Overview of Kentucky LLET Tax
Kentucky’s limited liability entity tax, known as LLET, applies to various types of entities based on their annual gross receipts. This tax is not an income tax but is imposed on entities with limited liability in Kentucky. The LLET may be calculated using a specified rate on gross receipts or profits, with a minimum tax of $175 applying regardless of the calculation method used.
Calculation of LLET
To calculate the LLET, there are three steps to follow:
- Calculate Kentucky gross receipts and profits.
- Apply the specified rate on gross receipts or profits, whichever is less.
- Compare the calculated amount to the minimum tax of $175.
Eligibility and Exemptions
The LLET applies to traditional corporations, S corporations, limited liability companies (LLCs), limited partnerships (LPs), and limited liability partnerships (LLPs). It does not include sole proprietorships and general partnerships. Some businesses are statutorily exempt from this tax.
Deadline and Filing Extension
The deadline for income tax returns for FY 2020-2021 has been extended to September 30, 2021. Individuals can file for an extension electronically and make payments via mail to the Kentucky Department of Revenue.
Deductibility and Recognition
The LLET paid is deductible for both Kentucky and federal tax purposes. Kentucky recognizes S-Corp and C-Corp elections and taxes them accordingly.