Schedule RC-R: Recycling or Composting Equipment Tax Credit Recapture (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Schedule RC-R calculates the recycling or composting equipment tax credit recapture or remaining credit balance when qualifying equipment is sold, transferred, or disposed of before the end of the recapture period. It reports equipment details, the recomputed allowable c
Who files this form
Use Schedule RC-R if you sell, transfer, or dispose of qualifying recycling or composting equipment before the end of the recapture period. The schedule recomputes the allowable credit and determines whether you have a remaining credit balance or must repay previously used credit through added tax liability.
A pass-through entity must attach a copy of Schedule RC-R to each partner’s, member’s, shareholder’s, or beneficiary’s Kentucky Schedule K-1. Each recipient must also prepare Schedule RC-R and attach it to their own tax return.
What you'll need
Have these records and details available:
- Your entity name, taxable year ending, Kentucky Corporation/LLET Account Number, and federal identification number.
- A description of each equipment item and its useful life under Internal Revenue Code Section 168.
- The dates each item was purchased or installed and sold, transferred, or disposed of.
- The month and year the Department of Revenue approved the credit.
- Schedule RC showing the originally approved credit.
- Records of credit used in prior years against the limited liability entity tax (LLET) and income tax.
- Equipment costs if a credit covering multiple items must be prorated.
If you are a partner, member, shareholder, or beneficiary, use the pass-through entity’s Schedule RC-R attached to your Kentucky Schedule K-1 to prepare your own schedule.
How to file
- In Section A, describe each equipment item disposed of before the end of its useful life and check the applicable useful-life box. Attach additional Schedules RC-R if you disposed of more than three items.
- In Section B, enter the equipment dates, full years held, approval year, allowable percentage from the table, originally approved credit, and prior-year credits used. Compute the credit balances or recapture amounts on lines 10 through 13.
- Attach Schedule RC-R to the applicable return: Form 720, 720U, PTE, 725, 740, 740-NP, or 741.
Report line 12, LLET credit recapture, on:
- Form 720, Part II, line 2.
- Form 720U, Schedule U9, Section A, line 2.
- Form PTE, Part II, line 2.
- Form 725, Part II, line 2.
Report line 13, income tax credit recapture, on:
- Form 720, Part III, line 2.
- Form 720U, Schedule U9, Section B, line 2.
- Form 740, page 1, line 13.
- Form 740-NP, page 1, line 14, combined with the income tax amount.
- Form 741, line 17.
Common mistakes
- Leaving the Kentucky account number at six digits. The form requires nine digits. Add leading zeros if the number has six digits.
- Listing only three items when more were disposed of. Attach additional Schedules RC-R as needed.
- Failing to prorate prior-year credit use. If the original approved credit covered more than one equipment item, prorate the credit reported on lines 8 and 9 based on equipment cost.
- Carrying an unused balance into a later year. A credit balance not used in the year of the sale, transfer, or disposition cannot be carried forward.
Questions people ask
When must previously used credit be recaptured?
If the total credit used in prior tax years exceeds the recomputed credit, the difference must be recaptured on the return for the year the equipment was sold, transferred, or disposed of.
How do I find the allowable credit percentage?
Use the schedule’s Allowable Tax Credit Percentage table. It uses the equipment’s useful-life category and how long the equipment was held. Line 3 asks for the number of full years held.
Can I still use a remaining credit balance?
Yes. If the recomputed credit exceeds credit already used, the difference may reduce tax liability in the year of the sale, transfer, or disposition, subject to the stated credit limitations. Any balance unused that year cannot be carried forward.
How does a pass-through recipient complete the schedule?
Include your pro rata share of the equipment amounts from the entity’s Schedule RC-R, lines 1 through 7. Compute lines 8 through 13 yourself and attach your completed schedule to your tax return.