Schedule ETH: Application and Credit Certificate of Income/LLET Credit- Ethanol (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule ETH is the application and credit certificate for the ethanol income tax and limited liability entity tax (LLET) credit. It reports gallons of ethanol produced in Kentucky that meet current ASTM standards, the credit approved by the Department of Revenue, and th
Who files this form
Kentucky ethanol producers seeking the income tax or limited liability entity tax (LLET) credit use Schedule ETH to report ethanol produced in Kentucky that meets current ASTM standards.
Ethanol produced in another state does not qualify. The Department of Revenue certifies the amount of credit available to each taxpayer.
When it's due
- Application for 2024 production: Submit Schedule ETH no later than January 15 following the close of the 2024 calendar year. Schedules postmarked or sent after that deadline 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.
- Required testing for 2024: Attach laboratory results for July 1 and December 31 of the 2024 calendar year.
What you'll need
Have the following ready:
- Laboratory results for July 1 and December 31 showing that the ethanol meets ASTM standards.
- The number of qualifying gallons produced in Kentucky during the calendar year.
- Dates when your ethanol failed to meet ASTM standards, if any.
- Your entity name, mailing and location addresses, entity type, and contact information.
- Your Social Security number if filing as an individual, or FEIN for other entities.
- Your Kentucky Corporation/LLET account number, if applicable, and Kentucky Special Fuels Dealer’s License account number.
A pass-through entity must report each recipient’s pro rata share of the approved credit on Schedule K-1. It must also email the department a separate plain text or plain ASCII attachment listing each partner, member, shareholder, or beneficiary’s name, address, telephone number, identification number, and distributive share of the credit.
Attach the approved credit certificate to the tax return claiming the credit.
How to file
- Enter your identifying information and check the appropriate entity type. If it is not listed, check “Other” and specify the type.
- Complete Part I with the qualifying gallons produced in Kentucky during the calendar year. Answer the ASTM compliance question and list any failure dates.
- Attach the required laboratory results, then sign and date the application.
- Fax Schedule ETH to 502-564-0058 or email it to DORTaxCredits@ky.gov. Credit certification cannot be guaranteed for schedules sent through regular mail.
The department will confirm receipt. If you do not receive confirmation within two weeks, contact the Division of Corporation Tax at 502-564-8139 or DORTaxCredits@ky.gov.
The department completes Parts II and III. After certification, complete Part IV for the credit claimed:
- LLET: Enter the credit on Schedule TCS, Part II, Column E.
- Corporation income tax: Enter the credit on Schedule TCS, Part II, Column F.
- Individual income tax: Enter the credit on Form 740, 740-NP, or 741.
Attach the credit certificate to the return claiming the credit. The form lists Forms 720, 720U, PTE, 725, 740, 740-NP, and 741 as applicable returns.
Pass-through entities must also send the required recipient information electronically to DORTaxCredits@ky.gov.
Common mistakes
- Submitting late: Schedules postmarked or sent after the January 15 deadline are void.
- Relying on regular mail: The instructions warn that credit certification cannot be guaranteed for mailed schedules.
- Omitting laboratory results: Missing proof of ASTM compliance for July 1 or December 31 results in denial of the credit for gallons back to the previous testing date.
- Missing pass-through reporting: Failure to email the required recipient information in the specified format 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 off the credit certificate: Attach it to the tax return claiming the credit.
Questions people ask
How much is the ethanol credit?
The rate is $1 per qualifying gallon. The annual cap for all taxpayers is $5,000,000. If approved applications exceed that cap, unused cellulosic ethanol credit capacity increases the cap, but only as much as needed for applicants to receive $1 per gallon. The department determines each taxpayer’s approved credit under the cap rules.
Is the credit refundable, or can I carry it forward?
The credit is nonrefundable. Unused credit cannot be carried forward.
Which taxes can the credit offset?
The credit may be applied against individual income tax, corporation income tax, and/or LLET. The amounts claimed against corporation income tax and LLET may differ. The credit cannot reduce LLET below $175.
Who completes Parts II and III?
The Department of Revenue completes these parts to determine the approved gallons and credit. Part III is used if total approved credit exceeds the annual cap.
What if I do not receive confirmation that my application arrived?
If confirmation has not arrived within two weeks after submission, contact the Division of Corporation Tax at 502-564-8139 or DORTaxCredits@ky.gov.