Schedule A: Apportionment and Allocation (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Schedule A calculates apportionment factors for corporations and pass-through entities taxable both within and outside Kentucky using receipts, property, and payroll information. For Form 720 filers, it also reports the apportionment and allocation of income to determine
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.
- Public service companies and financial organizations identified in the text must apportion and allocate income under KRS 141.121(5).
Submit Schedule A with the applicable Form 720, PTE, or 725. For a unitary combined return, attach Schedule A to Form 720U for entities using three-factor apportionment. Other members compute their factors on Form 720U, Schedule U5.
What you'll need
Have the following information and applicable attachments ready:
- Entity name, federal identification number, and Kentucky Corporation/LLET account number.
- Kentucky receipts and total receipts.
- For three-factor apportionment, Kentucky and total payroll, property values, and rental information. The property sections ask for beginning-of-year and end-of-year values.
- For Part II, net income from Form 720, Part I, line 40, and any applicable non-apportionable income and related expenses. Attach schedules for the related expenses reported on lines 2(f) and 6(f).
- Schedules K-1 showing pass-through entity factors, if applicable.
- The Department of Revenue approval or requirement letter, or the election statement, if using an alternative apportionment method as described in the text.
- A disclosure explaining changes from prior years in how gross receipts are included or excluded, or differences in that treatment among state returns, if applicable.
How to file
Attach Schedule A to the applicable tax 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 if the specified pass-through ownership rules apply or the corporation is filing an elective consolidated return. Carry the continuation sheet's grand totals to the corresponding lines in Part I.
Part II is for Form 720 only. Enter its line 8 taxable net income on Form 720, Part I, line 41.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Rounding percentages too early: Carry percentages to four decimal places.
- Leaving the Kentucky account number too short: It must have nine digits. Add leading zeros if it has six digits.
- Missing the three-factor reason code: Entities required to use three-factor apportionment must enter a valid reason code in the return's designated box.
- Repeating the parent company on continuation pages: If multiple continuation pages are needed, fill out line 1 only on the first page.
- Reporting a subsidiary's K-1 items in the wrong section: If a subsidiary receives a Kentucky Schedule K-1, report the pass-through items in Section A only.
- Classifying income by its label alone: Interest, rents, royalties, or capital gains are not automatically non-apportionable income. Their relationship to the corporation's business matters.
Questions people ask
Which apportionment percentage should I use?
Companies other than entities identified in KRS 141.121 and required to use three-factor apportionment use the receipts factor on Part I, line 3. This is Kentucky receipts divided by total receipts. Entities required to use three-factor apportionment use Part I, line 12.
Who completes Part II?
Part II is for Form 720 only. It calculates taxable net income after apportioning income to Kentucky and adding Kentucky net non-apportionable income.
How is property valued for the property factor?
Owned property is valued at original cost. Leased property is valued at eight times the annual rental rate less any non-apportionable subrentals. Exclude construction in progress and property certified by Kentucky as a pollution control facility that the corporation owns or leases.
How are transactions within an elective consolidated group handled?
The group is treated as a single corporation. Eliminate transactions between group members when determining receipts, property, and payroll factors. Use page 4, Section A, and enter intercompany transactions as a negative amount on line 14.