Corporation Income and Limited Liability Entity Tax

Tax Administration

Protest Time Period Changes For notices of tax due and refund denials issued on or after July 1, 2018, the time to file a protest increased from 45 to 60 days. This 60-day protest period applies to tangible personal property tax bills. These changes do not apply to protests of real property tax assessments.

Federal Audit Final Determinations The due date for submission to Kentucky increases from 30 to 180 days. Taxpayers now have 180 days to submit an amended income tax return to Kentucky from the date the federal audit final determination is issued by the IRS.

Tax Rates

For tax years beginning on or after January 1, 2018, the previous rate brackets have been replaced with a flat 5% tax rate.

Apportionment

For tax years beginning on or after January 1, 2018:

Single Sales Factor
Market Based Sourcing of receipts for sales of intangible property
Three-factor apportionment retained for providers.

Current Year Corporation Income Tax Forms

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Additional Resources

Corporate Federal Audit Adjustments

File a Corporate Income Tax Extension

Frequently Asked Questions

Pay Corporation Income Tax

To pay a bill, an estimated payment, an extension payment, or a payment for paper filed or electronically filed Corporation Income Tax and/or Limited Entity Tax (LLET) return:

Electronic payment: Choose to pay directly from your bank account or by credit card. Service provider fees may apply.

To pay an estimated payment or an extension payment for your Corporation Income Tax and/or Limited Liability Entity Tax (LLET):

Tax Payment Solution (TPS) - Register for EFT payments and pay EFT Debits online.

If filing a paper return with payment, make the check or money order payable to "Kentucky State Treasurer" and mail to
Kentucky Department of Revenue
Frankfort, KY 40620-0021

If filing a paper return showing no tax due or a refund, please mail to
Kentucky Department of Revenue
Frankfort, KY 40618-0010

If paying an estimate, extension, or other payment without a paper return, mail check or money order made payable to "Kentucky State Treasurer" to

Kentucky Department of Revenue
Frankfort, KY 40620-0020

All tax payment and e-file options

Estimated Payments

For tax years beginning on or after January 1, 2019: Estimated tax rules and penalties changed to generally follow federal rules for corporations and pass-through entities.

Four installments at 25% of the estimated tax due on April 15, June 15, September 15, and December 15
Allow Annualization and Adjusted Seasonal Installment Methods
Declaration Penalty replaced with "Addition to Tax" Penalty
See 2019 720ES Instructions
KY-TAM-19-02

Section 179 Expense Deduction

IRC §179 expense deduction increased to $100,000 for Kentucky for property placed in service on or after January 1, 2020:

Property placed into service 9/10/01 - 12/31/19

Use December 31, 2001 IRC ($25,000 § 179 maximum)

Property placed into service on or after 1/1/20

Use December 31, 2003 IRC ($100,000 § 179 maximum)

Corporate Extensions

For valid extensions filed on or after June 27, 2019:

C-Corporations allowed 7 month extension to file complete and accurate return

Bank Franchise Tax Repealed Effective 2021

For tax years beginning on or after January 1, 2021:

Bank Franchise Tax repealed and replaced with Corporation Income Tax and LLET

Applies to banks, savings and loan associations, and other financial institutions doing business in Kentucky.
Short year returns required for bank franchise tax returns with a fiscal year end

Statute of Limitations Extended for LLET Assessments of Pass-through Entities

If a pass-through entity is billed for LLET, the shareholders, partners, or members are allowed the greater of the ordinary statute of limitations or 180 days from the date an assessment is final to file amended returns.

Group Filing Methods and Net Operating Loss Provisions

For tax years beginning on or after January 1, 2019:

Filing:

Unitary Combined Group filing required; or
Group election for a 48 month same-as-federal consolidated group filing; otherwise
Separate entity filing if not part of a unitary or consolidated group

Unitary Combined Filing:

Combined group includes domestic corporations (with some exceptions) involved in unitary business
Unitary business means related corporations between which there is a significant flow of value
50% voting stock ownership required for combined group
Distributive share of pass-through income counts as part of corporation business income
Each entity calculates its own apportionment fraction
Group apportionable income is the sum of members' individual net incomes
Intercompany transactions are eliminated from group income and apportionment calculations
NOLs can be shared among members of a combined group; tax credits cannot be shared.

NOL:

Adopt the 80% federal NOL limitation under IRC Sec 172(a) for NOL generated after January 1, 2018
Adopt federal unlimited carryforward of NOL generated after January 1, 2018
Kentucky does not allow a NOL carryback for tax years beginning on or after January 1, 2005
Unitary Group NOL Sharing

Kentucky Net Operating Loss (KNOL) incurred by a taxpayer member prior to inclusion in a unitary combined group may be deducted from the apportioned income of:

That taxpayer member which originally incurred the KNOL *
Another taxpayer member, but in no case shall the deduction reduce any taxpayer member's Kentucky apportioned taxable income by more than 50% in any taxable year

KNOL incurred by a taxpayer member while included in a unitary combined group may be deducted from the apportioned income of:

That taxpayer member which originally incurred the KNOL*
Another taxpayer member that was a taxpayer member in the same combined group in the year in which the KNOL was originally incurred *

If the taxable income results in a net loss for a taxpayer member of the combined group, that taxpayer member has a KNOL
Any amount of NOL carryover that is deducted by another taxpayer member of the combined group shall reduce the amount of net operating loss carryover that may be carried over by the taxpayer member that originally incurred the loss

All KNOL are subject to the limits specified in IRC Section 172 and KRS 141.011
No prior year KNOL carryforward shall be available to entities that were not doing business in Kentucky in the year in which the loss was incurred

Electronic Filing

For tax years beginning on or after October 1, 2020, E-Filing is required for separate corporation and pass-through entity returns with federal gross receipts exceeding $1,000,000. See 103 KAR 1:160.

Internal Revenue Code Reference Date

For tax years beginning on or after January 1, 2018, IRC reference date is updated to December 31, 2017.
For tax years beginning on or after January 1, 2019, IRC reference date is updated to December 31, 2018.