3)............................................................................. 5 6 Enter LLET from line 5 less $175, but not more than line 4.................................................................... 6 7 Total tax excluding KIRA project (lines 4 and 5 less line 6)..................................................................... 7 8 Total tax attributable to KIRA project (Section A, line 4 less Section B, line 7) Continue to Part III and enter this amount on Part III, line 1................................................................... 8 PART III—Limitation 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 1 Enter tax liability attributable to KIRA project from Part II, Section B, line 8........................................... 1 00 2 Enter limitation from Schedule KIRA-T, Column E.................................................................................. 2 00 3 Allowable KIRA tax credit (lesser of line 1 or line 2)................................................................................ 3 Enter allowable credit on Schedule TCS, Part I, Column E and Column F 00 Economic development project means a project authorized under the Kentucky Rural Economic Development Act (KREDA), Metropolitan College Consortium Tax Credit (MCC), Kentucky Small Business Tax Credit Program (KSBTC), Kentucky Selling Farmer Tax Credit (KSFTC), 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), Skills Training Investment Credit Act (STICA), Incentives for Energy Independence Act (IEIA), and Incentives for Energy-related Business Act (IEBA). 230244 41A720-S24 KIRA (10-23) Page 3 of 8 INSTRUCTIONS—SCHEDULE KIRA 2023 The KIRA tax credit is applied against the corporation income tax imposed by KRS 141.040 and/or the limited liability entity tax (LLET) imposed by KRS 141.0401. The amount of tax credit against each tax can be different; however, for tracking purposes, the maximum amount of credit used against either tax is the amount that is used for the tax year. PURPOSE OF SCHEDULE—This schedule is used by a corporation to determine the credit allowed against the Kentucky corporation income tax and/or LLET attributable to the project per KRS 141.403. GENERAL INSTRUCTIONS Part I—Computation of LLET Excluding KIRA Project Line 2—Use Schedule L–ECON to compute a separate LLET of the KIRA project using only the Kentucky gross receipts and Kentucky gross profits of the project and attach it to the return when filed. If approved for multiple projects, attach a separate Schedule L–ECON for each project’s LLET computation. In the first and last years of each project, only calculate Kentucky gross receipts and gross profits received during the term of the incentive agreement. Tax Credit (KSFTC) must attach a copy of the certification from the Kentucky Economic Development Finance Authority. Alternative Methods—Per KRS 141.403(8), if the approved company can show that the nature of the operations and activities of the approved company are such that it is not practical to use separate accounting to determine net income, Kentucky gross receipts, or Kentucky gross profits from the facility where the project is located, the approved company must determine net income, Kentucky gross receipts, or Kentucky gross profits attributable to the project using an alternative method approved by the Department of Revenue. Thus, if any method other than separate accounting is used, a copy of the letter from the Department of Revenue approving the alternative method must be attached to this schedule. If the corporation has operations other than the KIRA project, it must attach schedules reflecting the computation of Kentucky gross profits and Kentucky gross receipts from the KIRA project per KRS 141.403(6)(b)** or KRS 141.403(7) (b).**** Separate Facility Part II—Computation of Taxable Net Income Excluding Net Income from KIRA Project and KIRA Tax Credit ** Per KRS 141.403(6)(b), if the project is a totally separate Section B Line 2—Enter net income for KIRA project. If the corporation’s only operation in Kentucky is the KIRA project, the amount entered on Line 1 must also be entered on Line 2. If the corporation has operations other than the KIRA project, it must attach schedules reflecting the computation of the net income from the KIRA project per KRS 141.403(6)(a)* or KRS 141.403(7)(a).*** In the first and last years of each project, only calculate Kentucky net income received during the term of the incentive agreement. See form for computation. Part III—Limitation Calculate KIRA tax credit based on the corporation’s tax liability, tax liability attributable to KIRA project, and credit limitation from Schedule KIRA-T. Enter credit on Schedule TCS, Part I, Column E and Column F. A corporation with more than one economic development project must separately compute the tax credit derived from each project. Complete the applicable tax computation schedules (KREDA, KIDA, KJRA, KIRA, KJDA, KBI, KRA, IEIA, or IEBA) for each project. A corporation approved for the Skills Training Investment Credit Act (STICA) or Metropolitan College Consortium Tax Credit (MCC) must attach a copy of the certification(s) from the Bluegrass State Skills Corporation. A corporation approved for the Kentucky Small Business Tax Credit Program (KSBTC) or the Kentucky Selling Farmer 41A720-S24 KIRA (10-23) * Per KRS 141.403(6)(a), if the project is a totally separate facility, net income attributable to the project shall be determined by the separate accounting method. facility, Kentucky gross receipts or Kentucky gross profits attributable to the project shall be determined under the separate accounting method reflecting only the Kentucky gross receipts or Kentucky gross profits directly attributable to the facility. Expansion to Existing Facility *** Per KRS 141.403(7)(a), if the KIRA project is an expansion to a previously existing facility, net income attributable to the entire facility shall be determined under the separate accounting method and the net income attributable to the KIRA project shall be determined by apportioning the separate accounting net income of the entire facility to the KIRA project income using a formula approved by the Department of Revenue. A copy of the letter from the Department of Revenue approving the percentage must be attached to this schedule. **** Per KRS 141.403(7)(b), if the KIRA project is an expansion to a previously existing facility, Kentucky gross receipts or Kentucky gross profits attributable to the entire facility shall be determined under the separate accounting method and the Kentucky gross receipts or Kentucky gross profits attributable to the KIRA project shall be determined by apportioning the separate accounting Kentucky gross receipts or Kentucky gross profits of the entire facility to the KIRA project Kentucky gross receipts or Kentucky gross profits using a formula approved by the Department of Revenue. A copy of the letter from the Department of Revenue approving the percentage must be attached to this schedule. Page 4 of 8 SCHEDULE KIRA-SP TAX COMPUTATION SCHEDULE (FOR A KIRA PROJECT OF A PASS-THROUGH ENTITY) Commonwealth of Kentucky Department of Revenue 2023 Taxable Year Ending __ __ / __ __ Mo. Yr. Name of Pass-through Entity Federal Identification Number Kentucky Corporation/LLET Account Number __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Activation Date of KIRA Incentive Agreement Economic Development Project Number Location of Project City / / County Mon. Day Yr. PART I—Computation of KIRA Tax Credit and Tax Due 1 Kentucky taxable income on KIRA project (see instructions).................................................................... 1 00 2 Net operating loss deduction on KIRA project........................................................................................... 2 ( ) 00 3 Kentucky taxable income on KIRA project after net operating loss deduction (line 1 less line 2)...................................................................................................................................... 3 00 4 Income tax of KIRA project (line 3 multiplied by the tax rate of 5%).......................................................... 4 00 5 LLET on KIRA project from Schedule L-ECON (see instructions). Not applicable for general partnerships............................................................................................................................... 5 00 6 Nonrefundable LLET credit allowed per KRS 141.0401(3) (line 5 less $175, but not more than line 4). Not applicable for general partnerships.............................................................................................. 6 00 7 Total tax on KIRA project (lines 4 and 5 less line 6).................................................................................. 7 00 8 Limitation (Column E from Schedule KIRA-T)............................................................................................ 8 00 9 Enter the lesser of line 7 or line 8 as either: (a) KIRA tax credit................................................................................................................................... 9(a) 00 or (b) Estimated tax payment and complete election in Part II.................................................................... 9(b) 00 10 Tax Due on the Project—If line 7 is larger than line 9(a) or 9(b), enter the difference here as a liability of the pass-through entity and add to the tax due on Form PTE, Part II, line 16 or Form 725, Part II, line 15............................................................................................... 10 00 PART II—Estimated Tax Election In accordance with KRS 141.403(4)(b), elects for the taxable year ended Name of Pass-through Entity , in lieu of the KIRA tax credit, to have an amount equal to the lesser of line 7 or line 8 above applied as an estimated tax payment. Signature of Shareholder, Partner, or Member Print Name 230246 41A720-S26 KIRA-SP (10-23) Date Page 5 of 8 INSTRUCTIONS –SCHEDULE KIRA-SP 2023 PURPOSE OF SCHEDULE—This schedule is used by a passthrough entity to determine the credit allowed against the Kentucky income tax and/or LLET attributable to the project per KRS 141.403. method approved by the Department of Revenue. A copy of the letter from the Department of Revenue approving the alternative method must be attached to this schedule. NOTE: These credits do not pass through to members, partners, or shareholders of pass-through entities. Separate Accounting—If the economic development project is a totally separate facility, net income must reflect only the gross income, deductions, expenses, gains, and losses allowed under this chapter directly attributable to the facility and overhead expenses apportioned to the facility; and Kentucky gross receipts or Kentucky gross profits must reflect only Kentucky gross receipts or Kentucky gross profits directly attributable to the facility. Pass-through entities should first complete Form PTE to determine net income (loss), deductions, etc., from the entire operations of the pass-through entity. The pass-through entity should then complete Schedule KIRA-SP to determine the KIRA tax credit and the tax due, if any, from the KIRA project. A pass-through entity is subject to tax per KRS 141.020 and KRS 141.0401 on the net income and the Kentucky gross receipts or Kentucky gross profits from the KIRA project and the KIRA credit is applied against the tax of the KIRA project. Consequently, the pass-through entity must use Form PTE(K) to exclude the net income from the KIRA project from the partners’, members’, or shareholders’ distributive share income. Multiple Projects—A pass-through entity with multiple economic development projects must complete the applicable schedules (KREDA-SP, KIDA-SP, KJRA-SP, KIRA-SP, KJDA-SP, KBI-SP, KRA-SP, IEIA-SP, or IEBA-SP) to determine the credit and net tax liability, if any, for each project. Line 1—If the pass-through entity’s only operation is the KIRA project, the amount entered on Line 1 is the net income (loss) from Form PTE. If the pass-through entity has operations other than the KIRA project, a schedule must be attached reflecting the computation of the net income (loss) from the KIRA project in accordance with the following instructions and enter on Line 1. In the first and last years of each project, only calculate Kentucky taxable income received during the term of the incentive agreement. Separate Facility—Per KRS 141.403(6), if the project is a totally separate facility, net income, Kentucky gross receipts, or Kentucky gross profits attributable to the project must be determined by a separate accounting method. Expansion of Existing Facility—Per KRS 141.403(7), if the KIRA project is an expansion to a previously existing facility, the net income, Kentucky gross receipts, or Kentucky gross profits must be determined under a separate accounting method reflecting the entire facility and the net income, Kentucky gross receipts, or Kentucky gross profits must be determined by apportioning the net income, Kentucky gross receipts, or Kentucky gross profits of the entire facility to the economic development project by a formula approved by the Department of Revenue. A copy of the letter from the Department of Revenue approving the percentage must be attached to the schedule. Alternative Methods—Per KRS 141.403(8), if the approved company can show that the nature of the operations and activities of the approved company are such that it is not practical to use a separate accounting method to determine the net income, Kentucky gross receipts, or Kentucky gross profits from the facility where the economic development project is located, the approved company must use an alternative 41A720-S26 KIRA-SP (10-23) If the economic development project is an expansion to a previously existing facility, net income of the entire facility must reflect only the gross income, deductions, expenses, gains, and losses allowed under this chapter directly attributable to the facility and overhead expenses apportioned to the facility; and Kentucky gross receipts and Kentucky gross profits must reflect only Kentucky gross receipts and Kentucky gross profits directly attributable to the facility. Net income, Kentucky gross receipts, and Kentucky gross profits of the entire facility attributable to the economic development project must be determined by apportioning the net income, Kentucky gross receipts, and Kentucky gross profits by a formula approved by the Department of Revenue. Line 2—Enter the net operating loss from the KIRA project, if any, being carried forward from previous years. Note: Just as the income from a KIRA project does not flow through to partners, members, or shareholders, neither do the losses. The project’s net operating loss from prior years must be subtracted from the project income before calculating the KIRA credit. General Partnership—Lines 5 and 6 of this schedule should not be completed by a general partnership as a general partnership is not subject to LLET. Line 5—Use Schedule L–ECON to compute a separate LLET of the KIRA project using only the Kentucky gross receipts and Kentucky gross profits of the project and attach it to the return when filed. If approved for multiple projects, attach a separate Schedule L–ECON for each project’s LLET computation. In the first and last years of each project, only calculate Kentucky LLET received during the term of the incentive agreement. Line 9—In lieu of the tax credit, the approved company may elect, on an annual basis, to apply as an estimated tax payment an amount equal to the allowable tax credit. Any estimated tax payment must be in satisfaction of the tax liability of the partners, members, or shareholders of the pass-through entity and must be paid on behalf of the partners, members, or shareholders. Enter an amount on either (a) or (b), but in no case should there be an entry on both (a) and (b). Per KRS 141.403(5), this estimated tax payment is excluded in determining each partner’s, member’s, or shareholder’s distributive share income or credit from a pass-through entity. Accordingly, the partners, members, or shareholders are not entitled to claim any portion of this estimated tax payment against their Kentucky income tax liability. Page 6 of 8 SCHEDULE KIRA-T TRACKING SCHEDULE FOR A KIRA PROJECT Commonwealth of Kentucky Department of Revenue 2023 Name of Entity Entity Type Corporation Federal Identification Number Kentucky Corporation/LLET Limited Liability Pass-through Entity Account Number General Partnership __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Other _______________________________________ Location of Project Activation Date of KIRA Incentive Agreement City County A B C _ _ / _ _ / _ _ Mo. Day Yr. D E Carry Forward State Wage Local KIRA Taxable Balance Assessment Wage Tax Year of Credit Claimed or Assessment Credit Ended Approved Appropriations Credit Limitation Costs Received Under an Claimed Appropriation Agreement ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( – ( + + + + + + + + + + + + + + + + + + + + + + + Economic Development Project Number F KIRA Tax Credit Claimed on Return Income/LLET Corporation Tax License Tax* ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – ) = – – – – – – – – – – – – – – – – – – – – – – – – * Corporation license tax was repealed effective for tax periods ending on or after December 31, 2005. 230245 41A720-S25 KIRA-T (10-23) Page 7 of 8 INSTRUCTIONS—SCHEDULE KIRA-T 2023 PURPOSE OF SCHEDULE—This schedule is used to maintain a record of the approved costs, wage assessment fees and income, LLET and license tax* credits for the duration of the revitalization agreement. This information is necessary for the company to determine the limitation of the tax credit for each year of the revitalization agreement and to allow the Kentucky Department of Revenue to verify that the credit has been properly computed. tax credit claimed for the prior year in Column F, enter the difference. GENERAL INSTRUCTIONS Column D—Enter the total amount of local wage assessment credit claimed, if eligible. A separate Schedule KIRA-T, Tracking Schedule for a KIRA Project, must be maintained for the duration of each KIRA project. Beginning with the first taxable year of the KIRA revitalization agreement, complete Columns A through F using a separate line for each year of the revitalization agreement. The company must attach a copy of this schedule updated with current year information to the Schedule KIRA or Schedule KIRA-SP which is filed with the Kentucky tax return and attach a copy to the Wage Assessment Report and Annual Reconciliation. All tax credits are entered on Schedule TCS, Tax Credit Summary Schedule. The total tax credits calculated may exceed the amount that can be used. Credits must be claimed in the order prescribed by KRS 141.0205. Total credits claimed cannot reduce the LLET below the $175 minimum nor the income tax liability below zero. Column C—Enter the total amount of state wage assessments withheld from the salaries of employees during the taxable year, or the appropriations received during the taxable year if an appropriation agreement was entered into in lieu of utilization of the wage assessment. Column E—Enter the result of subtracting the amounts entered in Columns C and D from the amount entered in Column B. Then, enter on Schedule KIRA, Part III, Line 2 or Schedule KIRA-SP, Part I, Line 8, whichever is applicable. Column F— The tax credit calculated for each tax can be different; however, for tracking purposes, the greater of the credit claimed against LLET or income tax is recorded as the amount claimed. Enter the greater of Column E or Column F from Schedule TCS for this project, if applicable. Otherwise, enter zero (-0-). SPECIFIC INSTRUCTIONS Column A—Enter on each line the ending date (month and year) of the taxable year for which the information requested in Columns B through F is entered. Column B—For the taxable year that includes the revitalization agreement date, enter 50 percent or 75 percent of the approved costs as verified by the Kentucky Economic Development Finance Authority. Refer to your agreement for the applicable percentage. For each year thereafter, if the amount entered in Column E for the prior year exceeds the combined total of income tax credit and corporation license 41A720-S25 KIRA-T (10-23) * Prior to January 1, 2006, KIRA tax credits were applied against corporation license tax. The tax was repealed effective for tax periods ending on or after December 31, 2005. KIRA credit used to offset license tax prior to that effective date must be reported on the Schedule KIRA-T. Page 8 of 8
Schedule KIRA
More about the Kentucky Schedule KIRA Corporate Income Tax Tax Credit TY 2023
We last updated the Tax Credit Computation Schedule for a KIRA Project of a Corporation in February 2024, so this is the latest version of Schedule KIRA, fully updated for tax year 2023. You can download or print current or past-year PDFs of Schedule KIRA directly from TaxFormFinder. You can print other Kentucky tax forms here.
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| Form Code | Form Name |
|---|---|
| Schedule KIRA-T | Tracking Schedule for a KIRA Project |
| Schedule KIRA-SP | Tax Computation Schedule for a KIRA Project of a Pass-Through Entity |
View all 130 Kentucky Income Tax Forms
Form Sources:
Kentucky usually releases forms for the current tax year between January and April. We last updated Kentucky Schedule KIRA from the Department of Revenue in February 2024.
Schedule KIRA is a Kentucky Corporate Income Tax form. States often have dozens of even hundreds of various tax credits, which, unlike deductions, provide a dollar-for-dollar reduction of tax liability. Some common tax credits apply to many taxpayers, while others only apply to extremely specific situations. In most cases, you will have to provide evidence to show that you are eligible for the tax credit, and calculate the amount of the credit to which you are entitled.
About the Corporate Income Tax
The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.
Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).
Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.
Historical Past-Year Versions of Kentucky Schedule KIRA
We have a total of nine past-year versions of Schedule KIRA in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
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