Advanced Search

103 KAR 17:060. Income subject to taxation; portions


Published: 2015

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$40 per month.
      103 KAR 17:060. Income subject to

taxation; portions.

 

      RELATES TO: KRS 141.010, 141.020

      STATUTORY AUTHORITY: KRS 131.130(1)

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

131.130(1) authorizes the department to promulgate administrative regulations

to administer and enforce Kentucky's tax laws. KRS 141.020 establishes the

income tax requirements for residents and nonresidents. This administrative

regulation prescribes methods of determining the Kentucky portion of certain

income tax deductions of nonresidents and part-year residents.

 

      Section 1. Residents. The entire net

income of a full-year resident individual shall be subject to Kentucky income

tax regardless of its source. Income from out-of-state sources shall not be

exempt. The adjustments to gross income and itemized deductions allowed under

KRS 141.010(10) and (11) of a full-year resident shall not be limited to those

paid in Kentucky.

 

      Section 2. Persons Becoming Residents

During the Year. (1) Persons who become Kentucky residents during the year shall

be subject to Kentucky individual income tax upon their entire net incomes from

any source after becoming Kentucky residents and upon their incomes from

Kentucky sources prior to becoming Kentucky residents.

      (2) Except as provided in Section 6 of

this administrative regulation for net operating loss deductions, persons who

become residents during the year shall be limited to either:

      (a) Adjustments to gross income and

itemized deductions allowed pursuant to KRS 141.010(10) and (11) paid after

becoming Kentucky residents; or

      (b) That portion of total adjustments to

gross income and itemized deductions that Kentucky income bears to total income.

 

      Section 3. Persons Becoming Nonresidents

During the Year. (1) Persons who are Kentucky residents, but become

nonresidents during the year, shall be subject to Kentucky individual income

tax upon their entire net incomes from all sources while they are Kentucky

residents, and upon their incomes from Kentucky sources after becoming

nonresidents.

      (2) Except as provided in Section 6 of

this administrative regulation for net operating loss deductions, persons who

become nonresidents during the year shall be limited to either:

      (a) Adjustments to gross income and

itemized deductions allowed pursuant to KRS 141.010(10) and (11) paid while a

Kentucky resident; or

      (b) That portion of total adjustments to

gross income and total itemized deductions allowed pursuant to KRS 141.010(10)

and (11) that Kentucky income bears to total income.

 

      Section 4. Nonresidents. (1) Any net

income of a nonresident shall be subject to Kentucky income tax if it is

derived from services performed in Kentucky or from property located in

Kentucky. Income from sources outside Kentucky shall not be subject to Kentucky

income tax. Losses incurred outside Kentucky deductible in computing Kentucky

shall not be adjusted gross income.

      (2) Except as provided in Section 6 of

this administrative regulation for net operating loss deductions, the

adjustments to gross income and itemized deductions allowed pursuant to KRS

141.010(10) and (11) shall be limited to that portion of adjustments to gross

income and total itemized deductions that Kentucky income bears to total income.

 

      Section 5. Allocation Based Upon Kentucky

Income. If a deduction or an adjustment to gross income is allowable based upon

the receipt of certain types of income and is limited to a maximum amount

deductible for federal income tax purposes, the Kentucky income used to make

the allocation shall be the same type of income used to allow the deduction on

the federal return.

 

      Section 6. Net Operating Loss Deduction.

An individual resident, a part-year individual resident, or an individual

nonresident shall compute the net operating loss deduction using Kentucky

income and expenses allowed or allowable on the Kentucky return. (II-6-1;

1 Ky.R. 329; eff. 2-5-1975; Am. 20 Ky.R. 2879; eff. 5-18-94; 32 Ky.R. 2060; 33

Ky.R. 77; eff. 8-7-2006.)