141.010 Definitions for chapter for taxable years beginning on or after January 1, 2018

141.010 Definitions for chapter for taxable years beginning on or after January 1,

2018.

As used in this chapter, for taxable years beginning on or after January 1, 2018:

(1) "Adjusted gross income," in the case of taxpayers other than corporations, means

the amount calculated in KRS 141.019;

(2) "Captive real estate investment trust" means a real estate investment trust as defined

in Section 856 of the Internal Revenue Code that meets the following requirements:

(a) 1. The shares or other ownership interests of the real estate investment

trust are not regularly traded on an established securities market; or

2. The real estate investment trust does not have enough shareholders or

owners to be required to register with the Securities and Exchange

Commission;

(b) 1. The maximum amount of stock or other ownership interest that is owned

or constructively owned by a corporation equals or exceeds:

a. Twenty-five percent (25%), if the corporation does not occupy

property owned, constructively owned, or controlled by the real

estate investment trust; or

b. Ten percent (10%), if the corporation occupies property owned,

constructively owned, or controlled by the real estate investment

trust.

The total ownership interest of a corporation shall be determined by

aggregating all interests owned or constructively owned by a

corporation; and

2. For the purposes of this paragraph:

a. "Corporation" means a corporation taxable under KRS 141.040,

and includes an affiliated group as defined in KRS 141.200, that is

required to file a consolidated return pursuant to KRS 141.200;

and

b. "Owned or constructively owned" means owning shares or having

an ownership interest in the real estate investment trust, or owning

an interest in an entity that owns shares or has an ownership

interest in the real estate investment trust. Constructive ownership

shall be determined by looking across multiple layers of a

multilayer pass-through structure; and

(c) The real estate investment trust is not owned by another real estate investment

trust;

(3) "Commissioner" means the commissioner of the department;

(4) "Corporation" has the same meaning as in Section 7701(a)(3) of the Internal

Revenue Code;

(5) "Critical infrastructure" means property and equipment owned or used by

communications networks, electric generation, transmission or distribution systems,

gas distribution systems, or water or wastewater pipelines that service multiple

customers or citizens, including but not limited to real and personal property such

as buildings, offices, lines, poles, pipes, structures, or equipment;

(6) "Declared state disaster or emergency" means a disaster or emergency event for

which:

(a) The Governor has declared a state of emergency pursuant to KRS 39A.100; or

(b) A presidential declaration of a federal major disaster or emergency has been

issued;

(7) "Department" means the Department of Revenue;

(8) "Dependent" means those persons defined as dependents in the Internal Revenue

Code;

(9) "Disaster or emergency-related work" means repairing, renovating, installing,

building, or rendering services that are essential to the restoration of critical

infrastructure that has been damaged, impaired, or destroyed by a declared state

disaster or emergency;

(10) "Disaster response business" means any entity:

(a) That has no presence in the state and conducts no business in the state, except

for disaster or emergency-related work during a disaster response period;

(b) Whose services are requested by a registered business or by a state or local

government for purposes of performing disaster or emergency-related work in

the state during a disaster response period; and

nse business" means any entity:

(a) That has no presence in the state and conducts no business in the state, except

for disaster or emergency-related work during a disaster response period;

(b) Whose services are requested by a registered business or by a state or local

government for purposes of performing disaster or emergency-related work in

the state during a disaster response period; and

(c) That has no registrations, tax filings, or nexus in this state other than disaster

or emergency-related work during the calendar year immediately preceding

the declared state disaster or emergency;

(11) "Disaster response employee" means an employee who does not work or reside in

the state, except for disaster or emergency-related work during the disaster response

period;

(12) "Disaster response period" means a period that begins ten (10) days prior to the first

day of the Governor's declaration under KRS 39A.100, or the President's

declaration of a federal major disaster or emergency, whichever occurs first, and

that extends thirty (30) calendar days after the declared state disaster or emergency;

(13) "Doing business in this state" includes but is not limited to:

(a) Being organized under the laws of this state;

(b) Having a commercial domicile in this state;

(c) Owning or leasing property in this state;

(d) Having one (1) or more individuals performing services in this state;

(e) Maintaining an interest in a pass-through entity doing business in this state;

(f) Deriving income from or attributable to sources within this state, including

deriving income directly or indirectly from a trust doing business in this state,

or deriving income directly or indirectly from a single-member limited

liability company that is doing business in this state and is disregarded as an

entity separate from its single member for federal income tax purposes; or

(g) Directing activities at Kentucky customers for the purpose of selling them

goods or services.

Nothing in this subsection shall be interpreted in a manner that goes beyond the

limitations imposed and protections provided by the United States Constitution or

Pub. L. No. 86-272;

(14) "Employee" has the same meaning as in Section 3401(c) of the Internal Revenue

Code;

(15) "Employer" has the same meaning as in Section 3401(d) of the Internal Revenue

Code;

(16) "Fiduciary" has the same meaning as in Section 7701(a)(6) of the Internal Revenue

Code;

(17) "Financial institution" means:

(a) A national bank organized as a body corporate and existing or in the process

of organizing as a national bank association pursuant to the provisions of the

National Bank Act, 12 U.S.C. secs. 21 et seq., in effect on December 31,

1997, exclusive of any amendments made subsequent to that date;

(b) Any bank or trust company incorporated or organized under the laws of any

state, except a banker's bank organized under KRS 286.3-135;

(c) Any corporation organized under the provisions of 12 U.S.C. secs. 611 to 631,

in effect on December 31, 1997, exclusive of any amendments made

subsequent to that date, or any corporation organized after December 31,

1997, that meets the requirements of 12 U.S.C. secs. 611 to 631, in effect on

December 31, 1997; or

(d) Any agency or branch of a foreign depository as defined in 12 U.S.C. sec.

3101, in effect on December 31, 1997, exclusive of any amendments made

subsequent to that date, or any agency or branch of a foreign depository

established after December 31, 1997, that meets the requirements of 12 U.S.C.

sec. 3101 in effect on December 31, 1997;

(18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal

Revenue Code;

(19) "Gross income":

(a) In the case of taxpayers other than corporations, has the same meaning as in

Section 61 of the Internal Revenue Code; and

branch of a foreign depository

established after December 31, 1997, that meets the requirements of 12 U.S.C.

sec. 3101 in effect on December 31, 1997;

(18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal

Revenue Code;

(19) "Gross income":

(a) In the case of taxpayers other than corporations, has the same meaning as in

Section 61 of the Internal Revenue Code; and

(b) In the case of corporations, means the amount calculated in KRS 141.039;

(20) "Individual" means a natural person;

(21) "Internal Revenue Code" means for taxable years beginning on or after January 1,

2025, the Internal Revenue Code in effect on December 31, 2024, exclusive of any

amendments made subsequent to that date, other than amendments that extend

provisions in effect on December 31, 2024, that would otherwise terminate;

(22) "Limited liability pass-through entity" means any pass-through entity that affords

any of its partners, members, shareholders, or owners, through function of the laws

of this state or laws recognized by this state, protection from general liability for

actions of the entity;

(23) "Modified gross income" means the greater of:

(a) Adjusted gross income as defined in 26 U.S.C. sec. 62, including any

amendments in effect on December 31 of the taxable year, and adjusted as

follows:

1. Include interest income derived from obligations of sister states and

political subdivisions thereof; and

2. Include lump-sum pension distributions taxed under the special

transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); or

(b) Adjusted gross income as defined in subsection (1) of this section and

adjusted to include lump-sum pension distributions taxed under the special

transition rules of Pub. L. No. 104-188, sec. 1401(c)(2);

(24) "Net income":

(a) In the case of taxpayers other than corporations, means the amount calculated

in KRS 141.019; and

(b) In the case of corporations, means the amount calculated in KRS 141.039;

(25) "Nonresident" means any individual not a resident of this state;

(26) "Number of withholding exemptions claimed" means the number of withholding

exemptions claimed in a withholding exemption certificate in effect under KRS

141.325, except that if no such certificate is in effect, the number of withholding

exemptions claimed shall be considered to be zero;

(27) "Part-year resident" means any individual that has established or abandoned

Kentucky residency during the calendar year;

(28) "Pass-through entity" means any partnership, S corporation, limited liability

company, limited liability partnership, limited partnership, or similar entity

recognized by the laws of this state that is not taxed for federal purposes at the

entity level, but instead passes to each partner, member, shareholder, or owner their

proportionate share of income, deductions, gains, losses, credits, and any other

similar attributes;

(29) "Payroll period" has the same meaning as in Section 3401(b) of the Internal

Revenue Code;

(30) "Person" has the same meaning as in Section 7701(a)(1) of the Internal Revenue

Code;

(31) "Registered business" means a business entity that owns or otherwise possesses

critical infrastructure and that is registered to do business in the state prior to the

declared state disaster or emergency;

(32) "Resident" means an individual domiciled within this state or an individual who is

not domiciled in this state, but maintains a place of abode in this state and spends in

the aggregate more than one hundred eighty-three (183) days of the taxable year in

this state;

(33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue

Code;

(34) "State" means a state of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, or any territory or possession of the United States;

(35) "Taxable net income":

te and spends in

the aggregate more than one hundred eighty-three (183) days of the taxable year in

this state;

(33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue

Code;

(34) "State" means a state of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, or any territory or possession of the United States;

(35) "Taxable net income":

(a) In the case of corporations that are taxable in this state, means "net income" as

defined in subsection (24) of this section;

(b) In the case of corporations that are taxable in this state and taxable in another

state, means "net income" as defined in subsection (24) of this section and as

allocated and apportioned under KRS 141.120;

(c) For homeowners' associations as defined in Section 528(c) of the Internal

Revenue Code, means "taxable income" as defined in Section 528(d) of the

Internal Revenue Code. Notwithstanding the provisions of subsection (21) of

this section, the Internal Revenue Code sections referred to in this paragraph

shall be those code sections in effect for the applicable tax year; and

(d) For a corporation that meets the requirements established under Section 856

of the Internal Revenue Code to be a real estate investment trust, means "real

estate investment trust taxable income" as defined in Section 857(b)(2) of the

Internal Revenue Code, except that a captive real estate investment trust shall

not be allowed any deduction for dividends paid;

(36) "Taxable year" means the calendar year or fiscal year ending during such calendar

year, upon the basis of which net income is computed, and in the case of a return

made for a fractional part of a year under the provisions of this chapter or under

administrative regulations prescribed by the commissioner, "taxable year" means

the period for which the return is made; and

(37) "Wages" has the same meaning as in Section 3401(a) of the Internal Revenue Code

and includes other income subject to withholding as provided in Section 3401(f)

and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code.