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Kentucky Free Printable  for 2021 Kentucky Related Party Costs Disclosure Statement

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Related Party Costs Disclosure Statement
Schedule RPC

SCHEDULE RPC RELATED PARTY COSTS DISCLOSURE STATEMENT Commonwealth of Kentucky Department of Revenue 2020 Taxable Year Ending  See instructions.  Attach to Form 720, 720U, or PTE. Name of Entity Federal Identification Number __ __ __ __ __ __ __ __ __ __ __ / __ __ M M Y Y Kentucky Corporation/LLET Account Number (if applicable) __ __ __ __ __ __ Schedule RPC, Related Party Costs Disclosure Statement, must be completed by an entity that paid, accrued, or incurred intangible expenses, intangible interest expense, or management fees to a related member. To be entitled to an exception from the add back of expenses and a corresponding deduction from net income, the taxpayer must complete and attach this schedule to the applicable Kentucky tax return (Form 720, 720U, or PTE). Failure to complete Schedule RPC and attach all supporting documentation will result in disallowance of the exception(s). PART I – RELATED PARTY COSTS 1 Total intangible expenses paid to a related member: Do not include any interest expense or costs related to intangible interest expense...................................................... 1 2 Total intangible interest expenses paid to a related member............................................. 2 3 Total management fees paid to a related member............................................................... 3 4 Total Related Party Costs: Add lines 1 through 3.................................................................. 4 00 00 00 00 PART II – EXCEPTIONS TO ADD BACK Section A — Exceptions to Expenses 1 Enter amount from Part III, Section A, line 5.......................................................................... 1 2 Enter amount from Part III, Section B, line 5.......................................................................... 2 3 Enter amount from Part III, Section C, line 14........................................................................ 3 4 Total Exceptions: Add lines 1 through 3................................................................................. 4 00 00 00 00 Section B — Total Required Related Party Cost Add Back After Exceptions 1 Total: Part I, line 4 less Part II, line 4. Enter here and on Form 720, Part I, line 6; Form 720U, Schedule U4, line 6; or Form PTE, Part I, line 4................................................. 1 00 PART III – DETAIL OF EXCEPTIONS TO ADD BACK Section A — Exception for related party costs where the entity and the recipient are both included in the same consolidated Kentucky corporation income tax return Name of Related Member Federal Identification Number Amount Deducted Kentucky Corp./LLET Account Number 1. 2. 3. 4. 5. Total of lines 1 through 4. Enter here and on PART II, Section A, line 1 200332 41A720RPC (10-20) Page 1 of 3 00 00 00 00 00 Schedule RPC (2020) Page 2 of 3 Section B — Exception for related party costs for transactions that the recipient regularly engages with one or more unrelated parties on terms identical to that of the subject transaction and alternative apportionment methods Transactions with terms identical to those with unrelated parties 1 Has the recipient regularly engaged in transactions with one (1) or more unrelated parties on terms identical to that of the subject transaction? 2 Identical Terms—Exception amount enter here Alternative Apportionment 3 Is there a written agreement between the taxpayer and the Department which provides for use of an alternative method of apportionment per KRS 141.120(12)? 4 Alternative Apportionment—Exception amount enter here 5 Total of Line 2 and Line 4: Enter here and on Part II, Section A, Line 2 ¨ Yes  ¨ No $ ¨ Yes  ¨ No $ $ NOTE: If the answer to Line 1 is “Yes”, attach copies of the written agreement between the taxpayer and the recipient and the recipient and the unrelated party. If the answer to Line 3 is “Yes”, attach a copy of the written agreement between the taxpayer and the Department. Failure to attach written agreements will result in a denial of the exception(s). If any of the answers are “No”, the taxpayer does not qualify for this exception. Section C — Exception for related party costs paid to related members who are subject to tax in their state or country of domicile. 1 2 3 Were any intangible expenses, intangible interest expenses, or management fees paid, accrued, or incurred to a recipient where the expense or payment was subject to, in the related member’s state or country of commercial domicile, a net income tax or a franchise tax measured by, in whole or in part, net income? Note: Country must have in force a comprehensive income tax treaty with the United States if the recipient is a foreign corporation. Is the recipient engaged in substantial business activities separate and apart from the acquisition, use, licensing, management, ownership, sale, exchange, or any other disposition of intangible property, or in the financing of related members, as evidenced by the maintenance of permanent office space and full-time employees dedicated to the maintenance and protection of intangible property? Is the transaction giving rise to the intangible expenses, intangible interest expenses, or management fees between the taxpayer and the recipient made at a commercially reasonable rate and at terms comparable to an arm’s length transaction? Domestic Foreign ¨ Yes  ¨ No ¨ Yes  ¨ No ¨ Yes  ¨ No ¨ Yes  ¨ No ¨ Yes  ¨ No ¨ Yes  ¨ No NOTE: If the answers to Questions 1, 2, and 3 above in the Domestic column are all “Yes,” complete the following schedule and attach a copy of the pertinent parts of the contract or other documentation that support this exception. Failure to provide the requested information will result in a denial of the exception. If any of the answers are “No,” the taxpayer does not qualify for this exception. Domestic Name of Related Member Federal Identification Number State of Commercial Domicile Name of Tax Amount Deducted 4 5 6 7 8 Total of lines 4 through 7. 00 00 00 00 00 NOTE: If the Answers to lines 1, 2, and 3 in the Foreign column above are all “Yes”, complete lines lines 9 through 13 and attach a copy of all pertinent parts of the contract or other documentation that supports the exception. Failure to provide the requested information will result in the denial of the exception. If any of the answers are “No”, the taxpayer does not qualify for the exception. Foreign Name of Related Member Name of Foreign Nation Description of Treaty 9 10 11 12 13 Total of lines 9 through 12. 14 Add line 8 and line 13. Enter here and on PART II, Section A, line 3 200337 41A720RPC (10-20) Amount Deducted 00 00 00 00 00 00 Schedule RPC (2020) INSTRUCTIONS FOR RELATED PARTY COSTS Page 3 of 3 KRS 141.205(1)(l) states that “related party costs” means intangible expense, intangible interest expense, management fees, and any costs or expenses associated with other related party transactions. KRS 141.205(1)(h) states that “recipient” means a related member or foreign corporation to whom the item of income that corresponds to the intangible interest expense, the intangible expense, or the management fees, is paid. KRS 141.205(1)(b) states that “intangible expenses” includes the following only to the extent that the amounts are allowed as deductions or costs in determining taxable net income before the application of any net operating loss deduction per Chapter 1 of the Internal Revenue Code: (i) Expenses, losses, and costs for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property; (ii) Losses, related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions; (iii) Royalty, patent, technical, and copyright fees; (iv) Licensing fees; and (v) Other similar expenses and costs. KRS 141.205(1)(c) states that “intangible interest expense” means only those amounts which are directly or indirectly allowed as deduction per IRC §163 for purposes of determining taxable income under that code, to the extent that the amounts are directly or indirectly for, related to, or connected to the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property. KRS 141.205(1)(d) states that “management fees” includes but is not limited to expenses and costs paid for services pertaining to accounts receivable and payable, employee benefit plans, insurance, legal, payroll, data processing, purchasing, tax, financial and securities, accounting, reporting and compliance services, or similar services, only to the extent that the amounts are allowed as a deduction or cost in determining taxable net income before the application of net operating loss deduction for the taxable year per Chapter 1 of the Internal Revenue Code. PART I—RELATED PARTY COSTS Line 1— Intangible Expenses—Enter the total of all intangible expenses paid to a related member. Do not include any interest expense or costs related to intangible interest expense. Section B—Exception for related party costs for transactions that the recipient regularly engages with one or more unrelated parties on terms identical to that of the subject transaction and alternative apportionment methods. Line 2— Intangible Interest Expenses—Enter the total of all intangible interest expenses paid to a related member. Lines 1 and 3—Answer “Yes” or “No” by checking the applicable box. Line 3— Management Fees—Enter the total of all management fees paid to a related member. Lines 2 and 4—Enter the exception amount. Line 4— Total Related Party Costs—Enter the total of Lines 1 through 3. Line 5—Enter total of Section B, Lines 2 and 4 here and on Part II, Section A, Line 2. PART II—EXCEPTIONS TO ADD BACK Section C—Exception for related party costs paid to related members who are subject to tax in their state or country of domicile. Section A—Exceptions to Expenses Line 1—Enter the amount from Part III, Section A, Line 5. Line 2—Enter the amount from Part III, Section B, Line 5. Line 3—Enter the amount from Part III, Section C, Line 14. Line 4—Enter the total of Lines 1 through 3. Section B—Total Related Party Cost Add Back After Exceptions Line 1—Enter the amount from Part I, Line 4 less the amount on Part II, Line 4. Also, enter the amount on Form 720, Part I, Line 6; Form 720U, Schedule U4, line 6; Form PTE, Part I, Line 4. PART III—DETAIL OF EXCEPTIONS TO ADD BACK Section A—Exception for related party costs where the entity and the recipient are both included in the same consolidated Kentucky corporation income tax return. Lines 1 to 4—For each related member, include the name, Federal Identification Number, Kentucky Corporation/LLET Account Number, and the amount deducted by the taxpayer. If more than four related members, attach a statement with each member’s information and enter the total on Line 1. Line 5—Enter the total of Lines 1 through 4. Also, enter the total on Part II, Section A, Line 1. 41A720RPC (10-20) Questions 1 to 3—Answer questions 1 through 3. If the answers in the Domestic column are all “Yes”, complete Lines 4 through 8. If the answers in the Foreign column are all “Yes”, complete Lines 9 through 13. Lines 4 to 7—For each related member, include the name, Federal Identification Number, state of commercial domicile, name of tax, and the amount deducted by the taxpayer. If more than four related members, attach a statement with each member’s information and add to the total on Line 8. Line 8—Enter the total amount deducted. through 7. Add Lines 4 Lines 9 to 12—For each related member, include the name of foreign nation, description of treaty, and the amount deducted by the taxpayer. If more than four related members, attach a statement with each member’s information and add to the total on Line 13. Line 13—Enter the total amount deducted. through 12. Add Lines 9 Line 14—Enter the total of Section C, Lines 8 and 13 here and on Part II, Section A, Line 3.
Extracted from PDF file 2020-kentucky-schedule-rpc.pdf, last modified October 2020

More about the Kentucky Schedule RPC Corporate Income Tax TY 2020

We last updated the Related Party Costs Disclosure Statement in August 2021, so this is the latest version of Schedule RPC, fully updated for tax year 2020. You can download or print current or past-year PDFs of Schedule RPC directly from TaxFormFinder. You can print other Kentucky tax forms here.

Other Kentucky Corporate Income Tax Forms:

TaxFormFinder has an additional 129 Kentucky income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form PTE Instructions Kentucky Pass-Through Entity Income and LLET Return - Instructions
Form 725 Kentucky Single Member LLC Individually Owned & LLET Return
Form 720-ES Kentucky Estimated Tax Voucher - Corporation Income/Limited Liability Entity Tax - Form 41A720ES
Form PTE Kentucky Pass-Through Entity Income and LLET Return
Form 720 Kentucky Corporation Income Tax and LLET Return

Download all KY tax forms View all 130 Kentucky Income Tax Forms


Form Sources:

Kentucky usually releases forms for the current tax year between January and April. We last updated Kentucky Schedule RPC from the Department of Revenue in August 2021.

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About the Corporate Income Tax

The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.

Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).

Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.

Historical Past-Year Versions of Kentucky Schedule RPC

We have a total of seven past-year versions of Schedule RPC in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:



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