Kentucky PKG KJDA is a tax incentive package used by a business entity that has been approved for the Kentucky Jobs Development Act credit. It is used to report KJDA tax incentives, calculate the allowable credit, and track the approved project amounts during the service and technology agreement. The package applies to businesses that received preliminary or final approval for the KJDA project on or before June 26, 2009. Corporations use Schedule KJDA and Schedule KJDA-T, while pass-through entities and general partnerships use Schedule KJDA-SP and Schedule KJDA-T. The package tracks project income, LLET, income tax, approved costs, rental payments, state wage assessment credits, local wage assessment credits, in-lieu-of credits, KJDA tax credit limitations, and credits claimed on the return. Only one approved KJDA project should be reported in each package, so a business with more than one approved project must complete a separate package for each project.
How To File Kentucky PKG KJDA
Use Kentucky PKG KJDA only if the business has approval for the Kentucky Jobs Development Act credit. The package should be attached to the Kentucky return that applies to the filer. A corporation filing Form 720 or Form 720U must complete Schedule KJDA and Schedule KJDA-T. A pass-through entity or general partnership filing Form PTE or Form 725 must complete Schedule KJDA-SP and Schedule KJDA-T.
Each package should include only one KJDA incentive project. If the business has more than one approved economic development project, complete a separate package for each project. Tax incentives can only be claimed during the term of the incentive agreement. If the taxable year is the first or last year of the agreement, the incentive must be prorated for the eligible part of the year.
Separate period accounting is recommended. If separate period accounting is not available, calculate a proration factor. For the first year, divide the number of days from the activation date through the end of the taxable year by the total number of days in the taxable year. For the last year, divide the number of days from the first day of the taxable year through the end of the agreement term by the total number of days in the taxable year. Then multiply total income by the proration factor to determine the project income for the eligible period.
How To Complete Kentucky PKG KJDA
Package-Level Instructions
Line 1: Package Name: Use this package for the Kentucky Jobs Development Act, also called KJDA.
Line 2: Tax Year: Confirm that the package is for the correct taxable year before completing the schedules.
Line 3: Approval Requirement: Use this package only if the business has received approval for the KJDA credit through the Kentucky economic development process.
Line 4: Approval Date Rule: The business must have received preliminary or final approval for the KJDA project on or before June 26, 2009.
Line 5: Return Attachment: Attach the completed KJDA package to Form 720, Form 720U, Form PTE, or Form 725, depending on the type of return being filed.
Line 6: One Project Per Package: Include only one KJDA incentive project in each package. Do not combine more than one project in the same package.
Line 7: Corporation Filing Rule: If the entity files Form 720 or Form 720U, complete Schedule KJDA and Schedule KJDA-T.
Line 8: Pass-Through Entity Filing Rule: If the entity files Form PTE or Form 725, complete Schedule KJDA-SP and Schedule KJDA-T.
Line 9: First Year Proration: In the first year of the agreement, claim the incentive only for the period beginning on the activation date and ending on the last day of the taxable year.
Line 10: Last Year Proration: In the last year of the agreement, claim the incentive only for the period beginning on the first day of the taxable year and ending on the final day of the agreement term.
Line 11: Separate Period Accounting: Use separate period accounting when available to identify the project income, receipts, profits, and other project amounts for the eligible period.
Line 12: Proration Factor: If separate period accounting is not available, use the correct proration factor to calculate eligible project income for the first or last year.
Schedule KJDA Instructions For Corporations
Line 13: Taxable Year Ending: Enter the month and year when the corporation’s taxable year ends.
Line 14: Name Of Corporation: Enter the full legal name of the corporation claiming the KJDA credit.
Line 15: Federal Identification Number: Enter the corporation’s federal identification number.
Line 16: Kentucky Corporation/LLET Account Number: Enter the Kentucky Corporation or LLET account number. It must be 9 digits. If it has only 6 digits, add leading zeros.
Line 17: Location Of Project: Enter the physical location of the approved KJDA project.
Line 18: City: Enter the city where the KJDA project is located.
Line 19: County: Enter the county where the KJDA project is located.
Line 20: Activation Date Of KJDA Incentive Agreement: Enter the month, day, and year when the KJDA incentive agreement became active.
Line 21: Economic Development Project Number: Enter the project number assigned to the approved KJDA project.
Schedule KJDA, Part I, Computation Of LLET Excluding KJDA Project
Line 22: Part I, Line 1, LLET From Form 720 Or Form 720U: Enter the LLET from Form 720, Part II, line 1, or Form 720U, Schedule U8, Section E, line 1.
Line 23: Part I, Line 2, LLET On KJDA Project: Enter the LLET on the KJDA project from Schedule L-ECON. Schedule L-ECON should use only the Kentucky gross receipts and Kentucky gross profits from the KJDA project.
Line 24: Part I, Line 3, LLET Excluding KJDA Project: Subtract Part I, line 2 from Part I, line 1. Enter the result as LLET excluding the KJDA project.
Schedule KJDA, Part II, Section A, Computation Of Corporation Tax
Line 25: Section A, Line 1, Income Tax: Enter the income tax from Form 720, Part III, line 1, or Form 720U, Schedule U5, Section D, line 8.
Line 26: Section A, Line 2, LLET Of Corporation: Enter the corporation’s LLET from Part I, line 1.
Line 27: Section A, Line 3, Nonrefundable LLET Credit: Subtract $175 from Section A, line 2. Enter the result, but do not enter more than Section A, line 1.
Line 28: Section A, Line 4, Total Corporation Tax: Add Section A, lines 1 and 2, then subtract Section A, line 3. Enter the result.
Schedule KJDA, Part II, Section B, Computation Of Tax Excluding KJDA Project
Line 29: Section B, Line 1, Taxable Net Income: Enter taxable net income from Form 720, Part I, line 43, or Form 720U, Schedule U5, Section D, line 7.
Line 30: Section B, Line 2, Net Income From KJDA Project: Enter the net income from the KJDA project. If the project has a loss, enter zero.
Line 31: Section B, Line 3, Taxable Net Income Excluding KJDA Project: Subtract Section B, line 2 from Section B, line 1. If line 2 is greater than line 1, enter zero.
Line 32: Section B, Line 4, Income Tax Liability Excluding KJDA Project: Multiply Section B, line 3 by 5%. Enter the result.
Line 33: Section B, Line 5, LLET Excluding LLET On KJDA Project: Enter the amount from Part I, line 3.
Line 34: Section B, Line 6, LLET Credit Against Tax Excluding KJDA Project: Subtract $175 from Section B, line 5. Enter the result, but do not enter more than Section B, line 4.
Line 35: Section B, Line 7, Total Tax Excluding KJDA Project: Add Section B, lines 4 and 5, then subtract Section B, line 6.
Line 36: Section B, Line 8, Total Tax Attributable To KJDA Project: Subtract Section B, line 7 from Section A, line 4. Enter the result here and also carry it to Part III, line 1.
Schedule KJDA, Part III, Limitation
Line 37: Part III, Line 1, Tax Liability Attributable To KJDA Project: Enter the amount from Part II, Section B, line 8.
Line 38: Part III, Line 2, Limitation From Schedule KJDA-T: Enter the limitation from Schedule KJDA-T, Column G.
Line 39: Part III, Line 3, Allowable KJDA Tax Credit: Enter the smaller of Part III, line 1 or Part III, line 2. This is the allowable KJDA tax credit.
Line 40: Schedule TCS Entry: Enter the allowable credit on Schedule TCS, Part I, Column E and Column F.
Line 41: Schedule L-ECON Attachment: Attach Schedule L-ECON when computing the separate LLET for the KJDA project.
Line 42: Multiple Schedule L-ECON Rule: If the corporation has more than one approved project, attach a separate Schedule L-ECON for each project’s LLET computation.
Line 43: First And Last Year Gross Receipts Rule: In the first and last years of each project, include only Kentucky gross receipts and Kentucky gross profits received during the agreement term.
Line 44: Other Operations Attachment: If the corporation has operations other than the KJDA project, attach schedules showing how Kentucky gross receipts and Kentucky gross profits from the KJDA project were calculated.
Line 45: Corporation Project Income Rule: If the corporation’s only Kentucky operation is the KJDA project, enter the same taxable net income amount on Section B, line 1 and Section B, line 2.
Line 46: Net Income Schedule Attachment: If the corporation has operations other than the KJDA project, attach schedules showing how the KJDA project net income was calculated.
Line 47: Separate Facility Rule: If the KJDA project is a fully separate facility, determine project net income, Kentucky gross receipts, and Kentucky gross profits using separate accounting for that facility.
Line 48: Expansion Facility Rule: If the KJDA project expands an existing facility, first determine the entire facility’s amounts using separate accounting, then use the approved formula to assign the correct part to the KJDA project.
Line 49: Approved Formula Attachment: If an approved formula is used for an expansion project, attach the Department of Revenue approval letter.
Line 50: Alternative Method Attachment: If separate accounting is not practical and another approved method is used, attach the Department of Revenue approval letter.
Line 51: Multiple Corporation Projects: If the corporation has more than one economic development project, compute the credit separately for each project using the correct tax computation schedule.
Schedule KJDA-SP Instructions For Pass-Through Entities
Line 52: Taxable Year Ending: Enter the month and year when the pass-through entity’s taxable year ends.
Line 53: Name Of Pass-Through Entity: Enter the full legal name of the pass-through entity.
Line 54: Federal Identification Number: Enter the entity’s federal identification number.
Line 55: Kentucky Corporation/LLET Account Number: Enter the Kentucky Corporation or LLET account number. It must be 9 digits. If it has only 6 digits, add leading zeros.
Line 56: Location Of Project: Enter the physical location of the approved KJDA project.
Line 57: City: Enter the city where the project is located.
Line 58: County: Enter the county where the project is located.
Line 59: Activation Date Of KJDA Incentive Agreement: Enter the month, day, and year when the KJDA incentive agreement became active.
Line 60: Economic Development Project Number: Enter the assigned economic development project number.
Schedule KJDA-SP, Part I, Computation Of KJDA Tax Credit And Tax Due
Line 61: Part I, Line 1, Kentucky Taxable Income On KJDA Project: Enter the Kentucky taxable income from the KJDA project. If the entity’s only operation is the KJDA project, use the net income or loss from Form PTE. If the entity has other operations, attach a schedule showing how the KJDA project income or loss was calculated.
Line 62: Part I, Line 2, Net Operating Loss Deduction On KJDA Project: Enter any net operating loss deduction from the KJDA project that is being carried forward from previous years.
Line 63: Part I, Line 3, Kentucky Taxable Income After Net Operating Loss Deduction: Subtract line 2 from line 1. Enter the result.
Line 64: Part I, Line 4, Income Tax Liability Of KJDA Project: Multiply line 3 by 5%. Enter the project income tax liability.
Line 65: Part I, Line 5, LLET On KJDA Project: Enter the LLET on the KJDA project from Schedule L-ECON. General partnerships should not complete this line.
Line 66: Part I, Line 6, Nonrefundable LLET Credit: Subtract $175 from line 5. Enter the result, but do not enter more than line 4. General partnerships should not complete this line.
Line 67: Part I, Line 7, Total Tax On KJDA Project: Add lines 4 and 5, then subtract line 6. Enter the total tax on the KJDA project.
Line 68: Part I, Line 8, Limitation: Enter the limitation from Schedule KJDA-T, Column G.
Line 69: Part I, Line 9(a), KJDA Tax Credit: Enter the smaller of line 7 or line 8 if the entity is claiming the amount as a KJDA tax credit.
Line 70: Part I, Line 9(b), Estimated Tax Payment: Enter the smaller of line 7 or line 8 if the entity elects to use the amount as an estimated tax payment instead of a KJDA tax credit. If this option is chosen, complete Part II.
Line 71: Line 9 Entry Rule: Enter an amount on either line 9(a) or line 9(b), not both.
Line 72: Part I, Line 10, Tax Due On The Project: If line 7 is greater than the amount entered on line 9(a) or line 9(b), enter the difference as tax due on the project. Add this amount to Form PTE, Part II, line 16, or Form 725, Part II, line 15.
Schedule KJDA-SP, Part II, Estimated Tax Election
Line 73: Election Statement: Complete Part II only if the pass-through entity chooses to apply the allowable KJDA amount as an estimated tax payment instead of a credit.
Line 74: Name Of Pass-Through Entity In Election: Enter the name of the pass-through entity making the election.
Line 75: Taxable Year Ended In Election: Enter the taxable year ending date for the election.
Line 76: Estimated Tax Payment Amount: The election applies an amount equal to the smaller of Part I, line 7 or Part I, line 8 as an estimated tax payment.
Line 77: Signature Of Shareholder, Partner, Or Member: The shareholder, partner, or member making the election must sign.
Line 78: Print Name: Print the name of the person signing the election.
Line 79: Date: Enter the date the election is signed.
Line 80: Credit Does Not Pass Through: The KJDA credit does not pass through to members, partners, or shareholders.
Line 81: Form PTE(K) Adjustment: Use Form PTE(K) to exclude the net income from the KJDA project from the distributive share income of partners, members, or shareholders.
Line 82: Multiple Pass-Through Projects: If the pass-through entity has multiple economic development projects, complete the applicable schedule for each project to determine the credit and any net tax liability.
Line 83: First And Last Year Income Rule: In the first and last years of the project, include only Kentucky taxable income received during the agreement term.
Line 84: Separate Facility Rule: If the KJDA project is a separate facility, determine net income, Kentucky gross receipts, and Kentucky gross profits using separate accounting for that facility.
Line 85: Expansion Facility Rule: If the KJDA project expands an existing facility, use separate accounting for the entire facility and an approved formula to assign the correct part to the KJDA project.
Line 86: Approved Formula Attachment: If an approved expansion formula is used, attach the Department of Revenue approval letter.
Line 87: Alternative Method Rule: If separate accounting is not practical and another approved method is used, attach the Department of Revenue approval letter.
Line 88: Net Operating Loss Rule: KJDA project losses do not pass through to partners, members, or shareholders. Prior year KJDA project net operating losses must be subtracted from project income before the credit is calculated.
Line 89: General Partnership Rule: A general partnership is not subject to LLET, so it should not complete Schedule KJDA-SP lines 5 and 6.
Line 90: Schedule L-ECON Rule For Pass-Through Entities: Use Schedule L-ECON to compute a separate LLET for the KJDA project when LLET applies.
Schedule KJDA-T Tracking Schedule Instructions
Line 91: Name Of Entity: Enter the legal name of the entity maintaining the KJDA tracking schedule.
Line 92: Entity Type, Corporation: Check this box if the entity is a corporation.
Line 93: Entity Type, Limited Liability Pass-Through Entity: Check this box if the entity is a limited liability pass-through entity.
Line 94: Entity Type, General Partnership: Check this box if the entity is a general partnership.
Line 95: Entity Type, Other: Check this box if another entity type applies, then write the entity type on the line provided.
Line 96: Federal Identification Number: Enter the entity’s federal identification number.
Line 97: Kentucky Corporation/LLET Account Number: Enter the Kentucky Corporation or LLET account number. It must be 9 digits. If it has only 6 digits, add leading zeros.
Line 98: Location Of Project: Enter the physical location of the approved KJDA project.
Line 99: City: Enter the city where the project is located.
Line 100: County: Enter the county where the project is located.
Line 101: Activation Date Of KJDA Incentive Agreement: Enter the month, day, and year when the KJDA incentive agreement became active.
Line 102: Economic Development Project Number: Enter the assigned project number.
Line 103: Schedule KJDA-T Purpose: Use Schedule KJDA-T to maintain a record of approved costs, wage assessments, in-lieu-of credits, income tax credits, and LLET credits for the duration of the service and technology agreement.
Line 104: Separate Tracking Schedule Requirement: Keep a separate Schedule KJDA-T for each approved KJDA project for the full duration of the service and technology agreement.
Line 105: Year-By-Year Tracking Requirement: Starting with the first taxable year of the KJDA service and technology agreement, complete Columns A through H using a separate row for each year.
Line 106: Current Year Attachment: Attach the updated Schedule KJDA-T to Schedule KJDA or Schedule KJDA-SP when filing the Kentucky tax return.
Line 107: Wage Assessment Attachment: Attach an updated copy of Schedule KJDA-T to the Wage Assessment Report and Annual Reconciliation.
Line 108: Schedule TCS Credit Reporting: Enter all tax credits on Schedule TCS. Credits must be claimed in the required order.
Line 109: Credit Limitation Rule: Total credits cannot reduce the LLET below the $175 minimum and cannot reduce income tax below zero.
Schedule KJDA-T Columns
Line 110: Column A, Taxable Year Ended: Enter the month and year for the ending date of the taxable year shown on that row.
Line 111: Column B, Carry Forward Balance: For the taxable year that includes the activation date of the service and technology agreement, enter 50% of the total start-up costs verified by the Kentucky Economic Development Finance Authority.
Line 112: Column B, Later Years: For each later year, compare the prior year Column G amount with the prior year Column H amount. If prior year Column G is greater, enter the difference. If prior year Column H equals prior year Column G, enter zero.
Line 113: Column B Overclaim Warning: If the prior year Column H amount is greater than prior year Column G, too much credit was claimed. Review and correct the credit computation before continuing.
Line 114: Column C, 50 Percent Of Approved Annual Rental Payments: Enter 50% of the rental payments made during the taxable year as stated in the service and technology agreement.
Line 115: Column D, State Wage Assessment Credit Claimed: Enter the total amount of state wage assessments withheld from employee salaries during the taxable year.
Line 116: Column E, Local Wage Assessment Credit Claimed: Enter the total local wage assessment credit claimed, if the entity is eligible.
Line 117: Column F, In-Lieu-Of Credits Received: If the local jurisdiction elected to provide in-lieu-of credits, enter the amount of in-lieu-of credits received during the taxable year.
Line 118: Column G, KJDA Tax Credit Limitation: Add Columns B and C, then subtract Columns D, E, and F. Enter the result as the KJDA tax credit limitation.
Line 119: Column G Transfer For Corporations: If the filer is a corporation, carry Column G to Schedule KJDA, Part III, line 2.
Line 120: Column G Transfer For Pass-Through Entities: If the filer is a pass-through entity, carry Column G to Schedule KJDA-SP, Part I, line 8.
Line 121: Column H, KJDA Tax Credit Claimed On Return: Enter the greater of the KJDA credit claimed against LLET or income tax for this project as reported on Schedule TCS. If no credit is claimed, enter zero.
Line 122: Final Review: Check the entity name, entity type, identification numbers, project location, activation date, project number, taxable year rows, start-up cost carryforward, annual rental payments, wage assessment credits, in-lieu-of credits, limitation amount, and credit claimed before filing.
Line 123: Final Filing Step: Attach the required KJDA schedules to the proper Kentucky return and make sure all transferred amounts match Schedule KJDA, Schedule KJDA-SP, Schedule KJDA-T, Schedule L-ECON, and Schedule TCS.