K-29: Short Line Railroad Tax Credit Schedule (Revision 2024-07)

Who files this form

Schedule K-29 is used to claim the Kansas Short Line Railroad Tax Credit. Eligible taxpayers are:

• Railroads subject to Kansas income tax that are classified as Class II or Class III by the United States Surface Transportation Board under the definition in effect on January 1, 2022.
• Owners or lessees of rail sidings located on or adjacent to a Class II or Class III railroad in Kansas.

The schedule also accounts for credits received by transfer and proportionate shares claimed by partners, shareholders or members of pass-through entities.

What you'll need

Have these documents and details ready:

• Your taxpayer name as shown on your return, Social Security number or EIN, and taxable-year beginning and ending dates.
• Your Kansas Department of Revenue Tax Credit Certificate, including its certificate number and the credit amounts for railroad track and rail siding maintenance.
• The number of Kansas railroad track miles and rail sidings owned or leased for which the credit is based.
• Your prior year's Schedule K-29 if you have an available carryforward.
• Your Kansas tax liability after all other credits.
• If you are a partner, shareholder or member: the entity's name, EIN and your proportionate share percentage.
• If credits were transferred: the amounts received or transferred, the written transfer agreement and Form K-260, Tax Credit Transfer Notification Form.

To apply for certification of the credit, complete and submit Form K-205, Short Line Railroad Tax Credit Application.

How to file

1. Apply for the credit using Form K-205, available at ksrevenue.gov. Qualified expenditures must be approved before the credit can be certified and applied against income tax liability.
2. Complete the identifying information on K-29. Enter your certificate number in Part A and check the box if the credit was transferred to you.
3. Enter the track and siding information in Parts B and C, using the credit amounts on your certificate.
4. In Part D, calculate your share of the credit. Partners, shareholders and members enter their proportionate share percentage on line 6. All other taxpayers enter 100%.
5. In Part E, include prior-year carryforward and credits received, then subtract credits transferred away. Line 13 is the lesser of the available credit on line 11 or the tax liability on line 12.
6. Enter line 13 on the appropriate line of Form K-40, K-41 or K-120. Enter the remaining credit from line 14 on next year's Schedule K-29, subject to the carryforward limit.

For a transfer, the original eligible taxpayer and the recipient must jointly file a copy of the written transfer agreement with the Department of Revenue within 30 days of the transfer. The transferor completes and signs their part of Form K-260, then gives it to the recipient. The recipient completes and signs their part and submits the completed form to the Department.

The supplied text does not specify a mailing address or e-file method for filing K-29. The address printed in the text is for taxpayer assistance.

Common mistakes

• Do not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant.
• Do not count the same mile of track more than once in a taxable year.
• Do not transfer a credit before Form K-205 has been submitted and the credit has been certified and approved.
• Do not treat a Class I railroad as an eligible customer or vendor for a transfer.
• Do not claim more on line 13 than the lesser of lines 11 and 12. The credit is not refundable.
• Do not enter a negative carryforward on line 14. The amount cannot be less than zero.

Questions people ask

How much is the credit?

The credit is 50% of qualified railroad track maintenance expenditures, limited to $5,000 per mile of track or per rail siding owned or leased in Kansas at the close of the taxable year. Total credits for all eligible taxpayers cannot exceed $8,720,000 for each taxable year.

What maintenance expenses qualify?

Qualified expenditures include maintenance, reconstruction or replacement of railroad track, including roadbed, bridges, industrial leads, side-track and related track structures. The track must be in Kansas and must have been owned or leased by an eligible taxpayer as of January 1, 2022. Expenditures used to generate a federal tax credit or funded by a state or federal grant do not qualify.

Can I carry unused credit forward or receive a refund?

Unused credit may be carried forward for up to five taxable years immediately following the year for which it was allowed. The credit is not refundable.

Can unused credit be transferred?

Yes. An eligible taxpayer may transfer unused credit by written agreement to an eligible customer or vendor during the five years immediately following the taxable year for which the credit was allowed. Eligible customers include businesses that use the specified railroad facilities to transport goods, are served by a Class II or Class III short line railroad, or store rail cars on one. Eligible vendors provide railroad-related services directly to an eligible taxpayer. A Class I railroad is not an eligible customer or vendor.

Official sources

• https://www.ksrevenue.gov/pdf/k-29.pdf