KRS § 141.432 — KY Code / Title XI / Chapter 141 / Section 141.432
141.432 Definitions for KRS 141.432 to 141.434
Status: in_force

141.432 Definitions for KRS 141.432 to 141.434.

As used in KRS 141.432 to 141.434, unless the context requires otherwise:

(1) "Applicable percentage" means zero percent (0%) for each of the first two (2) credit

allowance dates, seven percent (7%) for the third credit allowance date, and eight

percent (8%) for the next four (4) credit allowance dates;

(2) "Credit allowance date" means, with respect to any qualified equity investment:

(a) The date on which the investment is initially made; and

(b) Each of the six (6) anniversary dates of that date thereafter;

(3) "Long-term debt security" means any debt instrument issued by a qualified

community development entity, at par value or a premium, with an original maturity

date of at least seven (7) years from the date of its issuance, with no acceleration of

repayment, amortization, or prepayment features prior to its original maturity date.

The qualified community development entity that issues the debt instrument may

not make cash interest payments on the debt instrument during the period

commencing with its issuance and ending on its final credit allowance date in

excess of the cumulative operating income, as defined in the regulations

promulgated under 26 U.S.C. sec. 45D, of the qualified community development

entity for that same period, which shall be calculated prior to giving effect to the

expense of the cash interest payments. The foregoing shall in no way limit the

holder's ability to accelerate payments on the debt instrument in situations where the

qualified community development entity has defaulted on covenants designed to

ensure compliance with KRS 141.432 to 141.434 or 26 U.S.C. sec. 45D;

(4) "Purchase price" means the amount paid to a qualified community development

entity that issues a qualified equity investment for the qualified equity investment;

(5) "Qualified active low-income community business" has the same meaning given

that term in 26 U.S.C. sec. 45D. A business shall be considered a qualified active

low-income community business for the duration of the qualified community

development entity's investment in, or loan to, the business if the entity reasonably

expects, at the time it makes the investment or loan, that the business will continue

to satisfy the requirements for being a qualified active low-income community

business throughout the entire period of the investment or loan. The term excludes

any business that derives or projects to derive fifteen percent (15%) or more of its

annual revenue from the rental or sale of real estate. This exclusion does not apply

to a business that is controlled by, or under common control with, another business

if the second business:

(a) Does not derive or project to derive fifteen percent (15%) or more of its

annual revenue from the rental or sale of real estate; and

(b) Is the primary tenant of the real estate leased from the first business;

(6) "Qualified community development entity" has the same meaning given that term in

26 U.S.C. sec. 45D; provided that the entity has entered into, or is controlled by an

entity that has entered into, an allocation agreement with the Community

Development Financial Institutions Fund of the United States Treasury Department

with respect to credits authorized by 26 U.S.C. sec. 45D, which includes the

Commonwealth of Kentucky within the service area set forth in such allocation

agreement;

(7) "Qualified equity investment" means any equity investment in, or long-term debt

security issued by, a qualified community development entity that:

(a) Is acquired after June 4, 2010, at its original issuance solely in exchange for

cash;

(b) 1. In the case of a qualified equity investment issued prior to January 1,

2014, has at least eighty-five percent (85%) of its cash purchase price

used by the issuer to make qualified low-income community

investments in qualified active low-income community businesses

located in the Commonwealth by the second anniversary of the initial

credit allowance date; and

2. In the case of a qualified equity investment issued on or after January 1,

2014, has at least one hundred percent (100%) of its cash purchase price

used by the issuer to make qualified low-income community

investments in qualified active low-income community businesses

located in the Commonwealth by the first anniversary of the initial credit

allowance date; and

(c) Is designated by the issuer as a qualified equity investment under this

subsection and is certified by the department as not exceeding the limitation

contained in KRS 141.434. This term shall include any qualified equity

investment that does not meet the provisions of paragraph (a) of this

subsection if the investment was a qualified equity investment in the hands of

a prior holder. The qualified community development entity shall keep

sufficiently detailed books and records with respect to the investments made

with the proceeds of the qualified equity investments to allow the direct

tracing of the proceeds into qualified low-income community investments in

qualified active low-income community businesses in the Commonwealth;

(8) "Qualified low-income community investment" means any capital or equity

investment in, or loan to, any qualified active low-income community business

made after June 4, 2010. With respect to any one (1) qualified active low-income

community business, the maximum amount of qualified low-income community

investments that may be made in the business, on a collective basis with all of its

affiliates, with the proceeds of qualified equity investments that have been certified

under KRS 141.433 shall be ten million dollars ($10,000,000) whether made by one

(1) or several qualified community development entities;

(9) "Tax credit" means a nonrefundable credit against the taxes imposed by KRS

141.020, 141.040, 141.0401, 136.320, 136.330, 136.340, 136.350, 136.370,

136.390, or 304.3-270. For the credit against the taxes imposed by KRS 141.020,

141.040, or 141.0401, the ordering of the credits shall be as provided in KRS

141.0205. An insurance company claiming a tax credit against the insurance

premium tax is not required to pay additional retaliatory tax levied pursuant to KRS

304.3-270; and

(10) "Taxpayer" means any individual or entity subject to the tax imposed by KRS

141.020, 141.040, 141.0401, 136.320, 136.330, 136.340, 136.350, 136.370,

136.390, or 304.3-270.