Kentucky Inventory Tax Credit

Inventory Tax Credit
SChedule INV
SCHEDULE

INV

KENTUCKY
INVENTORY TAX CREDIT
(Ad Valorem)

Commonwealth of Kentucky
Department of Revenue

2023
KRS 141.408

  Attach to Form 720, 720U, PTE, 725, 740, 740-NP, or 741.
Name of Taxpayer	
Federal Identification Number	
		

Mailing Address	
	

	
	

Kentucky Corporation/LLET
Account Number (if applicable)

Taxed as: 	
 Corporation		
  General Partnership
  Limited Liability Pass-through Entity	
 Individual
 Other_________________________________________________________

PART I—Qualifications

•	

Did you timely pay ad valorem (inventory) tax to a taxing jurisdiction within Kentucky on

	

or before December 31, 2023? Note: The credit can only be claimed on timely paid tax............. 	   Yes    No

If you answered “No”, STOP! You do not qualify for the credit. If you answered “Yes”, proceed to Part II.

PART II—Amount of Credit (see instructions)

Please see instructions.

  Check here if including a Centrally Assessed or Public Service Company
Section A—Enter only timely paid INVENTORY
amounts displayed on local tax bills
Section B1/B2—Enter only timely paid INVENTORY
amounts NOT reported in Section A

Section A

Section B1

Section B2

Inventory Tax Paid
per Local Bill(s)

Inventory Valuation
NOT reported in
Section A

Tax Timely Paid on
Inventory NOT
reported in Section A

 1	 Timely Inventory Tax Paid (per local bills)............................................... 	 1	1	
  2	 Line 31, Merchants Inventory..............................................................	 2	2	
 3	 Line 32, Manufacturing Finished Goods..............................................	 3	3	
 4	 Line 33, Manufacturers Raw Materials/Goods in Process...................	 4	4	
 5	 Line 34, Various Reported Items (see instructions).............................	 5	5	
 6	 Line 35, Goods Stored in Warehouse/Distribution Center...................	 6	6	
  7	 Line 36, Inventory In–Transit...............................................................	 7	7	
8	

 8	 Total Inventory Tax (add lines 1 through 7)..........................................	8	

 9	 Total Inventory Tax (add Section A, Line 8 and Section B2, Line 8)........................................................................................... 	9	
10	 Allowable Percentage................................................................................................................................................................ 	10	

0 0

„	
11	

11	 Allowable Inventory Tax Credit (Line 9 multiplied by Line 10)

100%

PART III—Pass-through Entities ONLY
 1	 Total Allowable Inventory Tax Credit (from Line 11)........................................................................................................................
  2	 Enter each partner, member, shareholder, or beneficiary’s distributive share of the amount on Line 1 (attach supporting schedule(s) if needed). These
amounts should also be reported on Kentucky Schedules K-1.
Partner/Member/Shareholder/Beneficiary Name

FEIN/SSN

230348 41A720INV (10-23)	

Distributive Share (%)

Distributive Share of
Allowable Inventory
Tax Credit

Page 1 of 3

SCHEDULE INV
(2023)

INSTRUCTIONS FOR SCHEDULE INV

Page 2 of 3

The inventory tax credit is a nonrefundable and nontransferable credit that may be applied (with the ordering of the credits as
provided in KRS 141.0205) against income taxes imposed by KRS141.020 (individual income tax) or KRS 141.040 (corporation
income tax) and the limited liability entity tax (LLET) imposed by KRS 141.0401 for any taxpayer that, on or after January 1, 2018,
timely pays ad valorem (tangible personal property) taxes to the Commonwealth or any political subdivision for inventory properties
subject to the provisions of KRS 132.020(1)(e) and/or KRS 132.099. 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 partners, members, shareholders, or beneficiaries in the same
proportion as the distributive share of income or loss is passed through.

Purpose of Schedule INV—This schedule is used to:
1)	 Report the inventory valuation, on which inventory taxes
were timely paid as reported on Kentucky Property Tax
Forms 61A500, 61A200, 61A800, 62A500, or 61A508;
2)	 Report the amount of timely-paid ad valorem tax on the
inventory;
3)	 Calculate the total amount of allowable inventory tax credit;
and,
4)	 Report distributive share of the inventory tax credit to
the taxpayer’s partners, members, shareholders, or
beneficiaries (if applicable).
The credit allowed is phased-in over four years. The following
table shows the allowable percentage for each year.

	

Tax Year	

Allowable Credit %

	2018	

25%

	2019	

50%

	2020	

75%

	

100%

2021-forward	

2024 Inventory Tax Credit Calculator: The inventory tax credit
calculator will become available after the first quarter of 2024
once all counties have provided state and local tax rates to the
department. The Inventory Tax Credit Calculator is an excelbased workbook that will be available for download once all
rates have been compiled. Once finalized, the workbook will be
available for download at https://revenue.ky.gov/Business/
Pages/Inventory-Tax-Credit.aspx to assist taxpayers in
calculating the amount of inventory tax credit. The workbook
contains easy-to-follow instructions and allows taxpayers to
input inventory values for multiple locations. The worksheet
automatically computes the tax on each category of inventory
for each taxing jurisdiction. It also generates the Schedule INV
and supporting documentation that can be printed and attached
to a taxpayer’s income tax return, as required. Supporting detail

41A720INV (10-23)	

for taxpayers claiming the inventory tax credit must be attached
to the income tax return.
Note: There are multiple online inventory tax credit
calculators available for download. Ensure you are utilizing
the correct year’s calculator as the rates and credit vary
each year.
Centrally Assessed and Public Service Companies
(Kentucky Property Tax Forms 61A200 and 61A800)—
Taxpayers reporting timely paid inventory tax for inventories
reported on Property Tax Forms 61A200 or 61A800 must check
the box on Schedule INV, Part II, and report the timely paid
inventory tax on Part II, Section A. Sections B1 and B2 may be
used to report timely paid inventory tax for inventories that were
declared on other qualifying property tax forms (as listed under
Purpose of the Schedule INV above).
Communications/Multichannel
Video
Programming
Service Providers (Kentucky Tangible Personal Property
Tax Form 61A500)—Taxpayers filing Tangible Personal
Property Tax Form 61A500 should report inventory by the
appropriate type listed (i.e., Merchant’s Inventory,
Goods Stored in Warehouse, etc.) when completing
Part II, lines 2 through 7. Report valuations and tax
paid by the proper inventory type. Attach 8.5” x 11”
photocopies of the front and back of the property tax bills to the
Schedule INV as supporting statements.
Centrally Assessed Distilled Spirits in Bonded Warehouses
(Kentucky Property Tax Form 61A508)—Taxpayers filing
Kentucky Property Tax Form 61A508 should only complete Part
II, lines 8 through 11, unless also claiming credit for inventory
amounts reported on other acceptable personal
property tax forms. All values reported on Kentucky
Property Tax Form 61A508 are inventory; therefore, all
ad valorem (tangible personal property) taxes timely
paid on such inventory are eligible for the inventory tax credit.
Attach 8.5” x 11” photocopies of the front and back of the property
tax bills to the Schedule INV as supporting statements.
Contact Us: If you have a question about the inventory tax
credit, call the dedicated phone line at 502–564–1555 or via
email at [email protected] .

SCHEDULE INV
(2023)

INSTRUCTIONS FOR SCHEDULE INV

SPECIFIC INSTRUCTIONS FOR SCHEDULE INV
General Instructions—Check the appropriate entity type. If the
entity type is not listed, check the “Other” box and list the entity
type.
Federal Identification Number—For an individual, enter the
Social Security number (SSN); for all other entities, enter the
FEIN. Taxpayers can visit https://revenue.ky.gov/Business/
Pages/Inventory-Tax-Credit.aspx to obtain the downloadable
2024 Inventory Tax Credit Calculator (when available) if
assistance is needed in calculating the inventory tax credit and
preparing the Schedule INV.
PART I—Qualifications
Answer the qualification question by checking the appropriate
“Yes” or “No” box. If you answer “No”, STOP! You do not qualify
for the credit. If you answer “Yes”, go to Part II.
PART II—Amount of Credit
Centrally Assessed and Public Service Companies that are
claiming credit for inventories reported from Property Tax Forms
61A200 or 61A800 must check the box provided in Part II header.
All other taxpayers should leave this box blank.
Section A—Inventory Tax Timely Paid as displayed on Local
Tax Bill(s)
Line 1—Enter the Kentucky inventory tax timely paid that is
separately displayed on the local personal property tax bill(s). If
your bill does not separately state this amount, do not use this
line. “Local Tax Bills” include both city and county bills. Some
taxing jurisdictions throughout the state bill the city & county
taxes separately. The Inventory Tax Credit Calculator combines
(where applicable) the city, county, and state tax rates to arrive
at total inventory tax paid on the inventory at a specific location.
Timely-paid separately stated amounts should be entered on
Section A, Line 1. However, instead of completing Section A, the
taxpayer may choose to report these locations in Sections B1
and B2. Amounts reported in Section A should not be duplicated
in Sections B1 and B2. If an amount is reported on Section
A, line 1, 8.5” x 11” photocopies of the front and back of the
property tax bills are required to be attached to the Schedule
INV as supporting statements.
Sections B1 and B2—Inventory Valuation and Timely-Paid
Inventory Tax Not Reported in Section A
Section B1—Enter the total valuation of inventory reported

41A720INV (10-23)	

Page 3 of 3

on the Kentucky personal property tax returns for all locations
on the lines which correspond to each category of inventory in
Section B1. Do not enter valuations for any inventory included
in Section A.
Section B2—Enter the total tax timely paid for all locations on
the lines which correspond to each category of inventory in
Section B2. Do not enter tax for any inventory tax included in
Section A.
Note: Part II, Lines 2 through 7, correspond to Lines 31 through
36 of the Kentucky Personal Property Tax Form 62A500.
Lines 2 through 7—Enter the inventory valuations and timelypaid Kentucky inventory tax for locations not reported in Section
A.
Line 8—Enter the amount from Section A, Line 1, on Section A,
Line 8. Enter the total amount from Section B2, Lines 2 through
7, on Section B2, Line 8.
Line 9—Add Section A, Line 8, and Section B2, Line 8. Enter
the result here.
Line 10—One-hundred percent (100%) is the allowable
percentage for 2023.
Line 11—Multiply Line 9 by Line 10. Enter the result here and on
Schedule TCS, Part II, Line 21 or Schedule ITC, Section A, Line
23. This is the allowable inventory tax credit.
PART III—Pass-Through Entities Only
Line 1—Enter the total Allowable Inventory Tax Credit from Part
II, Line 11.
Line 2—Enter the names, federal identification numbers,
distributive share percentages, and each partner/member/
shareholder or beneficiary’s distributive share of the inventory
tax credit. If there are more than five (5) partners, members,
shareholders, or beneficiaries, attach supporting schedules in
the same order and format of the chart in Part III.
Additional information may be requested by the Department
during our review, KRS 141.050(2). Additional information
includes, but is not limited to, Tangible Property Tax Returns
claiming inventory, property tax bills, and copies of checks for
each property tax bill. Failure to furnish requested documents
will result in the denial of any unverified inventory tax credits
claimed on the return.