KIRA: Kentucky Industrial Revitalization Act (KIRA) Tax Credit (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
The Kentucky Industrial Revitalization Act (KIRA) Tax Credit package reports approved business tax incentives and calculates the allowable KIRA tax credit. It also tracks approved project costs, wage assessment fees, and tax credits, including local wage assessment credit claimed
Who files this form
Use the 2024 KIRA package to report approved Kentucky Industrial Revitalization Act tax incentives. The package cover says to use it only if your business has received final approval for the KIRA credit from the Cabinet for Economic Development.
The schedules you must complete depend on your business return:
- Form 720 or 720U: Complete Schedule KIRA and Schedule KIRA-T.
- Form PTE or 725: Complete Schedule KIRA-SP and Schedule KIRA-T.
Include only one incentive project in each KIRA package.
What you'll need
Have the following information and records ready:
- Your business name, federal identification number, and Kentucky Corporation/LLET account number.
- The project's location, project number, and incentive agreement activation date.
- Your business tax return and records of the project's income, Kentucky gross receipts, and Kentucky gross profits.
- Your incentive agreement and approved costs verified by the Kentucky Economic Development Finance Authority. The agreement identifies the percentage of approved costs to use.
- Records of state wage assessments or appropriations received, local wage assessment credits claimed, and prior tax credits for Schedule KIRA-T.
Attachments may include:
- Schedule L-ECON for the project's separate LLET calculation, where applicable. Use a separate schedule for each project's LLET calculation.
- Schedules showing the project's income calculation if the business has other operations. Corporations with other operations must also attach schedules showing the project's Kentucky gross receipts and gross profits calculations.
- A Department of Revenue approval letter if you use an alternative accounting method or an approved allocation percentage for an expansion of an existing facility.
How to file
- Complete Schedule KIRA for a business filing Form 720 or 720U, or Schedule KIRA-SP for a business filing Form PTE or 725.
- Update Schedule KIRA-T with the current year's information. Maintain a separate tracking schedule for each project throughout the agreement.
- Attach the updated Schedule KIRA-T to Schedule KIRA or KIRA-SP, and attach the package to Form 720, 720U, PTE, or 725, as applicable.
- Include required supporting schedules and approval letters. Enter tax credits on Schedule TCS. For Schedule KIRA, enter the allowable credit in Schedule TCS, Part I, Columns E and F.
- Also attach a copy of the updated Schedule KIRA-T to the Wage Assessment Report and Annual Reconciliation.
The supplied text does not give a mailing address or e-file directions.
Common mistakes
- Combining projects in one package. Include only one incentive project per package and calculate each project's credit separately.
- Claiming incentives outside the agreement term. First-year and last-year incentives must be prorated. Separate period accounting is recommended; a proration factor may be used if it is unavailable.
- Passing the KIRA credit through to owners. The credit does not pass through to members, partners, or shareholders. Project income must be excluded from their distributive share income using Form PTE(K).
- Ignoring prior project losses. A pass-through entity must subtract the project's net operating loss carried forward from prior years before calculating the credit. Project losses do not flow through to owners.
- Completing both choices on Schedule KIRA-SP, line 9. Enter an amount on either line 9(a) or line 9(b), never both.
- Completing LLET lines for a general partnership. General partnerships should not complete Schedule KIRA-SP, lines 5 and 6.
- Using more credit than allowed. Total credits claimed cannot reduce LLET below $175 or income tax liability below zero. Credits must be claimed in the prescribed order.
Questions people ask
What taxes can the corporate KIRA credit offset?
The credit applies against Kentucky corporation income tax and/or the limited liability entity tax, called LLET, attributable to the project.
How is the corporate credit limited?
Schedule KIRA, Part III, allows the lesser of the tax liability attributable to the KIRA project or the limitation from Schedule KIRA-T, Column E.
Why do I need Schedule KIRA-T every year?
It tracks approved costs, wage assessments, and tax credits throughout the revitalization agreement. This record determines the annual credit limitation and helps the Department of Revenue verify the calculation.
Do I add the income tax credit and LLET credit together for tracking?
No. For Schedule KIRA-T, Column F, record the greater of the credit claimed against LLET or income tax, not their combined total.
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 the amount on Schedule KIRA-SP, line 9(b), and complete Part II. The instructions state that owners are not entitled to claim any portion of this estimated tax payment against their Kentucky income tax liability.