Kentucky Administrative Regulations
Title 103 - FINANCE AND ADMINISTRATION CABINET - DEPARTMENT OF REVENUE
Chapter 1 - General Administration
Section 103 KAR 1:130 - Taxation of federal and certain nonfederal obligations
Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 136.290, 136.300, 136.310, 136.320, 141.019, 141.900
NECESSITY, FUNCTION, AND CONFORMITY: KRS 131.130(1) authorizes the Department of Revenue to promulgate administrative regulations to administer and enforce Kentucky's tax laws. KRS 141.019(1)(a) and 141.900(10)(a) and (12)(a) provide an exclusion from gross income when calculating Kentucky income tax for income that is exempt from state taxation by the Kentucky Constitution and the Constitution and statutory laws of the United States and Kentucky. KRS 136.290, 136.300, 136.310, and 136.320 impose an ad valorem tax on the total value of the capital of federally or state chartered savings and loan associations, savings banks, and other similar institutions and domestic life insurance companies authorized to transact business in Kentucky, with property and payroll both within and without this state. This administrative regulation establishes the requirements relating to taxation of federal and certain nonfederal obligations in accordance with those statutes.
Section 1. Income Taxation. Interest income from United States government obligations upon which states are prohibited by federal law from imposing a tax shall be excluded from gross income when calculating Kentucky income tax liability. Only the interest income from exempt United States government obligations included in the taxpayer's federal taxable income may be deducted from the taxpayer's gross income for Kentucky income tax purposes.
Section 2. This section contains two (2) lists of certain agencies, authorized corporations, and banks of the United States government from which Kentucky taxpayers may receive interest income. These lists are not all-inclusive, nor are they intended to be conclusive of the taxable or exempt status of a particular obligation issued by or in conjunction with a listed department, agency, instrumentality, or other entity.
Section 3. Property Taxation. A claim by a taxpayer that property or capital subject to the ad valorem taxes imposed by KRS 136.290, 136.300, 136.310 or 136.320 is exempt under federal law shall be supported by specific statutory or binding case authority. In the absence of statutory or binding case authority, all intangible property shall be taxable. Securities merely guaranteed by the U.S. government shall be taxable as intangible property.
Section 4. Exempt federal obligations shall be classified as:
Section 5.
STATUTORY AUTHORITY: KRS 131.130