Schedule RC: Application for Income Tax/LLET Credit for Recycling and/or Composting Equipment or Major Recycling Project (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule RC is an application for an income tax or limited liability entity tax (LLET) credit for recycling and/or composting equipment or a major recycling project. It reports equipment costs, locations and purchase and service dates, along with approved credits and amo
Who files this form
Use Schedule RC to request approval for Kentucky income tax and limited liability entity tax (LLET) credits for recycling or composting equipment. It also serves as a record of credits claimed on your tax returns.
Taxpayers who purchase and place qualifying equipment in service for exclusive use in Kentucky are entitled to the credit. If the purchaser is a pass-through entity, partners receive their pro rata or distributive share of the approved credit.
A Major Recycling Project must meet all three requirements:
- Invest more than $10 million in recycling or composting equipment used exclusively in Kentucky.
- Have at least 400 full-time employees with an average hourly wage greater than 300% of the federal minimum wage.
- Have plant and equipment with a total cost greater than $500 million.
When it's due
For tax year 2024, file the application on or before the first day of the seventh month following the close of the taxable year in which the equipment was purchased or placed in service.
Applications postmarked after that deadline will not be approved. You must obtain approval before claiming the credit.
What you'll need
Prepare the following information and supporting documents:
- Applicant name, entity type, identifying numbers, address, and contact information requested on the form.
- Equipment names, Kentucky locations, purchase dates, applicable placed-in-service dates, purchase prices, and installation costs.
- A description of how each item is used exclusively for recycling or composting postconsumer waste.
- Vendor invoices, installation contracts, and other documents needed to verify equipment and installation costs. Submit these with the application.
- A spreadsheet showing the cost of each equipment item to help reconcile the supporting documents to Schedule RC.
For a Major Recycling Project, also have the investment, employee wage and count, and total plant and equipment cost information needed for Part IV.
When claiming an approved credit, attach a copy of the approved application, with credit-use entries updated, to your Kentucky tax return.
How to file
- Complete the applicant information and taxable-year fields. File one application covering all qualifying purchases for that taxable period.
- Complete Part I, Columns A through F, and describe each item's use. Use the Part I Continuation on page 3 if you have more than two types of equipment. Round purchase and installation costs to the nearest whole dollar. Installation costs include shipping charges incurred and paid by the purchaser.
- Leave Column G and Part II blank for the Department of Revenue.
- For a Major Recycling Project, check the box and complete Part I and page 2 as instructed. Answer every question in Part IV. Complete Part V after receiving approval.
- Attach the cost documentation. Have the applicant or another authorized person sign the application.
- Mail it to:
Department of Revenue
Division of Corporation Tax, Station 52
501 High Street
Frankfort, KY 40601
The department will return the original approved application to the purchaser. After approval, record credits used in Part III for ordinary recycling or composting equipment, or Parts V and VI for a Major Recycling Project. Attach the updated approved application to each Kentucky return on which you claim the credit.
Common mistakes
- Claiming the credit before approval. Prior approval is required.
- Submitting an unsigned application. Unsigned applications will be returned.
- Submitting costs that cannot be matched to supporting documents. Approval is delayed until the department receives all information needed to reconcile equipment and installation costs.
- Claiming credit before required installation is complete. Equipment requiring installation must be fully installed and placed in service during the first taxable year for which the credit is claimed.
- Combining income tax and LLET credit balances. Calculate and maintain them separately. A remaining balance for one tax cannot be used against the other.
- Reducing LLET below its minimum. The credit cannot reduce LLET liability below $175.
- Recording a Major Recycling Project credit in Part III. Use Part V for that credit calculation.
Questions people ask
How much is the credit for equipment that is not part of a Major Recycling Project?
The total allowable credit is 50% of qualifying equipment and installation costs. In the year of purchase or placement in service, the amount claimed cannot exceed either 10% of the total allowable credit or 25% of each tax liability. In other years, the limit is 25% of the tax liability. Unused credit may be carried forward.
How much is the Major Recycling Project credit for tax year 2024?
The total allowable credit is 25% of the installed equipment cost. The annual amount claimed for all Major Recycling Projects is limited to 75% of each tax liability otherwise due, subject to the LLET limitations. The credit period is 30 years, beginning with approval of the application.
Do repairs or equipment leases qualify?
No. Eligible costs do not include repairs, including major repairs that are capitalized and depreciated. They also exclude equipment leases that the lessee must capitalize and depreciate for federal income tax purposes.
How do pass-through entities report the approved credit?
Report the total approved credit on Form PTE, Schedule K. Distribute the credit to partners, members, or shareholders on a pro rata or distributive-share basis and record their shares on Schedule K-1.