Kentucky Form 722 is the election form an affiliated group uses when it wants to file a consolidated Kentucky corporation income tax and limited liability entity tax return, instead of handling those filings separately for each eligible member. In simple terms, this form lets the common parent corporation make the election on behalf of the group, and once that election is made, the affiliated group is treated as a single corporation for Kentucky filing purposes. The form is specifically tied to Form 720 filers, and it applies to affiliated groups that want Kentucky to recognize a consolidated filing method that includes all members of the federal affiliated group, except any corporation that is exempt from Kentucky corporate income tax. This election can be made whether or not the business files a federal consolidated return, which makes the form important for groups whose federal and Kentucky filing approaches may differ. It is also not a short term choice, because the election is binding and cannot be revoked during the required 48 month period that begins with the first month of the first taxable year for which the election is made and ends with the close of the taxable year in which the 48th consecutive month falls. Each member of the affiliated group becomes jointly and severally liable for the tax shown on the consolidated return, so the form carries both administrative and legal significance. Just as important, the election must continue to include all corporations that meet the affiliated group rules for each year the election remains active, except entities that are exempt under Kentucky law.
How To File Kentucky Form 722
The form is filed by the common parent corporation on behalf of the entire affiliated group. The initial election must be completed and attached to the return by the due date, or by the extended due date, for the first taxable year covered by the election. After that, a copy of the form created for the first year must also be attached each year during the full 48 month binding period. If the return is filed late, simply attaching this election form does not create a valid election, so timing matters. When the first 48 month period ends, a new Form 722 must be completed and submitted to begin another election period. The dates entered on the form are not for one tax year alone, they show the first taxable year of the election and the taxable year in which the 48 month election period expires.
How To Complete Kentucky Form 722
There are no printed line numbers on the form, so the instructions below follow the fields from top to bottom and label them in a clear order for easy completion.
Line 1: Enter the full name of the affiliated group. Use the common parent corporation’s name together with its subsidiaries, in the same style you normally use for formal tax reporting, so the group is clearly identified as one consolidated filing group.
Line 2: Enter the number and street address for the affiliated group or common parent corporation. Use the mailing street address that belongs on the tax record, and avoid abbreviations that could create confusion if the business receives official correspondence there.
Line 3: Enter the city portion of the mailing address. Make sure it matches the address used with the rest of the return package so the address information stays consistent across all filings.
Line 4: Enter the state abbreviation for the mailing address. Use the standard two letter state code.
Line 5: Enter the ZIP code for the mailing address. Double check this entry because it helps ensure the filing record and any notices connect to the correct location.
Line 6: Enter the telephone number for the affiliated group or the common parent corporation. Use a working business number where a responsible person can be reached if the filing needs clarification.
Line 7: Enter the federal identification number. This should be the group’s federal employer identification number used for tax purposes, and it must be entered carefully because it is one of the main identifiers tied to the filing.
Line 8: Enter the common parent’s Corporation or LLET account number. This number must contain 9 digits, and if the account number you use is only 6 digits, add leading zeros at the beginning so the entry reaches the required 9 digit format.
Line 9: Enter the beginning date of the election period in month and year format. This is the first taxable year for which the consolidated election is intended to take effect, not simply the date you are filling out the form.
Line 10: Enter the ending date, also in month and year format, for the taxable year in which the 48 month election period expires. This date should reflect the close of the binding election period, so it must be calculated based on the start date rather than guessed or copied from a single annual return.
Line 11: The election statement for Form 720 filers does not require a blank entry, but it is a key part of what you are signing. By filing the form, the affiliated group is agreeing to file a consolidated Kentucky corporation income and LLET return and is accepting the conditions attached to that election.
Line 12: Read the first condition carefully. The election is binding and irrevocable during the required 48 month period, which means the group cannot casually switch back and forth between filing methods during that time.
Line 13: Read the second condition carefully. The affiliated group will be treated as a single corporation for Kentucky purposes while the election remains in effect.
Line 14: Read the third condition carefully. Each member of the affiliated group is jointly and severally liable for the income tax liability computed on the consolidated return, which means the responsibility is shared across the group rather than resting only on the common parent.
Line 15: Read the fourth condition carefully. For every taxable year covered by the election, the consolidated return must include all corporations that are members of the affiliated group under the federal affiliated group rules for that year, except those that are exempt from Kentucky corporate income tax.
Line 16: Sign the form in the signature area. The signer must be an authorized officer of the common parent corporation, and acceptable officers include the president, vice president, secretary, treasurer, assistant secretary, assistant treasurer, or chief accounting officer.
Line 17: Enter the date the officer signs the form. Use the actual signing date, because the signature date helps support the validity and timeliness of the election.
Line 18: Print the name of the officer who signs the form. Write the name clearly so the signer can be identified without any doubt.
Line 19: Enter the title of the officer who signs the form. The title should match one of the authorized officer roles permitted to execute the election.
Important Filing Rules To Remember
The election is available for taxable years beginning on or after January 1, 2019. The common parent must make the election for all members of the affiliated group, and the completed election must be attached not only for the first year but also in each later year while the election remains in force. A late filed return does not create a valid election merely because the form is attached. Also, once one 48 month election period ends, the business must submit a new Form 722 to begin the next period.
Practical Tips Before You Submit
Make sure the beginning and ending dates reflect the full 48 month election period, not just one tax year. Confirm that the common parent’s account number has the correct number of digits, especially if you need to add leading zeros. Check that the signer is an authorized officer, that the printed name and title are complete, and that the form is attached to the return on time. Finally, review the group membership carefully so the consolidated election includes all required corporations for each year the election applies.