Kentucky Railroad Maintenance and Improvement Tax Credit

Railroad Maintenance and Improvement Tax Credit
Schedule RR-I
SCHEDULE

RR-I

RAILROAD MAINTENANCE
AND IMPROVEMENT TAX CREDIT

Commonwealth of Kentucky
Department of Revenue

2023

	 See instructions.

			

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

Mailing Address

Location Address

KRS 141.385 and 141.387

Federal Identification Number

Kentucky Corporation/LLET
Account Number (if applicable)

__ __ __ __ __ __ __ __ __

 __ __ __ __ __ __

	 Taxed as:	

Corporation

		

Limited Liability Pass-through Entity

		

General Partnership

	 	

Individual

		

Other

Part I—Qualifications
Yes

1	
	

Were the “qualified expenditures” made on property that was not owned or leased
on January 1, 2008, by a Class II or Class III railroad?...................................................................

2	
3	
	

Was a tax credit claimed per KRS 141.386 on the same “qualified expenditures”?........................
Was a tax credit claimed per KRS 141.385 or 141.386 by another taxpayer on the
same “qualified expenditures”?........................................................................................................

No

If you answered “yes” to any of the questions above, STOP; you do not qualify for this credit.
If you answered “no” to ALL of the questions above, go to Part II.
Part II—Computation of the Credit
1	 Enter the amount of qualified expenditures paid or incurred
	

3	 Enter the number of miles of railroad track in Kentucky owned or
	

00
00

by the taxpayer during the tax year.............................................................................................................	1

2	 Enter 50% of line 1......................................................................................................................................	
leased by the taxpayer at the close of the taxable year	

	

3

00

	

4

	

5

00
00

2

4	 Enter the number of miles of railroad track in Kentucky assigned
	

to the taxpayer by a Class II railroad or Class III railroad	

5	 Enter the total of lines 3 and 4	

6	 Multiply line 5 by $3,500..............................................................................................................................	

6

00
00

7	 Enter the lesser of line 2 or line 6................................................................................................................	7
Part III—Railroad Maintenance and Improvement Credit Used By Taxpayer

00
00
00

1 LLET Credit—Enter on Schedule TCS, Part II, Column E .........................................................................	1
2	 Corporation Income Tax Credit—Enter on Schedule TCS, Part II, Column F.........................................	

2

3	 Individual Income Tax Credit—Enter on Form 740, 740–NP, or 741.......................................................	

3

No Carryforward Allowed

230318 41A720RR-I (10-23)	

Page 1 of 2

Schedule RR-I
(2023)

INSTRUCTIONS FOR SCHEDULE RR–I

Page 2 of 2

The railroad maintenance and improvement credit per KRS 141.385 is a nonrefundable credit that can be applied against the income taxes
imposed by KRS 141.020 or 141.040, and the limited liability entity tax (LLET) imposed by KRS 141.0401. The tax credit must be used in
the tax year of the qualified expenditures which generated the tax credit and cannot be carried forward to a return for any other period. If a
qualified expenditure qualifies for both the railroad maintenance and improvement credit per KRS 141.385 and the railroad expansion tax
credit as per KRS 141.386, the taxpayer must claim either the credit per KRS 141.385 or the credit per KRS 141.386, but not both.
Purpose of Schedule—This schedule is used to compute the
railroad maintenance and improvement credit. An eligible taxpayer
means: (i) the owner of any Class II railroad or Class III railroad
located in Kentucky; or (ii) any person who transports property
using the rail facilities of a Class II railroad or Class III railroad
located in Kentucky or furnishes railroad– related property or
services to a Class II railroad or Class III railroad located in
Kentucky, but only with respect to miles of railroad track assigned
to the person by a Class II railroad or Class III railroad for purposes
of the tax credit.

Part II—Computation of the Credit

Class II railroad means a railroad company classified as a Class
II carrier by the federal Surface Transportation Board.

Line 4—Enter the number of miles of railroad track in Kentucky
assigned for purposes of the tax credit per KRS 141.385 to the
eligible taxpayer by a Class II railroad or Class III railroad which
owns or leases the railroad track as of the close of the taxable year.

Class III railroad means a railroad company classified as a Class
III carrier by the federal Surface Transportation Board.
Qualified expenditures means expenditures, whether or not
otherwise chargeable to a capital account, that are made to
maintain or improve railroads located in Kentucky, including
roadbeds, bridges, and related structures, that are owned or
leased as of January 1, 2008, by a Class II or Class III railroad.
The railroad maintenance and improvement tax credit is an amount
equal to 50% of the qualified expenditures paid or incurred by the
taxpayer during the tax year, but must not exceed the product of
$3,500 multiplied by the sum of: (i) the number of miles of railroad
track in Kentucky owned or leased by the eligible taxpayer as
of the close of the taxable year; and (ii) the number of miles of
railroad track in Kentucky assigned per KRS 141.385 to the eligible
taxpayer by a Class II railroad or Class III railroad which owns or
leases the railroad track as of the close of the taxable year.

Line 1—Enter the amount of qualified expenditures paid or
incurred by the taxpayer during the tax year.
Line 2—Enter fifty percent (50%) of Line 1.
Line 3—Enter the number of miles of railroad track in Kentucky
owned or leased by the eligible taxpayer as of the close of the
taxable year.

Line 5—Enter total of Lines 3 and 4.
Line 6—Enter the amount on Line 5 multiplied by $3,500.
Line 7—Enter the lesser of Line 2 or Line 6.
Part III—Railroad Maintenance and Improvement Credit Used
by Taxpayer
Line 1—Enter the amount of the credit claimed for the taxable
year against the LLET on Schedule TCS, Part II, Column E. The
credit amount cannot reduce the LLET below the $175 minimum.
Line 2—Enter the amount of the credit claimed for the taxable
year against the corporation income tax on Schedule TCS, Part
II, Column F.

If a credit is taken per KRS 141.385(2), the basis of the track must
be reduced by the amount of credit taken.

Line 3—Enter the amount of the credit claimed for the taxable
year on Form 740, 740-NP, or 741.

Part I—Qualifications

A pass-through entity must include on each Schedule K-1 the
partner’s, member’s, shareholder’s, or beneficiary’s pro rata share
of the approved credit.

Qualified expenditures must be made on property that was owned
or leased on January 1, 2008, by a Class II or Class III railroad. If
you have taken the railroad expansion tax credit per KRS 141.386
on the same qualified expenditures, you do not qualify for this
credit. If a tax credit was claimed per of KRS 141.385 or 141.386
by another taxpayer on the same qualified expenditures, you do
not qualify for this credit.  

41A720RR-I (10-23)	

Attach Schedule RR-I to the tax return claiming the credit.