Kentucky Form 725 is the Kentucky Single Member LLC Individually Owned Income and LLET Return. It is used by a single member limited liability company that is individually owned and has Kentucky income, Kentucky business activity, or Kentucky Limited Liability Entity Tax reporting obligations. The form reports the LLC’s Kentucky net distributable income and calculates the Limited Liability Entity Tax, commonly called LLET. It also collects identifying information about the LLC, its owner, its Kentucky account number, its filing status, its residency status, and its business activity in Kentucky. The return includes several important parts. Part I reports income and deductions. Part II calculates the LLET, credits, payments, tax due, or refund. Part III calculates the member’s LLET credit. Part IV is used when the return is final or covers a short tax period. Part V explains changes on an amended return. Schedule Q asks required questions about the single member LLC, ownership, disregarded entities, pass-through activity, and accounting method. Schedule L calculates the LLET based on Kentucky gross receipts, Kentucky gross profits, total gross receipts, and total gross profits. A properly completed Form 725 helps Kentucky determine the LLC’s income reporting, LLET liability, available credits, required attachments, and whether payment or refund processing applies.
How To File Kentucky Form 725
Complete the return using the LLC’s tax year, Kentucky Corporation or LLET account number, FEIN or Social Security number, LLC legal name, business address, telephone number, state of organization, date of organization, Kentucky NAICS code, and Kentucky business activity. Then complete all income, tax, credit, payment, refund, questionnaire, and Schedule L sections that apply. Attach all required schedules, including any supporting income schedules, Schedule TCS for tax credits, Schedule COGS when cost of goods sold is reported, Schedule DE when disregarded entities are included, Schedule L-C when applicable, Form 2220-K if an estimated tax penalty applies, and supporting federal forms and schedules such as Federal Schedule C, Schedule E, or Schedule F.
If the return shows a refund or no payment, mail it to Kentucky Department of Revenue, Frankfort, KY 40618-0010. If the return includes a payment, mail it to Kentucky Department of Revenue, Frankfort, KY 40620-0021. Make any check payable to Kentucky State Treasurer. Payment may also be made through Kentucky e-pay options. The member must sign and date the return. A paid preparer must also sign and complete the preparer information if one prepared the return.
How To Complete Kentucky Form 725
Return Header And LLC Information
Tax Year Line: Enter whether the return is for calendar year 2025 or for a fiscal tax year. If it is a fiscal year, enter the beginning month, day, and year, then the ending month, day, and year.
Line A, LLET Exemption Code: Enter the LLET exemption code only if the LLC qualifies for an exemption. If there is no exemption, leave this field blank unless instructed otherwise.
Line B, FEIN/SSN: Enter the LLC’s Federal Employer Identification Number or the single member’s Social Security number, whichever applies to the filing situation.
Line C, Kentucky Corporation/LLET Account Number: Enter the required Kentucky Corporation or LLET account number. It must contain 9 digits. If the account number has only 6 digits, place zeros at the beginning to make it 9 digits.
Name Of LLC: Enter the full legal name of the single member LLC.
Change Of Name Checkbox: Check this box only if the LLC’s name has changed since the last Kentucky filing.
Telephone Number: Enter the best phone number for the LLC or responsible contact.
Line D, 3-Factor Apportionment Code: Enter the applicable 3-factor apportionment code if the LLC uses apportionment for Kentucky reporting.
Number And Street: Enter the LLC’s mailing street address.
City, State, ZIP Code: Enter the city, state, and ZIP code for the LLC’s mailing address.
Line E, Check Applicable Boxes: Check every filing status box that applies to this return.
Initial Return Checkbox: Check this box if this is the LLC’s first Kentucky Form 725 filing.
Change Of Accounting Period Checkbox: Check this box if the LLC changed its accounting period for this return.
Qualified Investment Partnership Checkbox: Check this box if the LLC qualifies as a qualified investment partnership.
Final Return Checkbox: Check this box if this is the LLC’s final Kentucky return. Also complete Part IV.
Short-Period Return Checkbox: Check this box if the return covers less than a full tax year. Also complete Part IV.
Amended Return Checkbox: Check this box if the LLC is correcting a previously filed return. Also complete Part V.
State Of Organization: Enter the state where the LLC was legally organized.
Principal Business Activity In KY: Enter the main business activity the LLC performs in Kentucky.
Date Of Organization: Enter the date the LLC was organized.
NAICS Code Number In KY: Enter the Kentucky NAICS code that best matches the LLC’s Kentucky business activity.
Line F, Single Member Is A Kentucky Resident Or Non-Resident: Check whether the single member owner is a Kentucky resident or a non-resident.
Non-Resident Filing Note: If the single member is a non-resident, the LLC must also file Form 740NP-WH.
Part I, Kentucky Net Distributable Income
Part I, Line 1, Ordinary Income (Loss): Enter the LLC’s ordinary business income or loss for the tax year.
Part I, Line 2, Net Income (Loss) From Rental Real Estate Activities: Enter the net income or loss from rental real estate activity.
Part I, Line 3, Net Income (Loss) From Other Rental Activities: Enter the net income or loss from rental activities that are not rental real estate.
Part I, Line 4, Interest Income: Enter the LLC’s interest income.
Part I, Line 5, Dividend Income: Enter the LLC’s dividend income.
Part I, Line 6, Royalty Income: Enter the LLC’s royalty income.
Part I, Line 7, Net Short-Term And Long-Term Capital Gain (Loss): Enter the total net capital gain or loss. If the result is a net loss, do not report more than $3,000 of loss on this line.
Part I, Line 8, IRC Section 1231 Net Gain (Loss): Enter the LLC’s net gain or loss from IRC Section 1231 transactions.
Part I, Line 9, Other Income: Enter other income not already reported on lines 1 through 8. Attach a schedule explaining the amount.
Part I, Line 10, Other Deductions: Enter other deductions that apply to the LLC and are not already reflected in the previous lines. Attach a schedule explaining the deductions.
Part I, Line 11, Total Net Distributable Income: Add lines 1 through 9, then subtract line 10. Enter the result.
Part I, Line 12, Apportionment Percentage: Enter 100 percent if all income is assigned to Kentucky. If the LLC uses apportionment, enter the apportionment fraction from Schedule A.
Official Use Only Area: Do not complete this section. It is reserved for Kentucky processing.
Part II, LLET Computation
Part II, Line 1, Schedule L, Section E, Line 1: Enter the LLET amount from Schedule L, Section E, line 1.
Part II, Line 2, Tax Credit Recapture: Enter any tax credit recapture amount that must be added back.
Part II, Line 3, Total: Add lines 1 and 2. Enter the total.
Part II, Line 4, Nonrefundable LLET Credit From Kentucky Schedule K-1: Enter any nonrefundable LLET credit passed through to the LLC from Kentucky Schedule K-1.
Part II, Line 5, Nonrefundable Tax Credits: Enter nonrefundable tax credits claimed on Schedule TCS. Attach Schedule TCS.
Part II, Line 6, LLET Liability: Subtract lines 4 and 5 from line 3. Compare that result with the $175 minimum tax. Enter the greater amount.
Part II, Line 7, Estimated Tax Payments: Enter all estimated tax payments made for the tax year.
Part II, Line 8, Refundable Tax Credits: Enter refundable tax credits claimed on Schedule TCS. Attach Schedule TCS.
Part II, Line 9, Reserved For Future Use: Leave this line blank unless Kentucky provides a specific instruction for the year.
Part II, Line 10, Extension Payment: Enter any payment made with an extension request.
Part II, Line 11, Prior Year’s Tax Credit: Enter any prior year credit carried forward and applied to this year.
Part II, Line 12, LLET Paid On Original Return: If filing an amended return, enter the LLET already paid with the original return.
Part II, Line 13, LLET Overpayment On Original Return: If filing an amended return, enter the LLET overpayment shown on the original return.
Part II, Line 14, Estimated Tax Penalty: Enter any estimated tax penalty. Attach Form 2220-K if this line applies.
Part II, Line 15, LLET And Estimated Tax Penalty Due: Add lines 6, 13, and 14. Then subtract lines 7 through 12. If the result is positive, enter the tax due amount.
Part II, Line 16, LLET Overpayment: Add lines 7 through 12. Then subtract lines 6, 13, and 14. If the result is positive, enter the overpayment.
Part II, Line 17, Credited To 2025 Interest: Enter the amount of overpayment to be credited to 2025 interest, if applicable.
Part II, Line 18, Credited To 2025 Late File/Pay Penalty: Enter the amount of overpayment to be credited to a 2025 late filing or late payment penalty, if applicable.
Part II, Line 19, Credited To 2026 LLET: Enter the amount of overpayment to apply to the LLC’s 2026 LLET.
Part II, Line 20, Amount To Be Refunded: Subtract lines 17 through 19 from line 16. Enter the amount to be refunded.
Part III, LLET Credit For Member
Part III, Line 1, LLET Liability: Add Part II, line 4 and Part II, line 6. Enter the total.
Part III, Line 2, Minimum Tax: The minimum tax is $175.00.
Part III, Line 3, Member’s LLET Credit: Subtract line 2 from line 1. Enter the member’s LLET credit.
Part IV, Explanation Of Final Return And/Or Short-Period Return
Part IV, Ceased Operations In Kentucky Checkbox: Check this box if the LLC stopped operating in Kentucky.
Part IV, Change In Filing Status Checkbox: Check this box if the LLC’s filing status changed.
Part IV, Change Of Ownership Checkbox: Check this box if ownership changed.
Part IV, Merger Checkbox: Check this box if the LLC was involved in a merger.
Part IV, Successor To Previous Business Checkbox: Check this box if the LLC is a successor to another business.
Part IV, Other Checkbox: Check this box if another reason explains the final or short-period return. Write the reason in the space provided.
Part V, Explanation Of Amended Return Changes
Part V, Explanation Area: If this is an amended return, explain each change clearly. State what was changed, why it was changed, and which lines or schedules were affected. Include enough detail so the amended filing can be understood without confusion.
Signature, Preparer, Enclosures, And Payment
Declaration Statement: Review the full return, schedules, and statements before signing. The signer is declaring that the return is true, correct, and complete to the best of their knowledge.
Signature Of Member: The single member owner must sign the return.
Date: Enter the date the member signs the return.
Name Of Member: Print the member’s name clearly.
Title: Enter the member’s title, if applicable.
Signature Of Preparer: If a paid preparer completed the return, the preparer must sign here.
Preparer Date: Enter the date the preparer signs the return.
Name Of Preparer Or Firm: Print the preparer’s name or the firm name.
ID Number: Enter the preparer or firm identification number.
Email And/Or Telephone Number: Enter the preparer’s email address or telephone number.
May The DOR Discuss This Return With This Preparer: Check Yes if Kentucky may discuss the return with the preparer. Check No if not.
Enclose Supporting Forms And Schedules: Include all required supporting federal forms and schedules, including Federal Schedule C, Schedule E, and/or Schedule F when applicable.
Refund Or No Payment Mailing Address: If the return has a refund or no payment, mail it to Kentucky Department of Revenue, Frankfort, KY 40618-0010.
Payment Check Payable To: Make the check payable to Kentucky State Treasurer.
E-Pay Options: Payment may be made through Kentucky e-pay options.
With Payment Mailing Address: If sending payment with the return, mail it to Kentucky Department of Revenue, Frankfort, KY 40620-0021.
Schedule Q, Single Member Limited Liability Company Questionnaire
Schedule Q Important Instruction: Questions 1 and 2 must be answered if this is the LLC’s initial return or if a return was not filed under the same name and same federal ID number for the prior year. If these questions are not answered, Kentucky may request a delinquent return. Questions 3 through 7 must be completed by all single member LLCs.
Schedule Q, Line 1, Single Member Owner Name, Address, And SSN Or FEIN: Enter the owner’s name, Social Security number or federal ID number, and address.
Schedule Q, Line 2, Foreign LLC Date Qualified To Do Business In Kentucky: If the LLC is a foreign limited liability company, enter the date it qualified to do business in Kentucky.
Schedule Q, Line 3, Books Are In Care Of: Enter the name and address of the person or office that keeps the LLC’s books and records.
Schedule Q, Line 4, Disregarded Entities Included In This Return: Check Yes or No. If Yes, attach Schedule DE.
Schedule Q, Line 5, Partner In A Pass-Through Entity Doing Business In Kentucky: Check Yes or No to show whether the LLC was a partner in a pass-through entity doing business in Kentucky during the tax year.
Schedule Q, Line 5A, Pass-Through Entity Name And FEIN: If Line 5 is Yes, enter the first pass-through entity’s name and FEIN.
Schedule Q, Line 5B, Pass-Through Entity Name And FEIN: Enter the second pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 5C, Pass-Through Entity Name And FEIN: Enter the third pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 5D, Pass-Through Entity Name And FEIN: Enter the fourth pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 5E, Pass-Through Entity Name And FEIN: Enter the fifth pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 5F, Pass-Through Entity Name And FEIN: Enter the sixth pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 5G, Pass-Through Entity Name And FEIN: Enter the seventh pass-through entity’s name and FEIN, if applicable.
Schedule Q, Line 6, Doing Business In Kentucky Other Than Through A Pass-Through Entity: Check Yes or No to show whether the LLC did business in Kentucky directly, apart from any interest held in a pass-through entity doing business in Kentucky.
Schedule Q, Line 7(a), Cash Basis: Check this box if the return was prepared using the cash method of accounting.
Schedule Q, Line 7(b), Accrual Basis: Check this box if the return was prepared using the accrual method of accounting.
Schedule Q, Line 7(c), Other Accounting Method: Check this box if the return was prepared using another accounting method, then describe the method in the space provided.
Schedule L, Limited Liability Entity Tax Computation
Schedule L, Schedule L-C Checkbox: Check this box and complete Schedule L-C if the entity filing the return is a partner or member of a limited liability pass-through entity or general partnership doing business in Kentucky. Enter the total amounts from Schedule L-C in Schedule L, Section A.
Schedule L, Section A, Computation Of Kentucky Gross Receipts And Gross Profits
Schedule L, Section A, Line 1(a), Gross Receipts Less Returns And Allowances: Enter Kentucky gross receipts after subtracting returns and allowances.
Schedule L, Section A, Line 1(b), Kentucky Statutory Gross Receipts Reductions: Enter statutory gross receipts reductions allowed for Kentucky purposes.
Schedule L, Section A, Line 2, Adjusted Gross Receipts: Subtract line 1(b) from line 1(a). Enter the result.
Schedule L, Section A, Line 3(a), Cost Of Goods Sold: Enter Kentucky cost of goods sold. Attach Schedule COGS.
Schedule L, Section A, Line 3(b), Kentucky Statutory Cost Of Goods Sold Reductions: Enter statutory reductions to cost of goods sold allowed for Kentucky purposes.
Schedule L, Section A, Line 4, Adjusted Cost Of Goods Sold: Subtract line 3(b) from line 3(a). Enter the result.
Schedule L, Section A, Line 5, Gross Profits: Subtract line 4 from line 2. Enter the result.
Schedule L, Section B, Computation Of Total Gross Receipts And Gross Profits
Schedule L, Section B, Line 1, Adjusted Gross Receipts: Enter total adjusted gross receipts from all sources.
Schedule L, Section B, Line 2, Cost Of Goods Sold: Enter total cost of goods sold from all sources. Attach Schedule COGS.
Schedule L, Section B, Line 3, Gross Profits: Subtract line 2 from line 1. Enter the result.
Schedule L, Section B, Skip Instruction: If Section B, line 1 or Section B, line 3 is $3,000,000 or less, skip Sections C and D. Enter $175 in Section E, line 1, then also enter $175 on Part II, line 1. If the amounts are above that threshold, continue to Section C.
Schedule L, Section C, Computation Of Gross Receipts LLET
Schedule L, Section C, Line 1, Gross Receipts More Than $3,000,000 But Less Than $6,000,000: If gross receipts from all sources on Section B, line 1 are more than $3,000,000 but less than $6,000,000, calculate the amount using this formula: Section A, line 2 multiplied by 0.00095, then subtract $2,850 multiplied by $6,000,000 minus Section A, line 2, divided by $3,000,000. If the result is less than zero, enter zero.
Schedule L, Section C, Line 2, Gross Receipts Of $6,000,000 Or More: If gross receipts from all sources on Section B, line 1 are $6,000,000 or more, multiply Section A, line 2 by 0.00095. Enter the result.
Schedule L, Section C, Line 3, Gross Receipts LLET Amount: Enter the amount from Section C, line 1 or Section C, line 2, whichever applies.
Schedule L, Section D, Computation Of Gross Profits LLET
Schedule L, Section D, Line 1, Gross Profits More Than $3,000,000 But Less Than $6,000,000: If gross profits from all sources on Section B, line 3 are more than $3,000,000 but less than $6,000,000, calculate the amount using this formula: Section A, line 5 multiplied by 0.0075, then subtract $22,500 multiplied by $6,000,000 minus Section A, line 5, divided by $3,000,000. If the result is less than zero, enter zero.
Schedule L, Section D, Line 2, Gross Profits Of $6,000,000 Or More: If gross profits from all sources on Section B, line 3 are $6,000,000 or more, multiply Section A, line 5 by 0.0075. Enter the result.
Schedule L, Section D, Line 3, Gross Profits LLET Amount: Enter the amount from Section D, line 1 or Section D, line 2, whichever applies.
Schedule L, Section E, Computation Of LLET
Schedule L, Section E, Line 1, Final LLET Amount: Enter the lesser of Section C, line 3 or Section D, line 3. If the result is less than $175, enter $175. Also carry this amount to Part II, line 1.