Schedule A: Apportionment and Allocation (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule A is used by corporations and pass-through entities taxable both within and outside Kentucky to compute apportionment factors using receipts, property, and payroll. For Form 720 filers, it also reports the apportionment and allocation of income to determine Kent
Who files this form
Kentucky Schedule A is for corporations and pass-through entities taxable both within and outside Kentucky.
- A corporation taxable in Kentucky and another state must apportion and allocate its net income to Kentucky.
- A pass-through entity doing business within and outside Kentucky must compute an apportionment fraction.
- An entity included in a unitary combined return attaches Schedule A to Form 720U if it uses three-factor apportionment. Other members compute their factors on Form 720U, Schedule U5.
Public service companies and financial organizations must apportion and allocate net income under KRS 141.121(5).
What you'll need
Have the information and attachments that apply to your entity:
- Entity name, federal identification number, and Kentucky Corporation/LLET account number.
- Kentucky receipts and total receipts.
- For three-factor calculations, Kentucky and total payroll, property values at the beginning and end of the year, and rental and subrental information.
- For Part II, net income from Form 720, Part I, line 40, plus any non-apportionable income and related expenses. Attach schedules for the related expenses reported on lines 2(f) and 6(f).
- Schedules K-1 showing apportioned factors received from pass-through entities, if applicable.
- The Department of Revenue letter requiring or approving an alternative method, or the statement electing an alternative method, if applicable.
- Disclosures explaining changes to the inclusion or exclusion of gross receipts from prior years, or differences in that treatment across state returns, if applicable.
How to file
Submit Schedule A with the applicable return: Form 720, Form 720U for entities using three-factor apportionment, Form PTE, or Form 725.
Complete the page 4 continuation sheet and check the corresponding box on page 1 when required:
- Use Section A for an elective consolidated group.
- Use Section B if the filing corporation, or a corporation in its affiliated group, owns an interest in a limited liability pass-through entity or general partnership doing business in Kentucky.
- Use Section B if the filing pass-through entity owns an interest in another pass-through entity doing business in Kentucky.
Carry the applicable grand totals from the continuation sheet to Schedule A, Part I. Part II is for Form 720 only.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Not carrying percentages to four decimal places. The form specifically requires this precision.
- Using the wrong apportionment line. The instructions note that entities not defined in KRS 141.121 use the percentage on Part I, line 3.
- Classifying income by its label alone. Calling income interest, rent, royalties, or capital gains does not determine whether it is apportionable or non-apportionable.
- Reporting a subsidiary's Kentucky Schedule K-1 items in Section B. The instructions say these pass-through items belong in Section A only.
- Repeating continuation-sheet line 1 on every page. If multiple continuation pages are needed, fill out line 1 only on the first page.
Questions people ask
Do all entities use three-factor apportionment?
No. Except for entities identified in KRS 141.121 and required to use three-factor apportionment, companies use Kentucky receipts divided by total everywhere receipts.
Can a corporation choose a different apportionment method?
A corporation must use the statutory formula unless the Department of Revenue requires or approves another method in writing, or the corporation qualifies for and elects an alternative under KRS 141.121(4). Attach the required letter or election statement to the return.
How are sales of tangible personal property assigned to Kentucky?
Receipts are assigned to Kentucky when the property is delivered or shipped to a purchaser in Kentucky, regardless of the f.o.b. point or other sale conditions. Sales to the U.S. government are assigned to Kentucky if the property is shipped from Kentucky.
Where does the taxable net income from Part II go?
Enter Part II, line 8 on Form 720, Part I, line 41.