Kentucky allows the following subtractions from income on Schedule M of the Kentucky return.
Interest Income from U.S. Government Bonds and Securities (line 8)
Do not include taxable interest from securities that are not considered US Bonds or Securities
Resident Adjustment from Partnerships, Fiduciaries and S. Corp Schedule K-1 (line 11)
See Kentucky instructions for the K-1.
Depreciation, (Section 179 Deduction and Gains/Losses) from KY Form 4562 (line 12)
Use only if you have elected to take the 30 or 50 percent special depreciation allowance.
Active Duty Military Pay (line 13)
You may subtract any active duty military pay that is included in your income on form 740 page 1, line 5.
Kentucky Net Operating Loss (NOL) (line 16)
Keep a record of how the NOL was calculated for your records.
Kentucky Domestic Production Activities
Beginning on January 1, 2010, you must limit the federal domestic productions activity by the 6% in lieu of the rate provided by IRC§ 199(a).
Other Subtractions from federal adjusted gross income:
- income of precinct workers for election training or working at election booths;
- capital gains on property taken by eminent domain;
- passive activity loss adjustment (see Form 8582-K and instructions);
- income of a child reported on the parent’s return;
- artistic charitable contributions (if you do not itemize deductions);
- the federal work opportunity credit used to reduce wages;
- at-risk limitations (see instructions);
- qualified farm networking project differences per KRS 141.0101(15);
- differences in the gains (losses) from the sale of intangible assets amortized under the provisions of the Revenue Reconciliation Act of 1993;
- differences in gains (losses) from assets purchased after September 10, 2001; and
- income of military personnel killed in the line of duty (see instructions for more information)
For additional information, please refer to the Kentucky Schedule M instructions