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

Tax Computation Schedule for a FON Project of a Pass-Through Entity
Schedule FON-SP
SCHEDULE FON-SP

*1500030329*

41A720-S57 (10-15)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

Taxable Year Ending

	
	

__ __ / __ __
Mo.

Yr.  

TAX COMPUTATION SCHEDULE
(FOR A FON PROJECT OF A PASS-THROUGH ENTITY)

➤	 See instructions.
➤	 Attach to Form 720S, 765 or 765-GP.

KRS 141.410 to 141.414

Name of Pass-through Entity	
Federal Identification Number	
Kentucky Corporation/LLET		
	
		
Account Number
		

__ __ __ __ __ __ __ __ __

Location of Project	
	
	

Activation Date of FON 	
Incentive Agreement 	

__ __ __ __ __ __

Farming Operation Networking
Project Number

 /     / 	

	
City	

County		
	 Mo.	
Day
Yr.

PART I—Computation of FON Tax Credit and Tax Due
  1.	
  2.	
  3.	
	
  4.	

Kentucky taxable income on FON project (see instructions)............................................................ 	1	
Net operating loss deduction on FON project................................................................................... 	 2	(	
Kentucky taxable income on FON project after net operating loss deduction
(line 1 less line 2).................................................................................................................................. 	 3		
Income tax on amount from line 3:

	

Taxable Net Income	

	
(a)	 First $3,000......................... 	
	
(b)	 Next $1,000......................... 	
	
(c)	 Next $1,000......................... 	
	
(d)	 Next $3,000......................... 	
	(e)	
Over $8,000 up to $75,000. 	
	(f)	
Over $75,000....................... 	

Rate	
x	2%	
x	3%	
x	4%	
x	5%	
x	5.8%	
x	6%	

00
)	 00
00

Tax
00
00
00
00
00
00

	

(g)	 Total income tax liability of FON project (add lines 4(a) through 4(f))...................................... 	4(g)	

00

  5.	
  6.	
	
  7.	
  8.	
  9.	
10.	
	
	

LLET on FON 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 FON project (lines 4(g) and 5 less line 6)....................................................................... 	7	
Limitation (Column D from Schedule FON-T).................................................................................... 	8	
Enter the lesser of line 7 or line 8 as the FON tax credit................................................................... 	9	
If line 7 is larger than line 9, 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

PART II—Certification
I, the undersigned, declare under the penalties of perjury, that I have examined this schedule, including all accompanying
schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete.

➤
Signature of Shareholder, Partner or Member		

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

Date

	

41A720-S57 (10-15)

Commonwealth of Kentucky
DEPARTMENT OF REVENUE

INSTRUCTIONS – SCHEDULE FON-SP

PURPOSE OF SCHEDULE—This schedule is used by a passthrough entity which has a farm operation networking project
(FON) approved by the Cabinet for Economic Development
as provided by KRS 141.410 to 141.414, to determine the
credit allowed against the Kentucky income tax and LLET
attributable to the project in accordance with KRS 141.412.
The annual tax credit shall be available for the first five (5)
years that the farming operation is involved in the networking
project. The annual tax credit shall be equal to the approved
costs incurred by the qualified farming operation during the
tax year and shall not exceed the income, Kentucky gross
profits or Kentucky gross receipts, as the case may be, of
the qualified farming operation generated by or arising
out of the qualified farming operation’s participation in a
networking project.
KRS 141.414(3) provides that the net income subject to tax
and the tax credit determined under KRS 141.414(2) shall
be excluded in determining each partner’s, member’s,
shareholder’s or beneficiary’s distributive share of net income
or credit of the pass-through entity or trust.
Pass-through entities should first complete Form 720S, 765
or 765-GP to determine net income (loss), deductions, etc.,
from the entire operations of the pass-through entity. The
pass-through entity should then complete Schedule FONSP to determine the FON tax credit, if any, from the FON
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 FON credit is applied against the tax of
the FON 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
FON 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 FON project from the
LLET at the entity level.
Multiple Projects—A pass-through entity with multiple
farming operation networking projects must complete an
applicable Schedule FON-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 FON
project, the amount entered on Line 1 is the net income (loss)
from Form 720S, 765 or 765-GP. If the pass-through entity
has operations other than the FON project, a schedule must
be attached reflecting the computation of the net income
(loss) from the FON project in accordance with the following
instructions, and such amount entered on Line 1.
Separate Operation—In accordance with KRS 141.414(4),
if the project is a separate operation, net income, Kentucky
gross receipts, and Kentucky gross profits attributable to
the project shall be determined by a separate accounting
method.
Expansion of Existing Operation—In accordance with KRS
141.414(5), if the FON project is an expansion to a previously
existing operation, the net income, Kentucky gross receipts
and Kentucky gross profits shall be determined under a

Page 2

separate accounting method reflecting the entire operation,
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 operation to the farming operation networking
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 141.414(6),
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
and Kentucky gross profits from the operation 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.
Separate Accounting—If the farming operation networking
project is a separate operation, net income shall reflect
only the gross income, deductions, expenses, gains and
losses allowed under this chapter directly attributable to
the operation and overhead expenses apportioned to the
operation; and Kentucky gross receipts or Kentucky gross
profits shall reflect only Kentucky gross receipts or Kentucky
gross profits directly attributable to the operation.
If the farming operation networking project is an expansion
to a previously existing operation, net income of the entire
operation shall reflect only the gross income, deductions,
expenses, gains and losses allowed under this chapter
directly attributable to the operation and overhead expenses
apportioned to the operation; and Kentucky gross receipts
and Kentucky gross profits shall reflect only Kentucky gross
receipts and Kentucky gross profits directly attributable to
the operation. Net income, Kentucky gross receipts and
Kentucky gross profits of the entire operation 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 FON project, if
any, being carried forward from previous years.
Note: Just as the income from a FON 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 FON 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 FON project using only the Kentucky
gross receipts and Kentucky gross profits of the project. Enter
“FON” at the top center of the Schedule LLET and attach it
to the tax return.