Schedule CELL: Application and Credit Certificate of Income Tax/LLET Credit- Cellulosic Ethanol (2024)

Who files this form

Schedule CELL is for taxpayers applying for the cellulosic ethanol credit for ethanol produced in Kentucky that meets current ASTM standards. The Department of Revenue uses the application to certify each taxpayer’s credit.

Cellulosic ethanol produced in another state does not qualify. A pass-through entity must also report each recipient’s share of the approved credit and notify the department electronically.

When it's due

• Application for 2024 production: Submit Schedule CELL no later than January 15 following the close of the 2024 calendar year. Schedules postmarked or sent after January 15 are void.
• Credit certificate for 2024 production: The Department of Revenue will issue the certificate by April 15 following the close of the 2024 calendar year.
• Testing for the 2024 application: Attach laboratory results for July 1 and December 31 of the 2024 calendar year.

What you'll need

Have the following ready:

• Laboratory results showing compliance with ASTM standards on July 1 and December 31 of the calendar year.
• The number of qualifying gallons produced in Kentucky during the calendar year.
• Entity name, mailing and location addresses, entity type, and contact information.
• Your Social Security number if applying as an individual, or FEIN for other entities.
• Kentucky Corporation/LLET account number, if applicable, and Kentucky Special Fuels Dealer’s License account number.
• Dates when the ethanol failed to meet ASTM standards, if any.

Pass-through entities also need each partner’s, member’s, shareholder’s, or beneficiary’s name, address, telephone number, identification number, and distributive share of the credit for the required electronic notice.

Attach the department-issued credit certificate to the tax return claiming the credit.

How to file

1. Check the appropriate entity type. If it is not listed, check “Other” and list the type. Complete the identifying information and Part I, then sign and date the application. The Department of Revenue completes Parts II and III.
2. Attach the required laboratory results. Send Schedule CELL to the Department of Revenue by fax at 502-564-0058 or email at DORTaxCredits@ky.gov. Credit certification cannot be guaranteed for schedules sent through regular mail.
3. Watch for confirmation of receipt. If none arrives within two weeks, contact the Division of Corporation Tax at 502-564-8139 or DORTaxCredits@ky.gov.
4. Attach the credit certificate to the return claiming the credit. The form lists Forms 720, 720U, PTE, 725, 740, 740-NP, and 741.

In Part IV, report LLET credit on Schedule TCS, Part II, Column E; corporation income tax credit on Schedule TCS, Part II, Column F; and individual income tax credit on Form 740, 740-NP, or 741.

Pass-through entities must include each recipient’s pro rata share on Schedule K-1. They must also email DORTaxCredits@ky.gov with a separate plain text or plain ASCII attachment containing the required recipient information and credit shares.

Common mistakes

• Submitting late: Schedules postmarked or sent after January 15 are void.
• Relying on regular mail: Credit certification is not guaranteed for mailed schedules.
• Omitting laboratory proof: Missing proof of ASTM compliance on July 1 or December 31 results in denial of credit for gallons back to the previous testing date.
• Skipping pass-through reporting: Failure to provide the required electronic recipient information forfeits available credits for all partners, members, shareholders, or beneficiaries.
• Carrying unused credit forward: No carryforward is allowed.
• Reducing LLET too far: The credit cannot reduce LLET below the $175 minimum.
• Leaving out the credit certificate: Attach it to the tax return claiming the credit.

Questions people ask

How much is the credit?

The rate is $1 per qualifying gallon. The annual cap for all taxpayers is $5,000,000, with an increase from unused ethanol tax credit capacity as described in the instructions. The Department of Revenue determines the approved amount.

Is the credit refundable or available to carry forward?

No. The credit is nonrefundable, and unused credit cannot be carried forward.

Which taxes can the credit offset?

It may be applied against individual income tax, corporation income tax, and/or LLET. The amounts claimed against corporation income tax and LLET may differ. LLET cannot be reduced below $175.

Who completes the credit approval sections?

The Department of Revenue completes Parts II and III to determine the credit. The taxpayer reports the credit used in Part IV.

Official sources

• https://revenue.ky.gov/Forms/Schedule%20CELL%202024.pdf