Kentucky Schedule ETH is an application and credit certificate used by taxpayers who produce ethanol in Kentucky and want to claim the Kentucky Ethanol Income Tax or LLET Credit. The schedule reports the number of gallons of ethanol produced in Kentucky during the calendar year that meet the current ASTM standard. The credit is intended only for qualifying ethanol produced in Kentucky, not ethanol produced in another state. The credit rate is generally $1 per approved gallon, but the total credit for all taxpayers is subject to an annual cap of $5,000,000. That cap may be increased by any unused cap from the cellulosic ethanol tax credit if approved ethanol credit applications exceed the regular ethanol cap. The Department of Revenue reviews the application, approves eligible gallons, and issues a credit certificate showing the amount of credit available to the taxpayer. The credit is nonrefundable, meaning it can reduce eligible Kentucky tax liability, but it cannot create a refund. It may be applied against Kentucky individual income tax, corporation income tax, or limited liability entity tax, also called LLET. However, there is no carryforward allowed for unused ethanol credit, so the taxpayer should claim only the amount allowed for the taxable year.
How To File Kentucky Schedule ETH
Schedule ETH must be sent to the Department of Revenue by fax or email no later than January 15 after the close of the calendar year in which the ethanol was produced. Regular mail is not recommended because credit certification is not guaranteed for schedules sent by regular mail. If the schedule is sent or postmarked after January 15, it is void. Use fax number 502-564-0058 or email DORTaxCredits@ky.gov. The Department of Revenue should confirm receipt of the application. If confirmation is not received within two weeks, contact the Division of Corporation Tax at 502-564-8139 or email DORTaxCredits@ky.gov. The Department of Revenue will issue the credit certificate by April 15 after the close of the preceding calendar year. Attach the credit certificate to the Kentucky tax return claiming the credit. The credit may be claimed with Form 720, Form 720U, Form PTE, Form 725, Form 740, Form 740-NP, or Form 741, depending on the taxpayer’s filing type.
How To Complete Kentucky Schedule ETH
Line 1: Schedule ETH
Use this schedule to apply for and claim the Kentucky ethanol income tax or LLET credit.
Line 2: Tax Year 2025
Use this version for the 2025 tax year.
Line 3: Commonwealth Of Kentucky Department Of Revenue
This identifies the Kentucky agency responsible for processing the application and credit certificate.
Line 4: Application And Credit Certificate Of Income Tax/LLET Credit Ethanol
This title shows that the form is both an application and a credit certificate for the ethanol tax credit.
Line 5: KRS 141.422 To 141.4248
This identifies the Kentucky law connected with the ethanol credit.
Line 6: 103 KAR 15:110
This identifies the Kentucky administrative regulation related to the ethanol credit process and testing rules.
Line 7: See Instructions
Review the schedule instructions before completing the application because some sections are completed by the Department of Revenue.
Line 8: Attach To Form 720, 720U, PTE, 725, 740, 740-NP, Or 741
Attach the issued credit certificate to the Kentucky return that applies to your filing situation.
Line 9: Name Of Entity
Enter the legal name of the ethanol producer or taxpayer applying for the credit.
Line 10: Mailing Address
Enter the taxpayer’s mailing address where notices and correspondence should be sent.
Line 11: Location Address
Enter the physical location address connected with the ethanol production activity.
Line 12: Federal Identification Number
Enter the taxpayer identification number. Individuals enter a Social Security number. All other entities enter a federal employer identification number.
Line 13: Taxed As Corporation
Check this box if the taxpayer is taxed as a corporation.
Line 14: Taxed As Limited Liability Pass-Through Entity
Check this box if the taxpayer is taxed as a limited liability pass-through entity.
Line 15: Taxed As General Partnership
Check this box if the taxpayer is taxed as a general partnership.
Line 16: Taxed As Individual
Check this box if the taxpayer is an individual.
Line 17: Taxed As Other
Check this box if the taxpayer’s entity type is not listed, then write the correct entity type.
Line 18: Kentucky Corporation/LLET Account Number, If Applicable
Enter the Kentucky Corporation/LLET account number if the taxpayer has one.
Line 19: Account Number Formatting Rule
The Kentucky Corporation/LLET account number must have 9 digits. If the account number has only 6 digits, add zeros at the beginning.
Line 20: Kentucky Special Fuels Dealer’s License Account Number
Enter the Kentucky Special Fuels Dealer’s License account number for the ethanol producer.
Line 21: ASTM Standard Question
Answer whether your ethanol failed to meet the ASTM standard at any time during the calendar year.
Line 22: Yes Box
Check “Yes” if the ethanol failed to meet the ASTM standard at any time during the calendar year.
Line 23: No Box
Check “No” if the ethanol did not fail to meet the ASTM standard during the calendar year.
Line 24: If Yes, List Dates
If you checked “Yes,” enter the dates when the ethanol failed to meet the ASTM standard.
Part I, Gallons Produced In Kentucky During The Calendar Year
Line 1: Number Of Gallons Of Ethanol Produced Meeting ASTM Standard
Enter the total number of gallons of ethanol produced in Kentucky during the calendar year that met the ASTM standard.
Part II, Ethanol Gallons Approved
Part II Note:
This section is completed by the Department of Revenue. It shows the number of ethanol gallons approved for the credit.
Line 1: Ethanol Gallons Approved By Department Of Revenue
This line shows the number of ethanol gallons the Department of Revenue approves for credit purposes.
Part III, Ethanol Approved Credit Certificate
Part III Note:
This section is completed by the Department of Revenue to determine the approved credit amount. It is used when the total approved ethanol credit applications exceed the annual ethanol tax credit cap.
Line 1(a): Requested Credit For Ethanol Producer, Numerator
This line shows the credit requested by the individual ethanol producer.
Line 1(b): Total Requested Credit For Ethanol Producer, Denominator
This line shows the total credit requested by all ethanol producers when the cap calculation applies.
Line 1 Calculation:
The requested credit for the producer is divided by the total requested credit for all producers. That fraction is multiplied by the applicable annual credit cap to determine the approved credit.
Approved Credit:
This line shows the approved credit amount determined by the Department of Revenue.
Annual Ethanol Tax Credit Cap Note:
The annual ethanol tax credit cap is $5,000,000. This cap may be increased by the unused cellulosic ethanol tax credit cap if total approved ethanol applications exceed $5,000,000.
Department Of Revenue Use Only:
Leave this section blank. It is completed by the Department of Revenue.
By:
This line is for the authorized Department of Revenue representative.
Date:
This line shows the date the Department of Revenue completes or approves the credit certificate.
Taxpayer Use Only
Taxpayer Use Only Note:
Complete the taxpayer sections that apply to the application and credit claim.
No Carryforward Allowed:
Unused ethanol credit cannot be carried forward to another year.
Declaration Statement:
By signing, the taxpayer states under penalties of perjury that the application and all attached schedules and statements have been reviewed and are true, correct, and complete to the best of the signer’s knowledge.
Signature:
The authorized taxpayer or representative must sign the schedule.
Title:
Enter the signer’s title, such as owner, officer, partner, member, manager, or authorized representative.
Date:
Enter the date the schedule is signed.
Contact Name, If Different From Signer:
Enter the contact person’s name if someone other than the signer should be contacted about the application.
Email Address:
Enter the contact email address for communication about the application.
Telephone Number:
Enter the contact telephone number.
Fax Number:
Enter the contact fax number, if available.
Part IV, Ethanol Credit Used By Taxpayer
Line 1: LLET Credit
Enter the amount of ethanol credit claimed for the taxable year against the limited liability entity tax. Report this amount on Schedule TCS, Part II, Column E. The credit cannot reduce LLET below the $175 minimum.
Line 2: Corporation Income Tax Credit
Enter the amount of ethanol credit claimed for the taxable year against Kentucky corporation income tax. Report this amount on Schedule TCS, Part II, Column F.
Line 3: Individual Income Tax Credit
Enter the amount of ethanol credit claimed for the taxable year against Kentucky individual income tax. Report this amount on Form 740, Form 740-NP, or Form 741, whichever applies.
Testing And Attachment Requirements
Line 1: Laboratory Results Requirement
Attach laboratory results for July 1 and December 31 of the calendar year with Schedule ETH.
Line 2: ASTM Proof Requirement
The attached laboratory results must show that the ethanol met the ASTM standard on the required testing dates.
Line 3: Missing Testing Proof Rule
If proof of meeting the ASTM standard on July 1 and December 31 is not provided, the credit can be denied for gallons produced back to the previous required testing date.
Pass-Through Entity Instructions
Line 1: Schedule K-1 Reporting
A pass-through entity must report each partner’s, member’s, shareholder’s, or beneficiary’s pro rata share of the approved credit on Schedule K-1.
Line 2: Department Notification Requirement
A pass-through entity must notify the Department of Revenue electronically of all partners, members, shareholders, or beneficiaries who may claim any part of the approved credit.
Line 3: Forfeiture Warning
If the pass-through entity does not provide the required owner information electronically, available credits may be forfeited for all partners, members, shareholders, or beneficiaries.
Line 4: Email Address For Owner Information
Send the required pass-through entity owner information by email to DORTaxCredits@ky.gov.
Line 5: Required File Format
The email must include a separate attachment in plain text or plain ASCII format.
Line 6: Owner Name
Include each partner’s, member’s, shareholder’s, or beneficiary’s name.
Line 7: Owner Address
Include each owner’s address.
Line 8: Owner Telephone Number
Include each owner’s telephone number.
Line 9: Owner Identification Number
Include each owner’s identification number.
Line 10: Owner Distributive Share Of Tax Credit
Include each owner’s distributive share of the approved ethanol tax credit.
Important Credit Rules
Line 1: Kentucky Production Rule
Only ethanol produced in Kentucky may qualify for the credit.
Line 2: Out-Of-State Production Rule
Ethanol produced outside Kentucky does not qualify for this credit.
Line 3: Credit Rate Rule
The credit rate is $1 per approved gallon of qualifying ethanol.
Line 4: Annual Cap Rule
The total annual ethanol credit for all taxpayers is capped at $5,000,000, unless increased by unused cellulosic ethanol credit cap.
Line 5: Cellulosic Ethanol Cap Transfer Rule
Unused cellulosic ethanol credit cap may increase the ethanol credit cap only when approved ethanol applications exceed the regular $5,000,000 cap.
Line 6: Cap Transfer Limit Rule
The transferred cap cannot exceed the amount needed for all applicants to receive the $1 per gallon credit.
Line 7: Nonrefundable Credit Rule
The ethanol credit can reduce eligible Kentucky tax liability, but it cannot create a refund.
Line 8: No Carryforward Rule
Any ethanol credit not used for the taxable year cannot be carried forward.
Line 9: Different Tax Type Amounts Rule
The amount claimed against corporation income tax and LLET may be different.
Line 10: LLET Minimum Tax Rule
The ethanol credit cannot reduce the limited liability entity tax below the $175 minimum.
Line 11: Filing Deadline Rule
Schedule ETH must be faxed or emailed no later than January 15 after the close of the calendar year.
Line 12: Late Filing Rule
A schedule sent or postmarked after January 15 is void.
Line 13: Confirmation Rule
If you do not receive confirmation within two weeks after submitting the application, contact the Department of Revenue.
Line 14: Credit Certificate Rule
The Department of Revenue issues the credit certificate by April 15 after the close of the preceding calendar year.
Line 15: Return Attachment Rule
Attach the credit certificate to the Kentucky return on which the ethanol credit is claimed.