KIDA: Kentucky Industrial Development Act (KIDA) Tax Credit (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
The Kentucky Industrial Development Act (KIDA) Tax Credit package reports approved business tax incentives and calculates the allowable KIDA tax credit. It also tracks debt service payments or approved costs and tax credits for a KIDA project.
Who files this form
Use the 2024 KIDA package only if your business has received approval for the Kentucky Industrial Development Act credit from the Cabinet for Economic Development. The package requires preliminary or final approval on or before June 26, 2009.
For an approved project:
- Businesses filing Form 720 or 720U must complete Schedule KIDA and Schedule KIDA-T.
- Businesses filing Form PTE or 725 must complete Schedule KIDA-SP and Schedule KIDA-T.
Use a separate package for each incentive project.
When it's due
For tax year 2024, the package states that your business must have received preliminary or final approval on or before June 26, 2009. This is an eligibility cutoff, not a return filing deadline.
The supplied package does not state a filing due date for tax year 2024.
What you'll need
Have these forms and records ready:
- Your Kentucky return: Form 720, 720U, PTE, or 725.
- Your federal identification number, Kentucky Corporation/LLET account number, project number, project location, and incentive agreement activation date.
- Project income records and, where applicable, Kentucky gross receipts and gross profits records.
- Debt service payment or approved cost records, plus prior-year credit information, to update Schedule KIDA-T.
- Schedule L–ECON for each project's separate LLET calculation, where applicable. Attach it to the return.
If your business has other operations, attach the required schedules showing how you calculated the KIDA project's income and, where applicable, gross receipts and gross profits.
If you use an approved allocation percentage for a facility expansion or an approved alternative accounting method, attach the Department of Revenue approval letter. Pass-through entities also need records of any project net operating loss carried forward.
How to file
- Complete one KIDA package for each project.
- If you file Form 720 or 720U, complete Schedule KIDA. If you file Form PTE or 725, complete Schedule KIDA-SP.
- Update Schedule KIDA-T with the current year's information and attach a copy to Schedule KIDA or KIDA-SP.
- Attach the package and required supporting schedules to Form 720, 720U, PTE, or 725.
- Report tax credits on Schedule TCS. For Schedule KIDA, enter the allowable credit in Part I, Columns E and F.
Also attach an updated copy of Schedule KIDA-T to the Wage Assessment Report and Annual Reconciliation.
The supplied text does not provide a mailing address or e-file instructions.
Common mistakes
- Combining projects: Include only one incentive project in each KIDA package and maintain a separate Schedule KIDA-T for each project.
- Claiming incentives outside the agreement term: Prorate incentives in the first and last years of the agreement.
- Passing credits through to owners: KIDA credits do not pass through to members, partners, or shareholders. Project losses do not pass through either.
- Skipping project losses: On Schedule KIDA-SP, subtract prior-year project net operating losses before calculating the credit.
- Completing both election lines: Enter an amount on Schedule KIDA-SP line 9(a) or 9(b), never both.
- Completing LLET lines for a general partnership: General partnerships should leave Schedule KIDA-SP lines 5 and 6 blank.
- Exceeding credit limits: Total credits claimed cannot reduce LLET below $175 or income tax liability below zero. Credits must be claimed in the prescribed statutory order.
Questions people ask
What taxes can the corporate KIDA credit offset?
The credit applies against Kentucky corporation income tax and/or limited liability entity tax (LLET) attributable to the project.
How is the corporation's allowable credit limited?
Schedule KIDA, Part III, uses the lesser of the tax liability attributable to the project or the credit limitation from Schedule KIDA-T, Column D.
What does Schedule KIDA-T track?
It tracks debt service payments or approved costs and tax credits for the duration of the agreement. Debt service payments include both principal and interest paid under the financing agreement.
What if the credit amounts differ for income tax and LLET?
For tracking purposes, Schedule KIDA-T records the greater of the credit claimed against LLET or income tax, not the sum of the two.
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 and must complete Schedule KIDA-SP, Part II. The instructions state that partners, members, or shareholders are not entitled to claim any portion of that payment against their Kentucky income tax liability.