KRS § 141.414 — KY Code / Title XI / Chapter 141 / Section 141.414
141.414 Computation of tax and credit
Status: in_force

141.414 Computation of tax and credit.

(1) A qualified farming operation which is an individual sole proprietorship subject to

tax under KRS 141.020 or a corporation or pass-through entity treated as a

corporation for federal income tax purposes subject to tax under KRS 141.040 shall:

(a) 1. Compute the tax due at the applicable tax rates as provided by KRS

141.020 or 141.040 on net income or taxable net income, including

income from the qualified farming operation's participation in a

networking project.

2. Compute the limited liability entity tax imposed under KRS 141.0401,

including Kentucky gross profits or Kentucky gross receipts from the

qualified farming operation's participation in a networking project; and

3. Add the amounts computed under subparagraphs 1. and 2. of this

paragraph and, if applicable, subtract the credit permitted by KRS

141.0401(3) from that sum. The resulting amount shall be the net tax for

purposes of this paragraph;

(b) 1. Compute the tax due at the applicable tax rates as provided by KRS

141.020 or 141.040 applies on net income or taxable net income,

excluding net income attributable to the qualified farming operation's

participation in a networking project;

2. Using the same method used under paragraph (a)2. of this subsection,

compute the limited liability entity tax imposed under KRS 141.0401,

excluding Kentucky gross profits or Kentucky gross receipts from the

qualified farming operation's participation in a networking project; and

3. Add the amounts computed under subparagraphs 1. and 2. of this

paragraph and, if applicable, subtract the credit permitted by KRS

141.0401(3) from that sum. The resulting amount shall be the net tax for

purposes of this paragraph; and

(c) Be entitled to a tax credit in the amount by which the tax computed under

paragraph (a)3. of this subsection exceeds the tax computed under paragraph

(b)3. of this subsection. The credit shall not exceed the farming operation's

approved costs, as defined in KRS 141.410.

(2) Notwithstanding any other provisions of this chapter, a qualified farming operation

which is a pass-through entity not subject to the tax imposed by KRS 141.040 or

trust not subject to the tax imposed by KRS 141.040 shall be subject to income tax

on the net income attributable to its participation in a networking project at the rates

provided in KRS 141.020, and the amount of the tax credit shall be the same as the

amount of the tax computed in this subsection. The credit shall not exceed the

farming operation's approved costs, as defined in KRS 141.410. If the tax computed

in this subsection exceeds the tax credit, the difference shall be paid by the pass-

through entity or trust at the times provided by KRS 141.160 for filing the returns.

(3) Notwithstanding any other provisions of this chapter, the net income subject to tax

and the tax credit determined under subsection (2) of this section shall be excluded

in determining each partner's, member's, shareholder's, or beneficiary's distributive

share of net income or credit of a pass-through entity or trust.

(4) If the networking entity is a separate facility:

(a) Net income attributable to the project for the purposes of subsections (1), (2),

and (3) of this section shall be determined under the separate accounting

method reflecting only the gross income, deductions, expenses, gains, and

losses allowed under KRS Chapter 141 directly attributable to the project and

overhead expenses apportioned to the facility; and

(b) Kentucky gross receipts or Kentucky gross profits attributable to the project

for the purposes of subsection (1) of this section shall be determined under the

separate accounting method reflecting only the Kentucky gross receipts or

Kentucky gross profits directly attributable to the facility.

(5) If the networking project is an expansion to a previously existing farming operation:

(a) Net income attributable to the entire operation shall be determined under the

separate accounting method reflecting only the gross income, deductions,

expenses, gains, and losses allowed under this chapter directly attributable to

the farming operation's participation in the networking project and overhead

expenses apportioned to the networking project, and the net income

attributable to the networking project for the purposes of subsections (1), (2),

and (3) of this section shall be determined by apportioning the separate

accounting net income of the entire networking project to the networking

project by a formula approved by the Department of Revenue; and

(b) Kentucky gross receipts or Kentucky gross profits attributable to the entire

facility shall be determined under the separate accounting method reflecting

only the Kentucky gross receipts or Kentucky gross profits directly

attributable to the facility, and Kentucky gross receipts or Kentucky gross

profits attributable to the economic development project for the purposes of

subsection (1) of this section shall be determined by apportioning the separate

accounting Kentucky gross receipts or Kentucky gross profits of the entire

facility to the economic development project by a formula approved by the

Department of Revenue.

(6) If an approved company can show to the satisfaction of the Department of Revenue

that the nature of the operations and activities of the approved farming operation are

such that it is not practical to use the separate accounting method to determine the

net income, Kentucky gross receipts, or Kentucky gross profits from the networking

project, the approved farming operation shall determine net income, Kentucky gross

receipts, or Kentucky gross profits from its participation in the networking project

using an alternative method approved by the Department of Revenue.

(7) The Department of Revenue may promulgate administrative regulations pursuant to

KRS Chapter 13A and require the filing of forms designed by the Department of

Revenue necessary to effectuate KRS 141.0101 and KRS 141.410 to 141.414 and

the allowable income tax credit which an approved farming operation may retain

under the provisions of KRS 141.412 and this section.