Questions and Answers

Identifying Information:Questions and Answers relating to Business and Job Development credits as they apply to partnerships and subchapter S corporations.
Tax Type:Corporate Income Tax
Brief Description:Questions and Answers relating to Business and Job Development credits as they apply to partnerships and subchapter S corporations.
Keywords:
Approval Date:10/01/1999



Body:
Office of Policy & Research


Question:

Can a partnership or subchapter S corporation that receives a business and job development credit choose which partner or shareholder receives the credit based on their by-laws, or must the credit be distributed to each partner or shareholder based on their ownership percentage?

Answer:

Partnership and subchapter S corporation tax business and job development credits must be distributed to each partner or shareholder based on their ownership percentages.

Question:

If a partner or shareholder leaves the partnership or subchapter S corporation, are they allowed to keep a one-time Business and Job Development credit [K.S.A. 79-32,160a] carry forward? What about a situation where the credit for establishment of a qualified business facility [K.S.A. 79-32,153] is re-computed each year?

Answer:

For purposes of the one-time Business and Job Development credit allowed by K.S.A. 79-32,160a, each partner or shareholder is considered to own their piece of the credit and can carry it forward to future years even if they are no longer a partner or shareholder. The ex-partner or ex-shareholder is responsible for checking each year to make sure the partnership or S corporation has maintained the required number of employees to obtain the credit that year. Form K34CO, the paperwork to annually re-certify such credits, must be completed and submitted with the ex-partner's or ex-shareholder's for each year of the carry forward period that the credit is claimed.

If a partner or shareholder leaves the partnership or subchapter S corporation they are no longer considered a partner or shareholder and not eligible to claim the re-computed credit for establishment of a qualified business facility allowed by K.S.A. 79-32,153. Conversely, if a partnership or S corporation gains partners or shareholders, these individuals are eligible to claim the re-computed credit in that particular year.



Date Composed: 11/12/1999 Date Modified: 10/11/2001