How do I prepare Kentucky Form 740-PTET and PTET-CR with an 1120S return using CCH® ProSystem fx® Tax and CCH Axcess™ Tax?

  • Article Type:
  • How To
  • Last Modified:
  • 08/07/2023

Objectives

Prepare Kentucky Passthrough Entity Tax on Distributive Share Income return.

Environment

  • CCH® ProSystem fx® Tax
  • CCH Axcess™ Tax
  • S Corporation – 1120S
  • Kentucky - KY
  • Worksheet View – WSV
  • Interview Forms – IVF

Procedure

Three Input Methods to Prepare 740-PTET

Method One: Common PTE Input

  • Go to Common State/City > State PTE Generation worksheet > State PTE Return Generation > Kentucky - Generate State PTE return.
  • Interview Form PTE-ST1, box 98.

Method Two: State-Level Input

  • Kentucky > Composite Return worksheet > section Pass-Through Entity Return > line Elect to pay income tax at the entity level and file form 740PTET, select the checkbox.
  • Interview Form Kentucky > KY16 > box 30.

Method 3: Owner Specific Input

  • Shareholders > Shareholder Information - State Specific worksheet > section Kentucky Composite and Nonresident Information > column Shareholder Number and column Composite Code, input applicable shareholder number(s) and select Yes.
  • Interview Form Kentucky > KY8 > boxes 70-84 and boxes 72-86 - Inactive.

Payments against taxes due

740-PTET, line 9:

  • Kentucky > Composite worksheet > section Kentucky Composite Return > line Estimated tax payments.
  • Federal > Payments/Penalties/Estimates > Payments worksheet > section State Quarterly Payments > column State Code, select KY > columns Based on Income and Not based on income with Code, select 2.
  • Interview Form Kentucky > KY16 > box 74.
  • Interview Form Common State > StPay/Est > STPAY-1 > box 30 state code KY > boxes 31-32, input amount > box 34, select 2.

740-PTET, line 10:

Common

  • 740-PTET, line 8 - Kentucky income tax liability, if Kentucky PTET Form 720EXT is prepared and unlocked.
  • Extensions worksheet > section State / City Extension > State column select KY > select Detail > line Special code, input 3 > line Tentative tax, input amount.
  • Interview Form EXT-2, box 30, select KY > box 33, input 3 > box 62, input amount.

Overrides

  • Kentucky > Composite worksheet > section Kentucky Composite Return > line Amount paid with extension.
  • Federal > Payments/Penalties/Estimates > Payments worksheet > section State S Corporation Composite Tax Payments > line Extension Payments.
  • Interview Form Kentucky > KY16, box 75.
  • Interview Form Common State > StPay/Est > STPAY-1 > box 30 state code KY > STPAY-2, box 50.

740-PTET, line 11:

  • Government Form and line (pink) override (with Release 2022.04010 / 2022-4.1).

740-PTET, line 12

If
  • Common State > State/City Common Data worksheet > line State / City code select KY, and line Amended return - override - Main Form column select Amended return,
then
  • Kentucky > Other Return worksheet > section Kentucky Nonresident Amended Return > line Original balance due.
If
  • Interview Form Common State > General Info > GEN-1 > box 30, select KY > box 44, select 1,
then 
  • Interview Form Kentucky > KY8, box 130.

740-PTET, line 14

If
  • Common State > State/City Common Data worksheet > line State / City code select KY, and line Amended return - override - Main Form column select Amended return,
then
  • Kentucky > Other Returns worksheet > section Kentucky Nonresident Amended Return > line Original refund, and line Original balance due is blank.
If
  • Interview Form Common State > General Info > GEN-1 > box 30, select KY > box 44, select 1.
then
  • Interview Form Kentucky > KY8, box 131, if box 130 is blank.

Next Year Estimates Form 740-PTET-ES

Per Form Instructions, 740-PTET-ES is not required if net tax due 740-PTET is $500 or less.

  • Federal > Payments/Penalties/Estimates > Estimates worksheet > section State Estimates and Application of Overpayment > column State Code select KYC. > either
    • Column Estimate Code, select Mandatory Estimate.
    • Or column Net Estimated Tax Override, input an amount.
  • Interview Form Common State > StPay/Est > STEST-1, box 30, select KYC >either
    • box 40, select option 2.
    • or box 49, input an amount.

740-PTET-ES, line 1

  • Form PTET-CR, line 6 of all applicable partner types.
  • Government Form and line (pink) override (with Release 2022.04010 / 2022-4.1).
  • Input override may be added with a later release.

740-PTET-ES, line 2

  • Federal > Payments/Penalties/Estimates > Estimates worksheet > section State Estimates and Application of Overpayment > column State Code select KYC > select Detail > line Change in taxable income.
  • Interview Form Common State > StPay/Est > STEST-1, box 30, select KYC > box 43, input amount.

740-PTET-ES, lines 6-10

  • N/A S Corporation return type. 

Vouchers 1-4 Controls

  • Federal > Payments/Penalties/Estimates > Estimates worksheet > section State Estimates and Application of Overpayment > column State Code select KYC > select Detail > section State Estimated Tax Additional Information > line 44 - Amount due, columns Voucher 1-4.
  • Interview Form Common State > StPay/Est > STEST-1, box 30 KYC > STEST-2, boxes 70-73.

Interest and Penalty

  • UP penalty is not applicable for 2022 processing as no estimated tax payments were due.  
  • The instructions for the PTET also implied that interest and penalties are also not applicable for 2022 processing as the specific line instructions for lines 19 and 20 do not allow crediting an overpayment to current year interest and penalty.

Notes

  • Important: Kentucky Form PTE, Schedule A - Computation of Apportionment Fraction may be necessary to populate 740-PTET. 
    • To deactivate 740-PTET and PTET-CR, please remove the input mentioned in Methods 1 through 3 above.
      • The system may default to automatically preparing Kentucky Withholding Return: 740NP-WH and PTE-WH.
    • If the new forms are generated, diagnostic 39516 will issue as the electronic forms are being finalized.

    Additional Information

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