Kentucky Administrative Regulations › Title 103 - FINANCE AND ADMINISTRATION CABINET - DEPARTMENT OF REVENUE › Chapter 1 - General Administration › Section 103 KAR 1:130 - Taxation of federal and certain nonfederal obligations

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				136.290,
				136.300,
				136.310,
				136.320,
				141.019,
				141.900
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				131.130(1) authorizes the
				Department of Revenue to promulgate administrative regulations to administer
				and enforce Kentucky's tax laws.
				KRS
				141.019(1)(a) and
				141.900(10)(a)
				and (12)(a) provide an exclusion from gross
				income when calculating Kentucky income tax for income that is exempt from
				state taxation by the Kentucky Constitution and the Constitution and statutory
				laws of the United States and Kentucky.
				KRS
				136.290,
				136.300,
				136.310,
				and
				136.320
				impose an ad valorem tax on the total value of the capital of federally or
				state chartered savings and loan associations, savings banks, and other similar
				institutions and domestic life insurance companies authorized to transact
				business in Kentucky, with property and payroll both within and without this
				state. This administrative regulation establishes the requirements relating to
				taxation of federal and certain nonfederal obligations in accordance with those
				statutes.
Section 1. Income Taxation.
			 Interest income from United States government obligations upon which states are
			 prohibited by federal law from imposing a tax shall be excluded from gross
			 income when calculating Kentucky income tax liability. Only the interest income
			 from exempt United States government obligations included in the taxpayer's
			 federal taxable income may be deducted from the taxpayer's gross income for
			 Kentucky income tax purposes.
Section
			 2. This section contains two (2) lists of certain agencies,
			 authorized corporations, and banks of the United States government from which
			 Kentucky taxpayers may receive interest income. These lists are not
			 all-inclusive, nor are they intended to be conclusive of the taxable or exempt
			 status of a particular obligation issued by or in conjunction with a listed
			 department, agency, instrumentality, or other entity.
(1) The list in this subsection shall serve
			 as examples of departments, agencies, and instrumentalities that issue United
			 States government obligations from which interest income shall be exempt from
			 state taxation.
(a) U.S. Treasury
			 (Bonds);
(b) U.S. Treasury (Series
			 EE and HH Savings Bonds and I Bonds);
(c) U.S. Treasury (Certificates of
			 Indebtedness);
(d) U.S. Treasury
			 (Bills);
(e) U.S. Treasury
			 (Notes);
(f) U.S. Treasury (Note
			 and Bond "Strips");
(g) Commodity
			 Credit Corporation;
(h) Central
			 Banks for Cooperatives and Banks for Cooperatives;
(i) Farm Credit Banks;
(j) Federal Land Bank Associations;
(k) Production Credit Associations;
(l) Farm Credit System Financial Assistance
			 Corporation;
(m) Federal Deposit
			 Insurance Corporation;
(n) Federal
			 Financing Bank;
(o) Federal Home
			 Loan Banks;
(p) Federal Savings and
			 Loan Insurance Corporation;
(q)
			 General Insurance Fund, Department of Housing and Urban Development, Rental
			 Housing Insurance, War Housing Insurance Project, Rental Housing Project, Armed
			 Services Housing, National Defense Housing Insurance, Neighborhood Conservation
			 Housing Insurance;
(r) Guam
			 (Bonds);
(s) Puerto Rico
			 (Bonds);
(t) Virgin Islands
			 (General Obligation Bonds and Public Improvement Bonds);
(u) American Samoa (Industrial Development
			 Bonds);
(v) Student Loan Marketing
			 Association (SLMA or "Sallie Mae");
(w) Tennessee Valley Authority (Bonds); or
(x) United States Postal
			 Service.