Agricultural Loan Interest Rate Reduction Credit
INCOME AND PRIVILEGE TAXPAYERS-Effective for all taxable years beginning after December 31, 1999 and prior to January 1, 2004.
A state bank, national banking association, production credit association, or agricultural credit association charted by the Farm Credit Administration which extends or renews an agricultural production loan to an eligible agricultural production borrower at an interest rate which is at least one whole percentage point less than the lowest interest rate made on loans with equivalent collateral or which reduces the rate of interest being charged on any outstanding agricultural production loan to an eligible agricultural borrower by at least one whole percentage point shall receive a credit against their tax liability.
QUALIFICATIONS
A state bank or national banking association must extend or renew
an agricultural production loan to an eligible agricultural
borrower at an interest rate which is at least one whole percentage
point less than the prime interest rate then specified by the bank
on such loans with equivalent collateral.
A state bank or national banking association which reduces the rate of interest being charged on any outstanding agricultural production loan to an eligible agricultural borrower must reduce the loan by at least one whole percentage point.
A production credit association or agricultural credit association must extend or renew an agricultural production loan to an eligible agricultural borrower at an interest rate which is at least one whole percentage point less than the lowest rate at which the association is making agricultural production loans to agricultural loan customers with equivalent collateral.
A production credit association or agricultural credit association which reduces the rate of interest being charged on any outstanding agricultural production loan to an eligible agricultural borrower must reduce the loan by at least one whole percentage point.
CREDIT AMOUNT
The total credit is the amount by which the interest income to the
lender on an after July 1, 2000 and prior to July 1, 2004, has been
reduced due to the reductions in rates of interest.
The tax credit allowed for any taxable year shall not exceed 1/5 of the total tax credit of the bank.
Unused tax credit shall be carried forward as a credit to the bank’s tax liability in each subsequent taxable year and shall then be taken into account, subject to the limitation that the credit in any one taxable year may not exceed 1/5 of the total tax credit.
LIMITATION OF CREDIT
The credit allowed as a result of an interest rate reduction on
any one agricultural production loan shall not exceed an amount
equal to 3% per annum on the unpaid principal balance of the loan.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-51
and Schedule K-52 to claim the
agricultural loan interest rate reduction credit. These schedules
must be completed and submitted with the income or privilege tax
return. You may also call the Department of Revenue voice mail system
at (785) 296-4937 to request Schedule K-51 and Schedule K-52. You
will be asked to give your name, address, phone number and form(s)
you desire. Please allow two weeks for delivery of your forms.
Eligible agricultural borrower
Eligible agricultural borrower means any person, limited agricultural partnership, limited liability agricultural company or family farm corporation, located in the state of Kansas, having an agricultural production loan which has been classified as substandard or doubtful:
- by any banking regulator, the farm credit administration or a district farm credit system institution which is subject to review by the farm credit administration; or
- by the designated loan committee of such banking association prior to examination for classification eligibility by the banking regulator, the farm credit administration or a district farm credit system institution which is subject to review by the farm credit administration.