Kentucky Limited Liability Entity Tax Cost of Goods Sold

Limited Liability Entity Tax Cost of Goods Sold
Schedule COGS
SCHEDULE

COGS

LIMITED LIABILITY ENTITY TAX
COST OF GOODS SOLD

Commonwealth of Kentucky
Department of Revenue

2023

 	 See instructions.
	 Attach to Form 720, 720U, PTE, or 725.
Name of Entity

Federal Identification Number

Kentucky Corporation/LLET
Account Number

__ __ – __ __ __ __ __ __ __

__ __ __ __ __ __
Limited Liability Entity Tax
Column A
Kentucky
Cost of Goods Sold

Column B
Total
Cost of Goods Sold

	 1	 Inventory at beginning of year...............................................................................	1	
00	
00
	2	 Purchases.............................................................................................................	2	
00	
00
	 3	 Cost of labor..........................................................................................................	3	
00	
00
	 4	 Additional section 263A costs................................................................................	4	
00	
00
	 5	 Other costs............................................................................................................	5	
00	
00
	 6	 Total (add lines 1 through 5)..................................................................................	6	
00	
00
	7	 Inventory at end of year.........................................................................................	7	
00	
00
	 8	 Cost of goods sold (subtract line 7 from line 6).....................................................	8	
00	
00
	 9	 Detail of purchases on line 2:................................................................................	9		
	(a)	
(a)	
00	
00
	(b)	
(b)	
00	
00
	(c)	
(c)	
00	
00
	(d)	
(d)	
00	
00
	(e)	
(e)	
00	
00
	 (f)	
(f)	
00	
00
	(g)	
(g)	
00	
00
	(h)	
(h)	
00	
00
	 (i)	
(i)	
00	
00
	 (j)	
(j)	00	 00
	(k)	
(k)	
00	
00
	10	 Detail of additional section 263A costs on line 4:.................................................... 	10
	(a)	
(a)	
00	
00
	(b)	
(b)	
00	
00
	(c)	
(c)	
00	
00
	(d)	
(d)	
00	
00
	(e)	
(e)	
00	
00
	 (f)	
(f)	
00	
00
	(g)	
(g)	
00	
00
	(h)	
(h)	
00	
00
	 (i)	
(i)	
00	
00
	 (j)	
(j)	00	 00
	(k)	
(k)	
00	
00
	11 	 Detail of other costs on line 5:...............................................................................	11
	(a)	
(a)	
00	
00
	(b)	
(b)	
00	
00
	(c)	
(c)	
00	
00
	(d)	
(d)	
00	
00
	(e)	
(e)	
00	
00
	 (f)	
(f)	
00	
00
	(g)	
(g)	
00	
00
	(h)	
(h)	
00	
00
	 (i)	
(i)	
00	
00
	 (j)	
(j)	00	 00
	(k)	
(k)	
00	
00

230344 41A720COGS (10-23)	

Page 1 of 2

Schedule COGS
(2023)

INSTRUCTIONS — SCHEDULE COGS

KRS 141.0401(1)(d)3 provides that for any activity other than
manufacturing, producing, reselling, retailing, or wholesaling,
costs must not be included in costs of goods sold. Therefore,
taxpayers that provide services or sell intangibles are not
allowed to compute cost of goods sold for purposes of
computing the limited liability entity tax (LLET).
For taxpayers who are engaged in manufacturing, producing,
reselling, retailing, or wholesaling, KRS 141.0401(1)(d)2
provides that amounts allowable as cost of goods sold must
be directly incurred in acquiring or producing a tangible
product generating the Kentucky gross receipts. Tangible
product means both real and tangible personal property.
Purpose of Schedule —This schedule is used by a
corporation or a limited liability pass-through entity to
compute its Kentucky cost of goods sold and its total cost of
goods sold from all sources for purposes of computing the
LLET on gross profits.
Lines 1 through 8—
In Columns A and B, enter on Lines 1 through 8 the cost
of goods sold amounts per KRS 141.0401(1) attributable
to Kentucky gross receipts and to gross receipts from all
sources, respectively.
“Purchases” means only direct materials that are incorporated
into the tangible product sold or manufactured.
“Cost of labor” means labor that is incorporated into
the tangible product sold or is an integral part of the
manufacturing process. Indirect labor must not be included
per KRS 141.0401(1)(d)(2)(c).

41A720COGS (10-23)	

Page 2 of 2

“Additional section 263A costs” means only direct material
costs per IRC §263A.
“Other costs” means only direct materials that are
incorporated into the tangible product sold or manufactured.
Line 9—Enter on Lines (a) through (k) the detail of purchases
included on Line 2 of each column. The total of the amounts
on Lines (a) through (k) of each column must equal the
amount included on Line 2 of each column. If Lines (a)
through (k) are not sufficient to include the detail of all
purchases, attach a two column schedule listing the detail
of the additional purchases.
Line 10—Enter on Lines (a) through (k) the detail of additional
section 263A costs included on Line 4 of each column. The
total of the amounts on Lines (a) through (k) of each column
must equal the amount included on Line 4 of each column.
If Lines (a) through (k) are not sufficient to include the detail
of all additional section 263A costs, attach a two column
schedule listing the detail of the additional section 263A
costs.
Line 11—Enter on Lines (a) through (k) the detail of other
costs included on Line 5 of each column. The total of the
amounts on Lines (a) through (k) of each column must equal
the amount included on Line 5 of each column. If Lines (a)
through (k) are not sufficient to include the detail of all other
costs, attach a two column schedule listing the detail of the
additional other costs.