Kentucky Recycling or Composting Equipment Tax Credit Recapture

Recycling or Composting Equipment Tax Credit Recapture
Schedule RC-R
SCHEDULE

RC-R

RECYCLING OR COMPOSTING
EQUIPMENT TAX CREDIT RECAPTURE

Commonwealth of Kentucky
Department of Revenue

	 See instructions.

Taxable Year Ending

	 Attach to Form 720, 720U, PTE, 725, 740, 740-NP, or 741.

	

	 KRS 141.390
Name of Entity

Federal Identification
Number

	

2023

__ __ / __ __
Mo.	Yr.

Kentucky Corporation/LLET
Account Number

__ __ __ __ __ __

__ __ __ __ __ __ __ __ __

Section A — Recycling or Composting Equipment Disposed of Before the End of the Recapture Period
Item

Useful Life Per Section 168
of the Internal Revenue Code
(Years)

Type of Equipment

	

A	

Less Than 5	

5 or More

	

B	

Less Than 5	

5 or More

	

C	

Less Than 5	

5 or More

Section B — Computation of Tax Credit Balance or Tax Credit Recapture
	Equipment
	A	
B	
  1	
  2	
  3	
  4	
	
  5	
  6	
	
  7	
8	
9	
	
10	
	 	
	11	
	 	
	12	
	 	
	13	
	 	
	14	

C	

Total

Date equipment was purchased or installed............................	
1	 /	/	
/	/	
/	/	
Date equipment was sold, transferred, or disposed.................	
2	 /	/	
/	/	
/	/	
Number of full years the equipment was held..........................	3 				
Taxable year the Department of Revenue		
				
___ ___/___ ___ ___ ___/___ ___ ___ ___/___ ___
	
mo.	
yr.
	
mo.	
yr.
	
mo.	
yr.
approved the tax credit.............................................................	4	
Allowable tax credit percentage from Table..............................	5
Amount of tax credit originally approved on
				
Schedule RC, Column G..........................................................	6 	00	00	00	00
Multiply Line 6 by the percentage on Line 5.............................	7 	00	00	00	00
Recycling tax credit used in prior years against LLET.............	8 	00	00	00	00
Recycling tax credit used in prior years against
income tax................................................................................	9 	00	00	00	00
LLET credit balance: if Line 7 of the Total column is greater than Line 8 of the Total column, enter the
difference..................................................................................................................................................................................	10
				
00
Income tax credit balance: if Line 7 of the Total column is greater than Line 9 of the Total column,
enter the difference..................................................................................................................................................................	11
				
00
LLET credit recapture: if Line 8 of the Total column is greater than Line 7 of the Total column, enter the
difference..................................................................................................................................................................................	12
				
00
Income tax credit recapture: if Line 9 of the Total column is greater than Line 7 of the Total column,
enter the difference..................................................................................................................................................................	13
				
00
Tax credit reduction: enter Line 6 of the Total column less Line 7 				
of the Total column..........................................................	14
00

Table — Allowable Tax Credit Percentage
	 Property	

Less Than 5 Years	

5 Years or More

	 1 Year or Less	  0%	  0%
	 Between 1 and 2 Years	
33%	
20%
	 Between 2 and 3 Years	
67%	
40%
	 Between 3 and 4 Years	
N/A	
60%
	 Between 4 and 5 Years	
N/A	
80%

230236 41A720RC-R (10-23)	

Page 1 of 2

Schedule RC-R
(2023)

INSTRUCTIONS – RECYCLING OR COMPOSTING
EQUIPMENT TAX CREDIT RECAPTURE

Purpose of Schedule—Per KRS 141.390(4), the Recycling/ Composting
Equipment Tax Credit per KRS 141.390 must be recaptured in whole or
in part if a taxpayer sells, transfers, or disposes of qualifying recycling or
composting equipment before the end of the recapture period. If the total
tax credit used in prior tax years exceeds the recomputed tax credit, the
difference must be recaptured on the tax return for the tax year in which
the sale, transfer, or disposition occurred. If the total tax credit taken in
prior tax years does not exceed the recomputed tax credit, the unused
portion of the tax credit will be allowed against the income tax imposed
by KRS 141.020 or 141.040 and the limited liability entity tax imposed
by KRS 141.0401, subject to the limitations per KRS 141.390(2), for the
taxable year in which the sale, transfer, or disposition occurs. Any tax
credit balance not used in the taxable year in which the sale, transfer,
or disposition occurs cannot be carried forward to another taxable year.
General Instructions—If recycling or composting equipment is sold,
transferred, or disposed of before the end of its useful life per IRC §168,
see the Table—Allowable Tax Credit Percentage on Schedule RC–R
(KRS 141.390(5)).
Section A—Recycling or Composting Equipment Disposed of Before
the End of the Recapture Period
For each item of equipment sold, transferred, or disposed of before the
end of its useful life per IRC §168, enter a description of each item of
equipment on Lines A, B, and C and check the box to indicate the useful
life of the equipment. If the taxpayer disposed of more than three items
of equipment during the tax year, attach additional Schedules RC–R as
needed.
Section B—Computation of Tax Credit Balance or Tax Credit
Recapture
For each item of equipment identified on Lines A, B, and C of Section
A, enter the following information in Columns A, B, and C, respectively:
Line 1—Enter the date the equipment was purchased or installed.
Line 2—Enter the date the equipment was sold, transferred, or disposed.
Line 3—Enter the number of full years the equipment was held (difference
between the dates on Line 1 and Line 2).
Line 4—Enter the tax year (month and year) that the tax credit on the
equipment was approved by the Department of Revenue.

Page 2 of 2

Line 11—Income tax credit balance: if the amount on Line 7 of the Total
column is greater than the amount on Line 9 of the Total column, enter
the difference on this line. The taxpayer is entitled to use the difference
to reduce their liability for the taxable year in which the sale, transfer, of
disposition occurs.
Line 12—LLET credit recapture: if the amount on Line 8 of the Total
column is greater than the amount on Line 7 of the Total column, enter the
difference on this line, adding to the taxpayer’s tax liability in the taxable
year in which the sale, transfer, or disposition occurs.
Line 13—Income tax credit recapture: if the amount on Line 9 of the
Total column is greater than the amount on Line 7 of the Total column,
enter the difference on this line, adding to the taxpayer’s tax liability in the
taxable year in which the sale, transfer, or disposition occurs.
Line 14—Tax credit reduction: enter the amount on Line 6 of the Total
column less the amount on Line 7 of the Total column. The difference
increases the taxpayer’s tax liability in the taxable year in which the sale,
transfer, or disposition occurs.
Enter the amount from Line 12 (LLET credit recapture) on the
applicable tax return as follows:
Form 720—Enter on Form 720, Part II, Line 2.
Form 720U—Enter on Form 720U, Schedule U9, Section A, Line 2.
Form PTE—Enter on Form PTE, Part II, Line 2.
Form 725—Enter on Form 725, Part II, Line 2.
Enter the amount from Line 13 (Income tax credit recapture) on the
applicable tax return as follows:
Form 720—Enter on Form 720, Part III, Line 2.
Form 720U—Enter on Form 720U, Schedule U9, Section B, Line 2.
Form 740—Enter on Form 740, page 1, Line 13.
Form 740–NP—Enter on Form 740–NP, page 1, Line 14 (combine with
income tax amount).
Form 741—Enter on Form 741, Line 17.

Line 5—Enter the allowable tax credit percentage from the Table—
Allowable Tax Credit Percentage.

Enter the amount from Line 14 as follows:

Line 6—Enter the amount of tax credit originally approved by the
Department of Revenue. The amount of the tax credit is the amount
originally approved on Schedule RC, Part II, line 2. Enter in the Total
column the total of the amounts on Line 6 of Columns A, B, and C.

Schedule RC—The recycling or composting equipment tax credit
balances for LLET and income tax on Schedule RC, Part III or Part VI
shall be reduced as follows: (i) for LLET by the total of Lines 10 and 14 less
Line 12, and (ii) for income tax by the total of Lines 11 and 14 less Line 13.

Line 7—Enter the amount of Line 6 multiplied by the percentage on Line
5. Enter in the Total column the total of the amounts on Line 7 of Columns
A, B, and C.

Pass-Through Entities—A pass–through entity must attach a copy
of Schedule RC–R to each partner’s, member’s, shareholder’s, or
beneficiary’s Kentucky Schedule K–1.

Line 8—Enter the tax credit used by the taxpayer against LLET (KRS
141.0401) in prior years. If the original tax credit approved was for more
than one item of equipment, the tax credit must be prorated based on the
cost of the equipment. Enter in the Total column the total of the amounts
on Line 8 of Columns A, B, and C.

Each partner, member, shareholder, or beneficiary must prepare a
Schedule RC–R to be attached to the partner’s, member’s, shareholder’s,
or beneficiary’s tax return. A partner, member, shareholder, or beneficiary
must include its pro rata share of the items of equipment amounts from
the pass-through entity’s Schedule RC–R, Lines 1 through 7 and Line 14
when preparing the partner’s, member’s, shareholder’s, or beneficiary’s
Schedule RC–R. The remaining Lines 8 through 13 of Schedule RC–R
must be computed by the partner, member, shareholder, or beneficiary.  
A partner, member, shareholder, or beneficiary must reduce the recycling
or composting equipment tax credit balances for LLET and income tax
on Schedule RC, Part III or Part VI as follows: (i) for LLET by the total of
Lines 10 and 14 less Line 12, and (ii) for income tax by the total of Lines
11 and 14 less Line 13.

Line 9—Enter the tax credit used by the taxpayer against income tax
(KRS 141.020 or 141.040) in prior years. If the original tax credit approved
was for more than one item of equipment, the tax credit must be prorated
based on the cost of the equipment. Enter in the Total column the total of
the amounts on Line 9 of Columns A, B, and C.
Line 10—LLET credit balance: if the amount on Line 7 of the Total
column is greater than the amount on Line 8 of the Total column, enter
the difference on this line. The taxpayer is entitled to use the difference
to reduce their liability for the taxable year in which the sale, transfer, of
disposition occurs.
41A720RC-R (10-23)	

Note: If the redetermined credit exceeds the total credit already taken in
prior taxable years, the taxpayer is entitled to use the difference to reduce
their tax liability in the year in which the sale, transfer, or disposition occurs.