Schedule RR-E: Application and Credit Certificate of Income/LLET Credit- Railroad Expansion (2025)

Who files this form

Eligible corporations and railway companies claiming the railroad expansion credit must file Schedule RR-E.

An eligible taxpayer is either:

• A corporation that owns fossil energy resources subject to tax under KRS 143.020 or 143A.020, or biomass resources, and transports those resources using rail facilities.
• A railway company subject to tax under KRS 136.120 that serves a corporation owning those resources.

The credit covers qualified expenditures to expand or upgrade railroad track, including roadbeds, bridges, and related track structures, to accommodate transportation of fossil energy or biomass resources.

You do not qualify if you claimed the credit under KRS 141.385 on the same expenditures, or if another taxpayer claimed a credit under KRS 141.385 or 141.386 on those expenditures.

When it's due

For tax year 2025:

• Application deadline: January 15 following the close of the 2025 calendar year. Fax or email Schedule RR-E by this deadline. Schedules postmarked or sent after January 15 are void.
• Credit certificate: The Department of Revenue will issue the certificate by March 15 following the close of the 2025 calendar year.

What you'll need

Have these details ready to complete Schedule RR-E:

• Entity name, mailing address, and business location address.
• Federal Identification Number and Kentucky Corporation/LLET Account Number, if applicable.
• Entity type and contact information.
• The total qualified expenditures paid or incurred during the calendar year.
• An authorized signature, title, and date.

Attach the approved credit certificate, Schedule RR-E, to the tax return claiming the credit. The form directs taxpayers to attach it to Form 720 or 720U.

Use Schedule TCS to report the credit used against LLET or corporation income tax. A pass-through entity must include each partner’s or member’s pro rata share of the approved credit on Schedule K-1.

How to file

1. Enter the entity’s identifying information and check its entity type.
2. Answer the Part I qualification questions. If any answer is “yes,” stop: you do not qualify. If all answers are “no,” complete Part II.
3. In Part II, enter qualified expenditures for the calendar year on line 1 and 25% of that amount on line 2.
4. Have an authorized corporate officer sign and date the application if filing Form 720 or 720U. A partner or member must sign and date it if filing Form PTE.
5. Send Schedule RR-E to the Department of Revenue by fax to 502-564-0058 or email to DORTaxCredits@ky.gov.

Credit certification cannot be guaranteed for schedules sent through regular mail. The text provides no mailing address or e-file instructions.

The department will confirm receipt. If you receive no confirmation within two weeks, contact the Division of Corporation Tax at 502-564-8139 or DORTaxCredits@ky.gov.

The department completes the approved credit certificate in Part III. Attach the certificate to the return claiming the credit. In Part IV, report the credit used against LLET on Schedule TCS, Part II, Column E, and the credit used against corporation income tax in Column F.

Common mistakes

• Continuing after a “yes” answer in Part I. Any “yes” answer means you do not qualify.
• Claiming both credits on the same expenditures. Choose either the railroad maintenance and improvement credit under KRS 141.385 or the railroad expansion credit under KRS 141.386, not both.
• Sending the application late or relying on regular mail. Late schedules are void, and certification is not guaranteed for schedules sent through regular mail.
• Ignoring a missing receipt confirmation. Contact the department if confirmation does not arrive within two weeks.
• Entering a six-digit Kentucky account number without leading zeros. The form requires nine digits.
• Reducing LLET below $175. The credit cannot reduce LLET below that minimum.
• Carrying unused credit forward. The credit must be used in the tax year of the qualified expenditures and cannot be carried forward.

Questions people ask

How much is the credit?

The credit is 25% of qualified expenditures paid or incurred during the tax year. Total approved credits for all taxpayers are limited to $1,000,000 per calendar year. If the total exceeds that cap, the department allocates the available credit proportionally.

What expenditures qualify?

Expenditures to expand or upgrade railroad track, including roadbeds, bridges, and related track structures, qualify when the work accommodates transportation of fossil energy or biomass resources.

Which taxes can the credit offset?

The credit can be applied against corporation income tax and LLET. It cannot reduce LLET below the $175 minimum.

Is the credit refundable or available to carry forward?

No. It is nonrefundable and must be used in the tax year of the qualified expenditures that generated it. It cannot be carried forward to another period.

How do pass-through entities report the approved credit?

A pass-through entity must include each partner’s or member’s pro rata share of the approved credit on that person’s Schedule K-1.

Official sources

• https://revenue.ky.gov/Forms/Schedule%20RR-E%20(10-25).pdf