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AN ACT relating to the sale or exchange of currency or bullion. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 141.019 is amended to read as follows: 3
In the case of taxpayers other than corporations: 4
(1) Adjusted gross income shall be calculated by subtracting from the gross income of 5
those taxpayers the deductions allowed individuals by Section 62 of the Internal 6
Revenue Code and adjusting as follows: 7
(a) Exclude income that is exempt from state taxation by the Kentucky 8
Constitution and the Constitution and statutory laws of the United States; 9
(b) Exclude income from supplemental annuities provided by the Railroad 10
Retirement Act of 1937 as amended and which are subject to federal income 11
tax by Pub. L. No. 89-699; 12
(c) Include interest income derived from obligations of sister states and political 13
subdivisions thereof; 14
(d) Exclude employee pension contributions picked up as provided for in KRS 15
6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, 16
and 161.540 upon a ruling by the Internal Revenue Service or the federal 17
courts that these contributions shall not be included as gross income until such 18
time as the contributions are distributed or made available to the employee; 19
(e) Exclude Social Security and railroad retirement benefits subject to federal 20
income tax; 21
(f) Exclude any money received because of a settlement or judgment in a lawsuit 22
brought against a manufacturer or distributor of "Agent Orange" for damages 23
resulting from exposure to Agent Orange by a member or veteran of the 24
Armed Forces of the United States or any dependent of such person who 25
served in Vietnam; 26
(g) 1. a. For taxable years beginning after December 31, 2005, but before 27 UNOFFICIAL COPY 25 RS BR 1574
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January 1, 2018, exclude up to forty-one thousand one hundred ten 1
dollars ($41,110) of total distributions from pension plans, annuity 2
contracts, profit-sharing plans, retirement plans, or employee 3
savings plans; and 4
b. For taxable years beginning on or after January 1, 2018, exclude 5
up to thirty-one thousand one hundred ten dollars ($31,110) of 6
total distributions from pension plans, annuity contracts, profit-7
sharing plans, retirement plans, or employee savings plans. 8
2. As used in this paragraph: 9
a. "Annuity contract" has the same meaning as set forth in Section 10
1035 of the Internal Revenue Code; 11
b. "Distributions" includes but is not limited to any lump-sum 12
distribution from pension or profit-sharing plans qualifying for the 13
income tax averaging provisions of Section 402 of the Internal 14
Revenue Code; any distribution from an individual retirement 15
account as defined in Section 408 of the Internal Revenue Code; 16
and any disability pension distribution; and 17
c. "Pension plans, profit-sharing plans, retirement plans, or employee 18
savings plans" means any trust or other entity created or organized 19
under a written retirement plan and forming part of a stock bonus, 20
pension, or profit-sharing plan of a public or private employer for 21
the exclusive benefit of employees or their beneficiaries and 22
includes plans qualified or unqualified under Section 401 of the 23
Internal Revenue Code and individual retirement accounts as 24
defined in Section 408 of the Internal Revenue Code; 25
(h) 1. a. Exclude the portion of the distributive share of a shareholder's net 26
income from an S corporation subject to the franchise tax imposed 27 UNOFFICIAL COPY 25 RS BR 1574
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under KRS 136.505 or the capital stock tax imposed under KRS 1
136.300; and 2
b. Exclude the portion of the distributive share of a shareholder's net 3
income from an S corporation related to a qualified subchapter S 4
subsidiary subject to the franchise tax imposed under KRS 5
136.505 or the capital stock tax imposed under KRS 136.300. 6
2. The shareholder's basis of stock held in an S corporation where the S 7
corporation or its qualified subchapter S subsidiary is subject to the 8
franchise tax imposed under KRS 136.505 or the capital stock tax 9
imposed under KRS 136.300 shall be the same as the basis for federal 10
income tax purposes; 11
(i) Exclude income received for services performed as a precinct worker for 12
election training or for working at election booths in state, county, and local 13
primaries or regular or special elections; 14
(j) Exclude any capital gains income attributable to property taken by eminent 15
domain; 16
(k) 1. Exclude all income from all sources for members of the Armed Forces 17
who are on active duty and who are killed in the line of duty, for the 18
year during which the death occurred and the year prior to the year 19
during which the death occurred. 20
2. For the purposes of this paragraph, "all income from all sources" shall 21
include all federal and state death benefits payable to the estate or any 22
beneficiaries; 23
(l) Exclude all military pay received by members of the Armed Forces while on 24
active duty; 25
(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167 26
or 168; and 27 UNOFFICIAL COPY 25 RS BR 1574
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2. Exclude the amounts allowed by KRS 141.0101 for depreciation; 1
(n) Include the amount deducted under 26 U.S.C. sec. 199A; 2
(o) Ignore any change in the cost basis of the surviving spouse's share of property 3
owned by a Kentucky community property trust occurring for federal income 4
tax purposes as a result of the death of the predeceasing spouse; 5
(p) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 6
278, related to the tax treatment of forgiven covered loans, deductions 7
attributable to those loans, and tax attributes associated with those loans for 8
taxable years ending on or after March 27, 2020, but before January 1, 2022;[ 9
and] 10
(q) For taxable years beginning on or after January 1, 2020, but before March 11, 11
2023, allow the same treatment of restaurant revitalization grants in 12
accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c, 13
related to the tax treatment of the grants, deductions attributable to those 14
grants, and tax attributes associated with those grants; and 15
(r) 1. For taxable years beginning on or after January 1, 2026, ignore 16
capital gains and capital losses attributable to the sale or exchange of 17
currency or bullion. 18
2. As used in this paragraph "currency" or "bullion" have the same 19
meaning as in KRS 139.480; and 20
(2) Net income shall be calculated by subtracting from adjusted gross income all the 21
deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as 22
modified by KRS 141.0101, except: 23
(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes; 24
(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering 25
losses allowed under Section 165(d) of the Internal Revenue Code; 26
(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses; 27 UNOFFICIAL COPY 25 RS BR 1574
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(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses; 1
(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous 2
deduction; 3
(f) Any deduction allowed by the Internal Revenue Code for amounts allowable 4
under KRS 140.090(1)(h) in calculating the value of the distributive shares of 5
the estate of a decedent, unless there is filed with the income return a 6
statement that the deduction has not been claimed under KRS 140.090(1)(h); 7
(g) Any deduction allowed by 26 U.S.C. sec. 151 for personal exemptions and 8
any other deductions in lieu thereof; 9
(h) Any deduction allowed for amounts paid to any club, organization, or 10
establishment which has been determined by the courts or an agency 11
established by the General Assembly and charged with enforcing the civil 12
rights laws of the Commonwealth, not to afford full and equal membership 13
and full and equal enjoyment of its goods, services, facilities, privileges, 14
advantages, or accommodations to any person because of race, color, religion, 15
national origin, or sex, except nothing shall be construed to deny a deduction 16
for amounts paid to any religious or denominational club, group, or 17
establishment or any organization operated solely for charitable or educational 18
purposes which restricts membership to persons of the same religion or 19
denomination in order to promote the religious principles for which it is 20
established and maintained; and 21
(i) A taxpayer may elect to claim the standard deduction allowed by KRS 22
141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63 23
and as modified by this section. 24
Section 2. KRS 141.039 is amended to read as follows: 25
In the case of corporations: 26
(1) Gross income shall be calculated by adjusting federal gross income as defined in 27 UNOFFICIAL COPY 25 RS BR 1574
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Section 61 of the Internal Revenue Code as follows: 1
(a) Exclude income that is exempt from state taxation by the Kentucky 2
Constitution and the Constitution and statutory laws of the United States; 3
(b) Exclude all dividend income; 4
(c) Include interest income derived from obligations of sister states and political 5
subdivisions thereof; 6
(d) Exclude fifty percent (50%) of gross income derived from any disposal of 7
coal covered by Section 631(c) of the Internal Revenue Code if the 8
corporation does not claim any deduction for percentage depletion, or for 9
expenditures attributable to the making and administering of the contract 10
under which such disposition occurs or to the preservation of the economic 11
interests retained under such contract; 12
(e) Include the amount calculated under KRS 141.205; 13
(f) Ignore the provisions of Section 281 of the Internal Revenue Code in 14
computing gross income; 15
(g) Include the amount of deprecation deduction calculated under 26 U.S.C. sec. 16
167 or 168; 17
(h) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 18
278, related to the tax treatment of forgiven covered loans, deductions 19
attributable to those loans, and tax attributes associated with those loans for 20
taxable years ending on or after March 27, 2020, but before January 1, 2022; 21
[and] 22
(i) 1. For taxable years beginning on or after January 1, 2026, ignore 23
capital gains and capital losses attributable to the sale or exchange of 24
currency or bullion. 25
2. As used in this paragraph "currency" or "bullion" have the same 26
meaning as in KRS 139.480; and 27 UNOFFICIAL COPY 25 RS BR 1574
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(j)[(i)] For taxable years beginning on or after January 1, 2020, but before 1
March 11, 2023, allow the same treatment of restaurant revitalization grants in 2
accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c, 3
related to the tax treatment of the grants, deductions attributable to those 4
grants, and tax attributes associated with those grants; and 5
(2) Net income shall be calculated by subtracting from gross income: 6
(a) The deduction for depreciation allowed by KRS 141.0101; 7
(b) Any amount paid for vouchers or similar instruments that provide health 8
insurance coverage to employees or their families; 9
(c) All the deductions from gross income allowed corporations by Chapter 1 of 10
the Internal Revenue Code, as modified by KRS 141.0101, except: 11
1. Any deduction for a state tax which is computed, in whole or in part, by 12
reference to gross or net income and which is paid or accrued to any 13
state of the United States, the District of Columbia, the Commonwealth 14
of Puerto Rico, any territory or possession of the United States, or to any 15
foreign country or political subdivision thereof; 16
2. The deductions contained in Sections 243, 245, and 247 of the Internal 17
Revenue Code; 18
3. The provisions of Section 281 of the Internal Revenue Code shall be 19
ignored in computing net income; 20
4. Any deduction directly or indirectly allocable to income which is either 21
exempt from taxation or otherwise not taxed under the provisions of this 22
chapter, except for deductions allowed under Pub. L. No. 116-260, secs. 23
276 and 278, related to the tax treatment of forgiven covered loans and 24
deductions attributable to those loans for taxable years ending on or 25
after March 27, 2020, but before January 1, 2022; and deductions 26
allowed under Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c, 27 UNOFFICIAL COPY 25 RS BR 1574
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related to the tax treatment of restaurant revitalization grants and 1
deductions attributable to those grants for taxable years beginning on or 2
after January 1, 2020, but before March 11, 2023. Nothing in this 3
chapter shall be construed to permit the same item to be deducted more 4
than once; 5
5. Any deduction for amounts paid to any club, organization, or 6
establishment which has been determined by the courts or an agency 7
established by the General Assembly and charged with enforcing the 8
civil rights laws of the Commonwealth, not to afford full and equal 9
membership and full and equal enjoyment of its goods, services, 10
facilities, privileges, advantages, or accommodations to any person 11
because of race, color, religion, national origin, or sex, except nothing 12
shall be construed to deny a deduction for amounts paid to any religious 13
or denominational club, group, or establishment or any organization 14
operated solely for charitable or educational purposes which restricts 15
membership to persons of the same religion or denomination in order to 16
promote the religious principles for which it is established and 17
maintained; 18
6. Any deduction prohibited by KRS 141.205; and 19
7. Any dividends-paid deduction of any captive real estate investment 20
trust; and 21
(d) 1. A deferred tax deduction in an amount computed in accordance with this 22
paragraph. 23
2. For purposes of this paragraph: 24
a. "Net deferred tax asset" means that deferred tax assets exceed the 25
deferred tax liabilities of the combined group, as computed in 26
accordance with accounting principles generally accepted in the 27 UNOFFICIAL COPY 25 RS BR 1574
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United States of America; and 1
b. "Net deferred tax liability" means deferred tax liabilities that 2
exceed the deferred tax assets of a combined group as defined in 3
KRS 141.202, as computed in accordance with accounting 4
principles generally accepted in the United States of America. 5
3. Only publicly traded companies, including affiliated corporations 6
participating in the filing of a publicly traded company's financial 7
statements prepared in accordance with accounting principles generally 8
accepted in the United States of America, as of January 1, 2019, shall be 9
eligible for this deduction. 10
4. If the provisions of KRS 141.202 result in an aggregate increase to the 11
member's net deferred tax liability, an aggregate decrease to the 12
member's net deferred tax asset, or an aggregate change from a net 13
deferred tax asset to a net deferred tax liability, the combined group 14
shall be entitled to a deduction, as determined in this paragraph. 15
5. For ten (10) years beginning with the combined group's first taxable 16
year beginning on or after January 1, 2026, a combined group shall be 17
entitled to a deduction from the combined group's entire net income 18
equal to one-tenth (1/10) of the amount necessary to offset the increase 19
in the net deferred tax liability, decrease in the net deferred tax asset, or 20
aggregate change from a net deferred tax asset to a net deferred tax 21
liability. The increase in the net deferred tax liability, decrease in the net 22
deferred tax asset, or the aggregate change from a net deferred tax asset 23
to a net deferred tax liability shall be computed based on the change that 24
would result from the imposition of the combined reporting requirement 25
under KRS 141.202, but for the deduction provided under this paragraph 26
as of June 27, 2019. 27 UNOFFICIAL COPY 25 RS BR 1574
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6. The deferred tax impact determined in subparagraph 5. of this paragraph 1
shall be converted to the annual deferred tax deduction amount, as 2
follows: 3
a. The deferred tax impact determined in subparagraph 5. of this 4
paragraph shall be divided by the tax rate determined under KRS 5
141.040; 6
b. The resulting amount shall be further divided by the 7
apportionment factor determined by KRS 141.120 or 141.121 that 8
was used by the combined group in the calculation of the deferred 9
tax assets and deferred tax liabilities as described in subparagraph 10
5. of this paragraph; and 11
c. The resulting amount represents the total net deferred tax 12
deduction available over the ten (10) year period as described in 13
subparagraph 5. of this paragraph. 14
7. The deduction calculated under this paragraph shall not be adjusted as a 15
result of any events happening subsequent to the calculation, including 16
but not limited to any disposition or abandonment of assets. The 17
deduction shall be calculated without regard to the federal tax effect and 18
shall not alter the tax basis of any asset. If the deduction under this 19
section is greater than the combined group's entire Kentucky net income, 20
any excess deduction shall be carried forward and applied as a deduction 21
to the combined group's entire net income in future taxable years until 22
fully utilized. 23
8. Any combined group intending to claim a deduction under this 24
paragraph shall file a statement with the department on or before July 1, 25
2019. The statement shall specify the total amount of the deduction 26
which the combined group claims on the form, including calculations 27 UNOFFICIAL COPY 25 RS BR 1574
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and other information supporting the total amounts of the deduction as 1
required by the department. No deduction shall be allowed under this 2
paragraph for any taxable year, except to the extent claimed on the 3
timely filed statement in accordance with this paragraph. 4