Kentucky Administrative Regulations
Title 103 - FINANCE AND ADMINISTRATION CABINET - DEPARTMENT OF REVENUE
Chapter 16 - Income Tax; Corporations
Section 103 KAR 16:330 - Apportionment and allocation; alternative apportionment; separate accounting
Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 141.120, 141.901
NECESSITY, FUNCTION, AND CONFORMITY: KRS 141.120 provides for the division of income of interstate business for tax purposes. KRS 141.120(12)(a)(1) states that if the allocation and apportionment provisions do not fairly represent the extent of the taxpayer's business activity in Kentucky, a taxpayer may petition for, or the department may require, in respect to all or any part of the taxpayer's business activity, if reasonable, an alternative method of apportionment. KRS 131.130(1) authorizes the Kentucky Department of Revenue to promulgate administrative regulations to administer and enforce Kentucky's tax laws. This administrative regulation establishes alternative apportionment request procedures and when the separate accounting method shall apply.
Section 1. Petition for Alternative Apportionment.
Section 2. Denial of Petition for Alternative Apportionment. If a taxpayer disagrees with the department's denial of a petition for alternative apportionment:
Section 3. Separate Accounting. If a taxpayer is permitted or required to use the separate accounting method of apportionment, the authorization or requirement shall be applied pro-spectively from the date or taxable year it was directed in writing by the department or requested by the taxpayer. Income tax returns filed under these conditions shall be subject to audit and review on a separate accounting basis to determine the correctness of income and expenses, but the method of apportioning net income shall not be changed retroactively. The fact that taxable income is greater or lesser, or that the taxpayer's accounting records reflect income by contracts or by states shall not be sufficient to support a request for separate accounting.
Section 4. This administrative regulation shall apply to taxable years beginning on or after January 1, 2018.
STATUTORY AUTHORITY: KRS 131.130, 141.120