IEBA: Incentives for Energy-related Business Act (IEBA) Tax Credit (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
The Kentucky IEBA package reports approved tax incentives under the Incentives for Energy-related Business Act. Its schedules calculate the allowable tax credit and maintain a record of approved project costs and tax credits.
Who files this form
Use the 2024 IEBA package only if your business has received approval for the IEBA credit from the Kentucky Cabinet for Economic Development. Preliminary or final approval is required to determine the allowable credit.
- Businesses filing Form 720 or 720U must complete Schedule IEBA and Schedule IEBA-T.
- Businesses filing Form PTE or 725 must complete Schedule IEBA-SP and Schedule IEBA-T.
Include only one incentive project in each package.
What you'll need
Have these records and forms available:
- Your business name, federal identification number, Kentucky Corporation/LLET account number, and taxable year ending date.
- The project number, location, and incentive agreement activation date.
- Your Tax Incentive Agreement showing the approved incentives for wage assessments and income tax/LLET credits.
- Project income, deductions, Kentucky gross receipts, and Kentucky gross profits needed for the calculations.
- Prior-year tracking information needed to update Schedule IEBA-T.
Required attachments depend on your situation:
- Attach the current-year Schedule IEBA-T to Schedule IEBA or IEBA-SP.
- Attach Schedule L-ECON for the project's LLET computation, with a separate schedule for each project. General partnerships do not complete the LLET lines on Schedule IEBA-SP.
- If using an alternative accounting method, attach the Department of Revenue's approval letter.
- A pass-through entity with operations outside the IEBA project must attach a schedule showing how it calculated the project's net income or loss.
How to file
Attach the IEBA package to your Kentucky Form 720, 720U, PTE, or 725.
- Complete Schedule IEBA for a business filing Form 720 or 720U, or Schedule IEBA-SP for a business filing Form PTE or 725.
- Update Schedule IEBA-T with the current year's information and attach it to the applicable computation schedule.
- Include the required supporting schedules and any required approval letter.
- Enter tax credits on Schedule TCS. For Schedule IEBA, enter the allowable credit in Part I, Columns E and F of Schedule TCS.
The package does not provide mailing instructions, a mailing address, or e-file directions.
Common mistakes
- Combining projects: Use only one incentive project per package and maintain a separate Schedule IEBA-T for each project.
- Claiming incentives outside the agreement term: Incentives are available only during the agreement term. Prorate claims in the first and last years.
- Passing credits or losses through to owners: IEBA credits and project losses do not pass through to partners, members, or shareholders. Subtract the project's prior-year net operating loss from project income before calculating the credit.
- Completing both choices on Schedule IEBA-SP, line 9: Enter an amount on either line 9(a) or 9(b), never both.
- Overstating usable credits: Follow the credit order prescribed by KRS 141.0205. Total credits claimed cannot reduce LLET below $175 or income tax liability below zero.
- Including project income in owners' distributive shares: Pass-through entities must use Form PTE(K) to exclude IEBA project net income from partners', members', or shareholders' distributive share income.
Questions people ask
What taxes can the IEBA credit offset?
The credit applies against Kentucky income tax and/or the limited liability entity tax (LLET) attributable to the project.
How is the allowable credit limited?
Schedule IEBA uses the lesser of the tax liability attributable to the project or the limitation in Schedule IEBA-T, Column C. Schedule IEBA-SP similarly uses the lesser of the total tax on the project or that limitation.
What if the credits used against income tax and LLET differ?
For tracking purposes, record the larger credit amount, not the sum. Schedule IEBA-T, Column E, uses the greater of Schedule TCS, Column E or Column F, for the project, if applicable.
Can a pass-through entity choose an estimated tax payment instead of the credit?
Yes. The approved company may make an annual election to apply an amount equal to the allowable credit as an estimated tax payment. Enter it on Schedule IEBA-SP, line 9(b), and complete Part II. The payment must satisfy owners' tax liability and be paid on their behalf. The instructions state that owners are not entitled to claim any portion of this payment against their Kentucky income tax liability.