Kentucky provides guidance on nonrefundable inventory tax credit

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November 2018


The Kentucky Department of Revenue (KDOR) on October 8 issued Technical Advice Memorandum 18-04 (TAM 18-04), addressing how the inventory tax credit is calculated when the inventory portion of the tax is mixed with other types of taxed property and how fiscal-year filers report the credit.

The takeaway

The Credit offers a use-it-or-lose-it nonrefundable and nontransferable option to taxpayers that timely pay ad valorem taxes on Eligible Property in Kentucky on or after January 1, 2018. The Credit also may appeal to benefit pass-through entities as the credit is applied against the limited liability entity tax and passes through to its members, partners, or shareholders.

The potential benefits from this credit increase each taxable year as a higher percentage of timely paid ad valorem taxes is subject to offset Kentucky tax liabilities.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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