Schedule COGS: Limited Liability Entity Tax Cost of Goods Sold (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule COGS calculates a corporation’s or limited liability pass-through entity’s Kentucky and total cost of goods sold for computing the limited liability entity tax (LLET) on gross profits. It reports inventory, purchases, labor, and other allowable costs and attache
Who files this form
Schedule COGS is used by a corporation or limited liability pass-through entity to calculate Kentucky cost of goods sold and total cost of goods sold from all sources when computing the limited liability entity tax (LLET) on gross profits.
Eligible costs must be directly incurred in acquiring or producing a tangible product in manufacturing, producing, reselling, retailing, or wholesaling. Taxpayers that provide services or sell intangibles cannot compute cost of goods sold for LLET purposes.
What you'll need
Have the following information ready to complete the schedule:
- Entity name, Kentucky Corporation/LLET account number, and federal identification number.
- Beginning and ending inventory amounts.
- Purchases, cost of labor, additional section 263A costs, and other costs, with Kentucky amounts and total amounts from all sources.
- Details of purchases, additional section 263A costs, and other costs for lines 9, 10, and 11.
If the detail lines are not enough, attach a two-column schedule listing the additional items for each affected category.
How to file
Attach Schedule COGS to Form 720, 720U, PTE, or 725.
The provided text does not specify a mailing address or electronic filing method.
Common mistakes
- Including costs from activities other than manufacturing, producing, reselling, retailing, or wholesaling. Those costs must not be included.
- Including indirect labor. The instructions expressly prohibit it.
- Including costs beyond the permitted direct materials in purchases, additional section 263A costs, or other costs.
- Letting the detail totals differ from the related line amounts. In each column, line 9 details must match line 2, line 10 details must match line 4, and line 11 details must match line 5.
- Leaving out additional details when lines (a) through (k) are not enough. Attach a two-column schedule for the remaining items.
Questions people ask
What is the difference between Columns A and B?
Column A reports cost of goods sold attributable to Kentucky gross receipts. Column B reports cost of goods sold attributable to gross receipts from all sources.
How do I calculate cost of goods sold on line 8?
Add lines 1 through 5 and enter the total on line 6. Subtract ending inventory on line 7 from line 6 to calculate line 8.
What labor costs can I include?
Include labor incorporated into the tangible product sold or labor that is an integral part of the manufacturing process. Do not include indirect labor.
What counts as a tangible product?
For this schedule, a tangible product includes both real property and tangible personal property.