8874(K) - NMDP: New Markets Development Program (NMDP) Tax Credit (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Form 8874(K) is an application to certify qualified equity investments for the New Markets Development Program tax credit. It collects information about the qualified community development entity (CDE), its certification and service area, the planned use of investment pr
Who files this form
A qualified community development entity (CDE) must file Form 8874(K) if it wants an equity investment or long-term debt security certified as a qualified equity investment eligible for the Kentucky New Markets Development Program tax credit.
Only use this package if your entity is a qualified CDE applying for or already approved for this credit. The package also includes forms for credit certification, credit recapture, and requesting a refund of the performance fee.
What you'll need
For the application, gather:
- The CDE’s name, address, federal identification number, and Kentucky Corporation/LLET account number, if applicable. Include the requested parent taxpayer information if the CDE is included in a consolidated return.
- Proof of current CDFI Fund certification, including the original certification and all subsequent updates.
- A copy of the new markets tax credit allocation agreement that includes Kentucky in the service area.
- Documentation of the CDE’s service area, such as a map, articles of organization, or bylaws.
- Information about how the investment proceeds will be used, including a description of the qualified active low-income community business.
- Each investor’s name, taxpayer identification number, investment type (debt or equity), and investment amount. Attach a schedule if more space is needed.
- Two separate cashier’s checks payable to the Kentucky State Treasurer: a $1,000 nonrefundable application fee and a refundable performance fee of 0.5% of the investment requested for certification, capped at $500,000.
For a performance fee refund request on Form 8874(K)-C, attach proof of certification and proof that the requirements under KRS 141.433(8)(d) have been met.
How to file
Complete Form 8874(K), attach the required documents, and include the two separate cashier’s checks. An executive officer of the CDE must sign and date the application and print their name and title.
Mail the application to:
Department of Revenue
Division of Corporation Tax
Tax Credits Section, Station 52
501 High Street
Frankfort, KY 40601-2103
Forms 8874(K)-A and 8874(K)-C also list this mailing address.
After receiving the investment cash, the CDE must file Form 8874(K)-A for each taxpayer as evidence of receipt. To claim the credit, the taxpayer must attach the approved Form 8874(K)-A to the tax return each year. A partner, member, or shareholder claiming the credit must also attach Schedule K-1, Form PTE.
Common mistakes
- Combining the fees into one payment. Each fee requires its own cashier’s check.
- Entering inconsistent investor totals. Item I must match the number of entries on line 6, and the total investment amount on line 6 must match Item J.
- Ignoring a request to correct the application. The CDE has 15 days after receiving a denial notice to supply the needed information. If it does not provide the information or complete the application in that period, the application is deemed denied and must be resubmitted in full with a new submission date.
- Missing the cash-receipt requirement after certification. If the CDE does not receive cash for the total certified investment within 90 days after receiving the certification notice, certification lapses and the entire performance fee is forfeited. The CDE must reapply before issuing the investment.
- Failing to report investor changes. The CDE must notify the department if eligible taxpayers change because of an investment transfer or a change in an allocation.
Questions people ask
How long does the department take to review an application?
The department will notify the CDE within 30 days after receiving the application whether it is approved or denied. If additional information is submitted to correct deficiencies, the department has another 30 days after receiving that information to approve or deny it.
What must the CDE do after certification?
Within 90 days after receiving the certification notice, the CDE must issue the qualified equity investment and receive cash equal to the certified purchase price. It must provide evidence of receipt within 10 business days after receiving the cash, using Form 8874(K)-A for each taxpayer.
How is the credit spread across the seven years?
Form 8874(K)-A lists no allowable credit for years 1 and 2, 7% for year 3, and 8% for each of years 4 through 7.
How does the CDE request a performance fee refund?
Use Form 8874(K)-C to make the written request. The CDE may request a refund no sooner than 30 days after meeting all requirements of KRS 141.433(8). The department must review the request within 30 days and either issue the refund without interest if the requirements are met or send written notice of noncompliance and possible forfeiture.