143A.010 Definitions for chapter.
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/ky/chapter-143a/143a-010A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
As used in this chapter:
(1)"Department" means the Department of Revenue;
(2)"Natural resource" means all forms of minerals including but not limited to rock,
stone, limestone, shale, gravel, sand, clay, natural gas, and natural gas liquids which
are contained in or on the soils or waters of this state. For purposes of this chapter,
"natural resource" does not include coal and oil which are taxed under KRS 143.020
and 137.120;
(3)"Severing" or "severed" means the physical removal of the natural resource from the
earth or waters of this state by any means; however, "severing" or "severed" shall
not include the removal of natural gas from underground storage facilities into
which the natural gas has been mechanically injected following its initial removal
from the earth;
(a)"Taxpayer" means and includes any individual, partnership, joint venture,
association, corporation, receiver, trustee, guardian, executor, administrator,
fiduciary, or representative of any kind engaged in the business of severing
and/or processing natural resources in this state for sale or use. In instances
where contracts, either oral or written, are entered into whereby persons,
organizations or businesses are engaged in the business of severing and/or
processing a natural resource but do not obtain title to or do not have an
economic interest therein, the party who owns the natural resource or has an
economic interest is the taxpayer.
(b)For purposes of this chapter, a taxpayer possesses an economic interest in a
natural resource where the taxpayer has acquired by investment any interest in
a natural resource and secures, by any form of legal relationship, income
derived from the severance or processing of the natural resource, to which he
must look for a return of his capital. A party who has no capital investment in
the natural resource or who only receives an arm's length royalty shall not be
considered as having an economic interest;
(5)"Gross value" is defined as follows:
(a)For natural resources severed and/or processed and sold during a reporting
period, gross value is the amount received or receivable by the taxpayer;
(b)For natural resources severed and/or processed, but not sold during a reporting
period, gross value shall be determined as follows:
1. If the natural resource is to be sold under the terms of an existing
contract, the contract price shall be used in computing gross value; and
2. If there is no existing contract, the fair market value for that grade and
quality of the natural resource shall be used in computing gross value;
(c)In a transaction involving related parties, gross value shall not be less than the
fair market value for natural resources of similar grade and quality;
(d)In the absence of a sale, gross value shall be the fair market value for natural
resources of similar grade and quality;
(e)If severed natural resources are purchased for the purpose of processing and
resale, the gross value is the amount received or receivable during the
reporting period reduced by the amount paid or payable to the taxpayer
actually severing the natural resource;
(f)If severed natural resources are purchased for the purpose of processing and
consumption, the gross value is the fair market value of processed natural
resources of similar grade and quality reduced by the amount paid or payable
to the taxpayer actually severing the natural resource;
(g)In all instances, the gross value shall not be reduced by any taxes including the
tax levied in KRS 143A.020, royalties, sales commissions, or any other
expense; and
(h)In all instances, transportation expense incurred in transporting a natural
resource shall not be considered as gross income from the property;
(6)"Processing" includes but is not limited to breaking, crushing, cleaning, drying,
sizing, or loading or unloading for any purpose. "Processing" shall not include the
act of unloading or loading for shipment natural resources that have not been
severed, cleaned, broken, crushed, dried, sized or otherwise treated in Kentucky;
(7)"Related parties" means two
(2)or more persons, organizations or businesses
owned or controlled directly or indirectly by the same interests; and
(a)"Transportation expense" means:
1. The amount paid by a taxpayer to a third party for transporting natural
resources; and
2. The expenses incurred by a taxpayer using his own facilities in
transporting natural resources from the point of extraction to a
processing plant, tipple, or loading dock.
(b)"Transportation expense" shall not include:
1. The cost of acquisition, improvements, and maintenance of real
property;
2. The cost of acquisition and operating expenses of mining and nonmining
loading or unloading facilities; or
3. The cost of acquisition and operating expenses of equipment used to
load or unload the natural resource at the point of extraction, processing
facility, or mining and nonmining loading facility.