Schedule INV: Kentucky Inventory Tax Credit (2024)

Who files this form

Use Schedule INV to claim Kentucky’s inventory tax credit for qualifying inventory taxes that were paid on time.

For the 2024 schedule, you must have timely paid ad valorem inventory tax to a Kentucky taxing jurisdiction on or before December 31, 2024. If you answer “No” to the qualification question in Part I, you do not qualify for the credit.

The credit may apply against individual income tax, corporation income tax, and the limited liability entity tax (LLET). Pass-through entities may apply the credit against LLET and pass it through to partners, members, shareholders, or beneficiaries in the same proportion as their share of income or loss.

When it's due

• Tax year 2024: Qualifying inventory tax must have been paid on time and on or before December 31, 2024.

This is a payment qualification for the credit, not a filing deadline for Schedule INV. The supplied text does not state a filing deadline for the schedule.

What you'll need

Have the following information and records available:

• Taxpayer name, mailing address, entity type, and Kentucky Corporation/LLET account number, if applicable. Individuals enter an SSN; other entities enter an FEIN.
• Inventory valuations and timely paid inventory tax amounts from applicable Kentucky property tax forms: 61A500, 61A200, 61A800, 62A500, or 61A508.
• Local property tax bills showing inventory tax amounts.
• For pass-through entities, each recipient’s name, federal identification number, distributive share percentage, and share of the credit.

Required supporting attachments:

• Attach supporting detail for the credit to the income tax return.
• If you report an amount in Section A, line 1, attach 8.5-by-11-inch photocopies of the front and back of the property tax bills to Schedule INV. The text also requires these bill copies for taxpayers filing Forms 61A500 or 61A508.
• If there are more than five partners, members, shareholders, or beneficiaries, attach supporting schedules in the same order and format as the Part III chart.

During review, the Department may request tangible property tax returns, property tax bills, and copies of checks for each bill. Failure to provide requested documents will result in denial of any unverified credit.

How to file

1. Enter your taxpayer information and entity type, then answer the qualification question in Part I.
2. In Part II, Section A, line 1, enter timely paid Kentucky inventory tax separately shown on local property tax bills. If the bill does not separately state this amount, do not use that line.
3. Use Sections B1 and B2 for inventory valuations and timely paid inventory tax not reported in Section A. Enter amounts by inventory category.
4. Complete lines 8 through 11. The allowable percentage for 2024 is 100%. Enter the line 11 credit on Schedule TCS, Part II, line 21, or Schedule ITC, Section A, line 23.
5. Pass-through entities complete Part III and also report recipients’ shares on Kentucky Schedules K-1.
6. Attach Schedule INV and required supporting documents to Form 720, 720U, PTE, 725, 740, 740-NP, or 741, as applicable.

Special reporting rules apply to centrally assessed and public service companies and taxpayers using Forms 61A500 or 61A508. For example, taxpayers claiming inventory from Forms 61A200 or 61A800 must check the Part II box and report that tax in Section A.

The supplied text does not provide a mailing address or e-file instructions.

Common mistakes

• Claiming tax that was not paid on time. Only timely paid inventory tax qualifies. Stop if you answer “No” in Part I.
• Counting inventory twice. Do not repeat valuations or tax from Section A in Sections B1 and B2.
• Using Section A, line 1, when the bill does not separately show inventory tax. The instructions say not to use that line in this situation.
• Using the wrong year’s calculator. The text warns that rates and credit vary by year, so use the correct year’s calculator.
• Checking the centrally assessed/public service company box incorrectly. Check it for inventory reported on Forms 61A200 or 61A800. All other taxpayers should leave it blank.
• Omitting required support or ignoring a document request. Attach the required supporting detail and bill copies. Unverified credits will be denied if requested documents are not provided.

Questions people ask

Is the inventory tax credit refundable or transferable?

No. The credit is nonrefundable and nontransferable.

What percentage applies for 2024?

The allowable percentage is 100%. Multiply the total inventory tax on Part II, line 9, by the percentage on line 10 to calculate the credit on line 11.

Can a pass-through entity pass the credit to its owners or beneficiaries?

Yes. It may apply the credit against LLET and pass the credit through in the same proportion as income or loss. Complete Part III and report the shares on Kentucky Schedules K-1.

Where can I ask questions about the credit?

Call the dedicated inventory tax credit line at 502-564-1555 or email DORTaxCredits@ky.gov.

Official sources

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