Kentucky PKG KJRA is a tax incentive package used by a business entity that has been approved for the Kentucky Jobs Retention Act incentive. The package helps the business report the KJRA tax incentive, calculate the allowable credit, and track the approved project costs and tax credits during the incentive agreement. Corporations use Schedule KJRA and Schedule KJRA-T, while pass-through entities and general partnerships use Schedule KJRA-SP and Schedule KJRA-T. The package applies to one approved KJRA project at a time. It is used to calculate tax liability connected to the KJRA project, compare that liability with the available credit limitation, and determine how much credit may be claimed. Schedule KJRA-T is also important because it keeps a year-by-year record of approved costs, transferred credits, state wage assessment credits, local wage assessment credits, the KJRA tax credit limitation, and the credit claimed on the return.
How To File Kentucky PKG KJRA
Use Kentucky PKG KJRA only if the business has approval for the Kentucky Jobs Retention Act incentive. Attach the package to the Kentucky return that applies to the business. A corporation filing Form 720 or Form 720U must complete Schedule KJRA and Schedule KJRA-T. A pass-through entity or general partnership filing Form PTE or Form 725 must complete Schedule KJRA-SP and Schedule KJRA-T.
Only one KJRA incentive project should be included in each package. If the business has more than one approved economic development project, prepare a separate package for each project. The incentive may be claimed only during the term of the incentive agreement. If the taxable year is the first or last year of the agreement, prorate the incentive for the eligible part of the year.
Separate period accounting is recommended. If separate period accounting is not available, use 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. Multiply total income by the proration factor to determine project income for the eligible period.
How To Complete Kentucky PKG KJRA
Package-Level Instructions
Line 1: Package Name: Use this package for the Kentucky Jobs Retention Act, also called KJRA.
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 approval for the KJRA incentive.
Line 4: Return Attachment: Attach the completed KJRA package to Form 720, Form 720U, Form PTE, or Form 725, depending on the type of return being filed.
Line 5: One Project Per Package: Include only one KJRA incentive project in each package. Do not combine more than one project in the same package.
Line 6: Corporation Filing Rule: If the entity files Form 720 or Form 720U, complete Schedule KJRA and Schedule KJRA-T.
Line 7: Pass-Through Entity Filing Rule: If the entity files Form PTE or Form 725, complete Schedule KJRA-SP and Schedule KJRA-T.
Line 8: 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 9: 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 10: Separate Period Accounting: Use separate period accounting when available to identify the project income, receipts, profits, and tax amounts for the eligible period.
Line 11: 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 KJRA Instructions For Corporations
Line 12: Taxable Year Ending: Enter the month and year when the corporation’s taxable year ends.
Line 13: Name Of Corporation: Enter the full legal name of the corporation claiming the KJRA credit.
Line 14: Federal Identification Number: Enter the corporation’s federal identification number.
Line 15: 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 16: Location Of Project: Enter the physical location of the approved KJRA project.
Line 17: City: Enter the city where the KJRA project is located.
Line 18: County: Enter the county where the KJRA project is located.
Line 19: Activation Date Of KJRA Incentive Agreement: Enter the month, day, and year when the KJRA incentive agreement became active.
Line 20: Economic Development Project Number: Enter the project number assigned to the approved KJRA project.
Schedule KJRA, Part I, Computation Of LLET Excluding KJRA Project
Line 21: 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 22: Part I, Line 2, LLET On KJRA Project: Enter the LLET on the KJRA project from Schedule L-ECON. Schedule L-ECON should use only the Kentucky gross receipts and Kentucky gross profits from the KJRA project.
Line 23: Part I, Line 3, LLET Excluding KJRA Project: Subtract Part I, line 2 from Part I, line 1. Enter the result as LLET excluding the KJRA project.
Schedule KJRA, Part II, Section A, Computation Of Corporation Tax
Line 24: 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 25: Section A, Line 2, LLET Of Corporation: Enter the corporation’s LLET from Part I, line 1.
Line 26: 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 27: Section A, Line 4, Total Corporation Tax: Add Section A, lines 1 and 2, then subtract Section A, line 3. Enter the result.
Schedule KJRA, Part II, Section B, Computation Of Tax Excluding KJRA Project
Line 28: 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 29: Section B, Line 2, Net Income From KJRA Project: Enter the net income from the KJRA project. If the project has a loss, enter zero.
Line 30: Section B, Line 3, Taxable Net Income Excluding KJRA Project: Subtract Section B, line 2 from Section B, line 1. If line 2 is greater than line 1, enter zero.
Line 31: Section B, Line 4, Income Tax Liability Excluding KJRA Project: Multiply Section B, line 3 by 5%. Enter the result.
Line 32: Section B, Line 5, LLET Excluding LLET On KJRA Project: Enter the amount from Part I, line 3.
Line 33: Section B, Line 6, LLET Credit Against Tax Excluding KJRA Project: Subtract $175 from Section B, line 5. Enter the result, but do not enter more than Section B, line 4.
Line 34: Section B, Line 7, Total Tax Excluding KJRA Project: Add Section B, lines 4 and 5, then subtract Section B, line 6.
Line 35: Section B, Line 8, Total Tax Attributable To KJRA 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 KJRA, Part III, Limitation
Line 36: Part III, Line 1, Tax Liability Attributable To KJRA Project: Enter the amount from Part II, Section B, line 8.
Line 37: Part III, Line 2, Limitation From Schedule KJRA-T: Enter the limitation from Schedule KJRA-T, Column G.
Line 38: Part III, Line 3, Allowable KJRA Tax Credit: Enter the smaller of Part III, line 1 or Part III, line 2. This is the allowable KJRA tax credit.
Line 39: Schedule TCS Entry: Enter the allowable credit on Schedule TCS, Part I, Column E and Column F.
Line 40: Schedule L-ECON Attachment: Attach Schedule L-ECON when computing the separate LLET for the KJRA project.
Line 41: 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 42: 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 43: Corporation Project Income Rule: If the corporation’s only Kentucky operation is the KJRA project, enter the same taxable net income amount on Section B, line 1 and Section B, line 2.
Line 44: First And Last Year Net Income Rule: In the first and last years of each project, calculate only Kentucky net income received during the term of the incentive agreement.
Line 45: Alternative Method Attachment: If separate accounting is not practical and another approved method is used, attach the Department of Revenue approval letter.
Line 46: 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 KJRA-SP Instructions For Pass-Through Entities
Line 47: Taxable Year Ending: Enter the month and year when the pass-through entity’s taxable year ends.
Line 48: Name Of Pass-Through Entity: Enter the full legal name of the pass-through entity.
Line 49: Federal Identification Number: Enter the entity’s federal identification number.
Line 50: 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 51: Location Of Project: Enter the physical location of the approved KJRA project.
Line 52: City: Enter the city where the project is located.
Line 53: County: Enter the county where the project is located.
Line 54: Activation Date Of KJRA Incentive Agreement: Enter the month, day, and year when the KJRA incentive agreement became active.
Line 55: Economic Development Project Number: Enter the assigned economic development project number.
Schedule KJRA-SP, Part I, Computation Of KJRA Tax Credit And Tax Due
Line 56: Part I, Line 1, Kentucky Taxable Income On KJRA Project: Enter the Kentucky taxable income from the KJRA project. If the entity’s only operation is the KJRA project, use the net income or loss from Form PTE. If the entity has other operations, attach a schedule showing how the KJRA project income or loss was calculated.
Line 57: Part I, Line 2, Net Operating Loss Deduction On KJRA Project: Enter any net operating loss deduction from the KJRA project that is being carried forward from previous years.
Line 58: Part I, Line 3, Kentucky Taxable Income After Net Operating Loss Deduction: Subtract line 2 from line 1. Enter the result.
Line 59: Part I, Line 4, Income Tax Liability Of KJRA Project: Multiply line 3 by 5%. Enter the project income tax liability.
Line 60: Part I, Line 5, LLET On KJRA Project: Enter the LLET on the KJRA project from Schedule L-ECON. General partnerships should not complete this line.
Line 61: 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 62: Part I, Line 7, Total Tax On KJRA Project: Add lines 4 and 5, then subtract line 6. Enter the total tax on the KJRA project.
Line 63: Part I, Line 8, Limitation: Enter the limitation from Schedule KJRA-T, Column G.
Line 64: Part I, Line 9(a), KJRA Tax Credit: Enter the smaller of line 7 or line 8 if the entity is claiming the amount as a KJRA tax credit.
Line 65: 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 KJRA tax credit. If this option is chosen, complete Part II.
Line 66: Line 9 Entry Rule: Enter an amount on either line 9(a) or line 9(b), not both.
Line 67: 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 KJRA-SP, Part II, Estimated Tax Election
Line 68: Election Statement: Complete Part II only if the pass-through entity chooses to apply the allowable KJRA amount as an estimated tax payment instead of a credit.
Line 69: Name Of Pass-Through Entity In Election: Enter the name of the pass-through entity making the election.
Line 70: Taxable Year Ended In Election: Enter the taxable year ending date for the election.
Line 71: 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 72: Signature Of Shareholder, Partner, Or Member: The shareholder, partner, or member making the election must sign.
Line 73: Print Name: Print the name of the person signing the election.
Line 74: Date: Enter the date the election is signed.
Line 75: Credit Does Not Pass Through: The KJRA credit does not pass through to members, partners, or shareholders.
Line 76: Form PTE(K) Adjustment: Use Form PTE(K) to exclude the net income from the KJRA project from the distributive share income of partners, members, or shareholders.
Line 77: 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 78: 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 79: Separate Facility Rule: If the KJRA project is a separate facility, determine net income, Kentucky gross receipts, and Kentucky gross profits using separate accounting for that facility.
Line 80: Alternative Method Rule: If separate accounting is not practical and another approved method is used, attach the Department of Revenue approval letter.
Line 81: Net Operating Loss Rule: KJRA project losses do not pass through to partners, members, or shareholders. Prior year KJRA project net operating losses must be subtracted from project income before the credit is calculated.
Line 82: General Partnership Rule: A general partnership is not subject to LLET, so it should not complete Schedule KJRA-SP lines 5 and 6.
Line 83: Schedule L-ECON Rule For Pass-Through Entities: Use Schedule L-ECON to compute a separate LLET for the KJRA project when LLET applies.
Schedule KJRA-T Tracking Schedule Instructions
Line 84: Name Of Entity: Enter the legal name of the entity maintaining the KJRA tracking schedule.
Line 85: Entity Type, Corporation: Check this box if the entity is a corporation.
Line 86: Entity Type, Limited Liability Pass-Through Entity: Check this box if the entity is a limited liability pass-through entity.
Line 87: Entity Type, General Partnership: Check this box if the entity is a general partnership.
Line 88: Entity Type, Other: Check this box if another entity type applies, then write the entity type on the line provided.
Line 89: Federal Identification Number: Enter the entity’s federal identification number.
Line 90: 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 91: Location Of Project: Enter the physical location of the approved KJRA project.
Line 92: City: Enter the city where the project is located.
Line 93: County: Enter the county where the project is located.
Line 94: Activation Date Of KJRA Incentive Agreement: Enter the month, day, and year when the KJRA incentive agreement became active.
Line 95: Economic Development Project Number: Enter the assigned project number.
Line 96: Schedule KJRA-T Purpose: Use Schedule KJRA-T to maintain a record of approved costs and tax credits, including income tax and LLET credits, for the duration of the agreement.
Line 97: Separate Tracking Schedule Requirement: Keep a separate Schedule KJRA-T for each approved KJRA project for the full duration of the agreement.
Line 98: Year-By-Year Tracking Requirement: Starting with the first taxable year of the KJRA agreement, complete Columns A through H using a separate row for each year.
Line 99: Current Year Attachment: Attach the updated Schedule KJRA-T to Schedule KJRA or Schedule KJRA-SP when filing the Kentucky tax return.
Line 100: Wage Assessment Attachment: Attach an updated copy of Schedule KJRA-T to the Wage Assessment Report and Annual Reconciliation.
Line 101: Schedule TCS Credit Reporting: Enter all tax credits on Schedule TCS. Credits must be claimed in the required order.
Line 102: Credit Limitation Rule: Total credits cannot reduce the LLET below the $175 minimum and cannot reduce income tax below zero.
Schedule KJRA-T Columns
Line 103: Column A, Taxable Year Ended: Enter the month, day, and year for the ending date of the taxable year shown on that row.
Line 104: Column B, Carry Forward Balance: Leave this column blank for the first taxable year of the agreement. 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 105: 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 106: Column C, Annual Approved Cost: Enter the portion of eligible costs approved by the authority that the company may recover through inducements. The negotiated percentage cannot exceed 50% of approved costs for the initial project, unless an approved supplemental project allows a higher percentage.
Line 107: Column D, Transferred Credits: Enter the balance of unused approved costs from a previously existing KIDA or KJDA project that is transferred to the KJRA project.
Line 108: Column E, State Wage Assessment Credit Claimed: Enter the total amount of state wage assessment credit claimed.
Line 109: Column F, Local Wage Assessment Credit Claimed: Enter the total amount of local wage assessment credit claimed, if eligible.
Line 110: Column G, KJRA Tax Credit Limitation: Add Columns B, C, and D, then subtract Columns E and F. Enter the result as the KJRA tax credit limitation.
Line 111: Column G Transfer For Corporations: If the filer is a corporation, carry Column G to Schedule KJRA, Part III, line 2.
Line 112: Column G Transfer For Pass-Through Entities: If the filer is a pass-through entity, carry Column G to Schedule KJRA-SP, Part I, line 8.
Line 113: Column H, KJRA Tax Credit Claimed On Return: Enter the greater of the KJRA credit claimed against LLET or income tax for this project as reported on Schedule TCS. If no credit is claimed, enter zero.
Line 114: Final Review: Check the entity name, entity type, identification numbers, project location, activation date, project number, taxable year rows, approved costs, transferred credits, wage assessment credits, local wage assessment credits, limitation amount, and credit claimed before filing.
Line 115: Final Filing Step: Attach the required KJRA schedules to the proper Kentucky return and make sure all transferred amounts match Schedule KJRA, Schedule KJRA-SP, Schedule KJRA-T, Schedule L-ECON, and Schedule TCS.