Kentucky Tax Computation Schedule for a KIRA Project of a Pass-Through Entity

Tax Computation Schedule for a KIRA Project of a Pass-Through Entity
10_41A720-S26 (KIRA-SP)_(0001)_FINAL.indd
*1000020246*

SCHEDULE KIRA-SP
41A720-S26 (10-10)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

For taxable year ended

__ __ / __ __
Mo.

➤ See instructions.

(FOR A KIRA PROJECT OF A PASS-THROUGH ENTITY)

➤ Attach to Form 720S, Form 765 or Form 765-GP.
Name of Pass-through Entity

KRS 154.26-010 to 120
Federal Identification Number

Kentucky Corporation/LLET
Account Number

__ __ __ __ __ __ __ __ __

__ __ __ __ __ __

Activation Date of KIRA
Incentive Agreement

Economic Development
Project Number

Location of Project

/
City

Yr.

TAX COMPUTATION SCHEDULE

County

Mon.

/
Day

Yr.

PART I—Computation of KIRA Tax Credit and Tax Due
1. Kentucky taxable income on KIRA project (see instructions) .............................................................
2. Net operating loss deduction on KIRA project.....................................................................................
3. Kentucky taxable income on KIRA project after net operating loss deduction
(line 1 less line 2) ....................................................................................................................................
4. Income tax on amount from line 3:
Taxable Net Income

5.
6.
7.
8.
9.

10.

Rate

1
2 (

00
) 00

3

00

Tax

(a) First $3,000 ........................
x
2%
00
(b) Next $1,000 ........................
x
3%
00
(c) Next $1,000 ........................
x
4%
00
(d) Next $3,000 ........................
x
5%
00
(e) Over $8,000 up to $75,000
x
5.8%
00
(f) Over $75,000.......................
x
6%
00
(g) Total income tax liability of KIRA project (add lines 4(a) through 4(f)) ...................................... 4(g)
LLET on KIRA project (see instructions). Not applicable for Form 765-GP .......................................
5
LLET credit allowed (line 5 less $175, but not more than line 4(g)). Not applicable for
Form 765-GP ..........................................................................................................................................
6
Total tax on KIRA project (lines 4(g) and 5 less line 6) .......................................................................
7
Limitation (Column D from Schedule KIRA-T) ....................................................................................
8
Enter the lesser of line 7 or line 8 as either:
(a) KIRA tax credit ................................................................................................................................ 9(a)
or
(b) Estimated tax payment and complete election in Part II............................................................. 9(b)
If line 7 is larger than line 9(a) or 9(b), enter difference here as a liability of the
pass-through entity. (Any pass-through entity reflecting a tax liability, complete
Tax Payment Summary below and remit payment.) .......................................................................... 10

00
00
00
00
00
00
00

00

PART II—Estimated Tax Election
In accordance with KRS 141.403(4)(b),
Name of Pass-through Entity

elects for the taxable year ended

, 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

Date

TAX PAYMENT SUMMARY (Make check payable to Kentucky State Treasurer.)
Tax

Interest

Penalty

TOTAL

41A720-S26 (10-10)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

INSTRUCTIONS –SCHEDULE KIRA-SP
(Form 720S, Form 765 or Form 765-GP)

Page 2

PURPOSE OF SCHEDULE—This schedule is used by any
pass-through entity which has entered into a service and
technology agreement or a tax incentive agreement for
a Kentucky Industrial Revitalization Act (KIRA) project to
determine the credit allowed against the Kentucky income
tax and LLET in accordance with KRS 141.403 on the income
and Kentucky gross receipts or Kentucky gross profits from
the project.

such that it is not practical to use a separate accounting
method to determine the net income, Kentucky gross receipts
and Kentucky gross profits from the facility at which the
economic development project is located, the approved
company shall use an alternative 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.

Pass-through entities should first complete Form 720S,
Form 765 or Form 765-GP to determine net income (loss),
deductions, etc., from the entire operations of the passthrough 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 as provided by KRS 141.020 and KRS
141.0401 on the net income and the Kentucky gross receipts or
Kentucky gross profits from the project and the KIRA credit is
applied against the tax of the KIRA project. Consequently, the
pass-through entity must use Form 720S(K), Form 765(K) or
Form 765-GP(K) in lieu of Schedule K (Form 720S), Schedule
K (Form 765) or Schedule K (Form 765-GP) in order to exclude
the net income from the KIRA project from the partners,
members or shareholders’ distributive share income, and
Schedule LLET(K) in lieu of Schedule LLET in order to exclude
the Kentucky gross receipts or the Kentucky gross profits of
the KIRA project from the LLET at the entity level.

Separate Accounting—If the economic development project
is a totally separate facility, net income shall 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 shall
reflect only Kentucky gross receipts or Kentucky gross profits
directly attributable to the facility.

Multiple Projects—A pass-through entity with multiple
economic development projects must complete an applicable
schedule (Schedule KREDA-SP, Schedule KIDA-SP, Schedule
KJDA-SP, Schedule KIRA-SP, Schedule KEOZ-SP, Schedule
KRA-SP, Schedule KJRA-SP, Schedule IEIA-SP or Schedule
KBI-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 720S, Form 765 or Form 765-GP. 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 such amount entered on Line 1.
Separate Facility—In accordance with KRS 141.403(6), if the
project is a totally separate facility, net income, Kentucky
gross receipts and Kentucky gross profits attributable to
the project shall be determined by a separate accounting
method.
Expansion of Existing Facility—In accordance with KRS
141.403(7), if the KIRA project is an expansion to a previously
existing facility, the net income, Kentucky gross receipts
and Kentucky gross profits shall be determined under a
separate accounting method reflecting the entire facility,
and the net income, Kentucky gross receipts and Kentucky
gross profits shall be determined by apportioning the net
income, Kentucky gross receipts and 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—In accordance with KRS 141.403(8),
if the approved company can show that the nature of the
operations and activities of the approved company are

If the economic development project is an expansion to a
previously existing facility, net income of the entire facility
shall 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 shall 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 shall 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 shall
not be completed by a general partnership as a general
partnership is not subject to LLET.
Line 5—Using Schedule LLET, create a new Schedule LLET
to compute the LLET of the KIRA project using only the
Kentucky gross receipts and Kentucky gross profits of the
project. Enter “KIRA” at the top center of the Schedule LLET
and attach it to the tax return.
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 made in this paragraph shall be in
satisfaction of the tax liability of the partners, members or
shareholders of the pass-through entity, and shall be paid on
behalf of the partners, members or shareholders. Enter an
amount on either (a) or (b), but in no case shall there be an
entry on both (a) and (b). In accordance with KRS 141.403(5),
this estimated tax payment is excluded in determining
each partner, member 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.