Kentucky Administrative Regulations
Title 103 - FINANCE AND ADMINISTRATION CABINET - DEPARTMENT OF REVENUE
Chapter 16 - Income Tax; Corporations
Section 103 KAR 16:320 - Claim of right doctrine
Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 134.580, 141.010, 141.039, 141.050, 26 U.S.C. 1341
NECESSITY, FUNCTION, AND CONFORMITY: KRS 131.130(1) authorizes the department to promulgate administrative regulations to administer and enforce Kentucky's tax laws. KRS 141.050(4) requires the department to promulgate administrative regulations to effectively carry out the provisions of KRS Chapter 141. Internal Revenue Code Section 1341, 26 U.S.C. 1341, provides for an adjustment to income tax where a taxpayer restores a substantial amount held under claim of right. This administrative regulation interprets the application of the claim of right doctrine for Kentucky corporation income tax purposes.
Section 1. Definition. "Internal Revenue Code" is defined by KRS 141.010(21).
Section 2. General. If a corporation has made a claim of right adjustment in its federal tax return, a claim of right adjustment may be made to the Kentucky corporation income tax return in accordance with this section.
Section 3. Documentation. The burden of proof shall be on the corporation to establish that the income or deduction subject to a claim of right was taxed or subject to tax in Kentucky, and the amount of tax actually paid on the income underlying the claim. Separate computations shall be attached to the return, when filed, showing the claim of right for federal tax purposes and the amount claimed to be attributable for Kentucky income tax purposes.
STATUTORY AUTHORITY: KRS 131.130(1), 141.050(4)