Schedule QR: Qualified Research Facility Tax Credit (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule QR calculates the Qualified Research Facility Tax Credit at 5% of qualified construction and equipment costs. It reports current-year credits against income tax and the limited liability entity tax (LLET), and tracks credits used and remaining balances by tax ye
Who files this form
Taxpayers use Schedule QR to calculate and track the Qualified Research Facility Tax Credit against Kentucky income tax and limited liability entity tax (LLET).
Qualifying work includes constructing, remodeling, equipping, or expanding facilities in Kentucky for qualified research. Only tangible, depreciable property qualifies. Replacement property does not qualify. The credit becomes available when the property is placed in service.
Submit a copy each year until the full credit is used or the 10-year carryforward period expires. Complete a separate schedule each year that a new project qualifies.
What you'll need
- A schedule of the tangible, depreciable property included in construction and equipment costs. List each property's purchase date, date placed in service, description, and cost.
- Entity name, federal identification number, entity type, and Kentucky Corporation/LLET Account Number, if applicable.
- The research facility's Kentucky location, county, completion date, and whether the project is new construction or an expansion.
- Credit amounts used and remaining balances for income tax and LLET, tracked separately.
How to file
Attach Schedule QR to Form 720, 720U, PTE, 725, 740, 740-NP, or 741.
- Part I: Enter construction and equipment costs, attach the required property schedule, add the costs, and multiply the total by 5%.
- Part II: Enter the current-year credit claimed. Transfer the LLET credit to Schedule TCS, Part II, Column E, and the corporation income tax credit to Column F. Enter the individual income tax credit on Form 740, 740-NP, or 741.
- Part III: Record the month and year the credit is taken, the credit balance, and the amount used. Track income tax and LLET separately.
A pass-through entity must include each partner's, member's, shareholder's, or beneficiary's pro rata share of the approved credit on Schedule K-1.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Missing the property schedule: Attach the required list of tangible, depreciable property, including purchase dates, placed-in-service dates, descriptions, and costs.
- Including replacement property: Amounts paid or incurred for replacement property do not qualify.
- Reducing LLET too far: This credit cannot reduce LLET below the $175 minimum.
- Mixing credit balances: Calculate income tax and LLET balances separately. A balance for one tax cannot be used against the other. Once a balance reaches zero, no further credit is allowed against that tax.
- Leaving a zero amount blank: If no credit was used for a year, enter -0- in Part III, Column C.
Questions people ask
How much is the credit?
The allowable credit is 5% of total qualified construction and equipment costs entered in Part I.
When does the credit become available?
The credit is available once the qualifying tangible, depreciable property is placed in service.
How long must I keep submitting Schedule QR?
Submit a copy each year until the full credit is used or the 10-year carryforward period expires.
Must the corporation income tax credit and LLET credit amounts be the same?
No. The amounts claimed can differ. Calculate the credit used and remaining balance separately for each tax.
What if my entity type is not listed?
Check the “Other” box and list the entity type.