Instructions for Form 7207 - Introductory Material Future Developments What’s New Facility information. Tax-exempt and governmental entities. Electing taxpayers. Transfer of advanced manufacturing production credit. Pre-filing registration. Parts III and IV. General Instructions Purpose of Form Applicable Entities Electing Taxpayers Credit Transfers Pre-Filing Registration Requirement for Payments and Transfers Special Rules Qualified sales. Phase out. Specific Instructions Part I—Facility Information Line 1. Line 3. Line 4. Line 5. Line 6. Part II—Eligible Components Eligible component. Line 1. Column (d) for lines 1a and 1e. Line 2. Column (d) for lines 2b–2f. Line 3. Column (d) for lines 3a–3f. Line 4. Line 5. Capacity-to-power ratio Column (d) for lines 5a–5c. Line 6. Line 7. Line 8a. Line 8b. Instructions for Form 7207 - Notices Paperwork Reduction Act Notice. Instructions for Form 7207 (01/2024) Advanced Manufacturing Production Credit Section references are to the Internal Revenue Code unless otherwise noted. Revised: 01/2024 Instructions for Form 7207 - Introductory Material Future Developments For the latest information about developments related to Form 7207 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form7207. What’s New Facility information. Separate information and computation of the advanced manufacturing production credit for each facility are required. See Part I. Facility Information , later. Tax-exempt and governmental entities. For tax years beginning after 2022, applicable entities (such as certain tax-exempt and governmental entities) can elect to treat the advanced manufacturing production credit as a payment of tax. See Applicable Entities, later. Electing taxpayers. For tax years beginning after 2022, taxpayers, partnerships, and S corporations electing to be treated as applicable entities can elect to treat the advanced manufacturing production credit as a payment of income tax. See Electing Taxpayers . Transfer of advanced manufacturing production credit. For tax years beginning after 2022, eligible taxpayers, partnerships, and S corporations that do not elect payment can elect to transfer all or part of the credit amount otherwise allowed as a general business credit to an unrelated third-party buyer in exchange for cash. Eligible taxpayers don't include applicable entities and electing taxpayers. See Credit Transfers , later. Pre-filing registration. The IRS has established a pre-filing registration process that must be completed prior to electing payment or transfer of the credit for the production and sale of eligible components at a facility. See Pre-Filing Registration Requirement for Payments and Transfers, later. Parts III and IV. These new parts are used to report information for each produced vessel sold and information for each applicable critical element produced and sold. General Instructions Purpose of Form Form 7207 is used to claim the advanced manufacturing production credit under section 45X for eligible components produced by the taxpayer within the United States (including U.S. territories) and sold during the tax year in the taxpayer’s trade or business to unrelated persons. For more information, see section 45X and Notice 2022-47. File a separate Form 7207 for each facility operated to produce and sell eligible components. This also applies to applicable entities, partnerships, S corporations, estates, and trusts that produce eligible components. Partners, S corporation shareholders, and beneficiaries of estates and trusts are generally not required to file Form 7207 if their only source for the credit is the pass-through entity. Instead, they can report this credit directly on Form 3800, General Business Credits. If the partner, S corporation shareholder, or beneficiary is, itself, a pass-through entity, see Line 7 , later. Applicable Entities For tax years beginning after 2022, applicable entities as defined under section 6417(d)(1)(A) that generally don't benefit from income tax credits can elect to treat the advanced manufacturing production credit as a payment of income tax. Resulting overpayments may result in refunds. Applicable entities making the elective payment election for advanced manufacturing production credit must file the following: Form 7207; Form 3800; and Form 990-T, Exempt Organization Business Income Tax Return, or other applicable income tax return. For a discussion of what is an applicable entity, see Elective Payment Elections and Transfer Elections in the Instructions for Form 3800. For more information on elective payment elections under section 6417, see Elective Payment of Certain Business Credits Under Section 6417 or Section 48D in the Instructions for Form 3800. Electing Taxpayers If you aren’t an applicable entity, you can elect to treat the credit as a payment of taxes on your return. Section 6417(d)(1)(D) allows electing taxpayers, including partnerships and S corporations, to treat the advanced manufacturing production credit as a payment of taxes. For a discussion of who is considered an electing taxpayer, see the last 3 paragraphs under Applicable entity making an elective payment election on IRA 2022 credits in the Instructions for Form 3800. For more information on elective payment elections under section 6417, see Elective Payment of Certain Business Credits Under Section 6417 or Section 48D in the Instructions for Form 3800. If you make a section 6417(d)(1)(D) election, your election generally applies for 2023 and the 4 succeeding years (unless you revoke your election). You must obtain an IRS-issued registration number for the facility in 2023 and each of the succeeding years. Credit Transfers For tax years beginning after 2022, under section 6418, eligible taxpayers, partnerships, and S corporations that do not elect payment can elect to transfer all or a part of the credit figured in Part II to an unrelated third-party buyer in exchange for cash. For more information on credit transfers, see Transfer of Eligible Credits Under Section 6418 in the Instructions for Form 3800. Pre-Filing Registration Requirement for Payments and Transfers Before you file your tax return, if you intend to make an elective payment election or transfer election on Form 3800 for the credit in Part II, you must complete a pre-filing registration for each manufacturing facility. To register, go to IRS.gov/Credits-Deductions/Register-for-Elective-Payment-or-Transfer-of-Credits. See Pub. 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool. Also see Elective Payment Elections and Transfer Elections in the Instructions for Form 3800. Special Rules Qualified sales. Sales of eligible components qualify under section 45X only with respect to eligible components, the production of which is within the United States or U.S. territories, including continental shelf areas described in sections 638(1) and 638(2). A person is treated as having sold an eligible component to an unrelated person if such component is integrated, incorporated, or assembled into another eligible component that is sold to an unrelated person. For purposes of the advanced manufacturing production credit, section 45X(d)(1) provides that persons are treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under the common control rules of section 52(b). For the latest information concerning qualified sales and related person rules, see IRS.gov/Form7207. If you made an election to treat a sale of components to a related person as made to an unrelated person, you must maintain and preserve records of qualified sales. Phase out. The credit for advanced manufacturing production will phase out for eligible components sold after 2029, except applicable critical minerals. For phase-out years, the credit amount is equal to the product of the amount determined in lines 1 through 6 of Form 7207 multiplied by the following phase-out percentages. Tax year sold Phase-out percentages Sold during calendar year 2030 75% Sold during calendar year 2031 50% Sold during calendar year 2032 25% Sold after December 31, 2032 0% Specific Instructions Part I—Facility Information If you are claiming the advanced manufacturing production credit for eligible components produced at a facility and sold to an unrelated person, you must complete Part I—Facility Information. Line 1. If applicable, enter your pre-filing registration number which you received from the IRS. See Pre-Filing Registration Requirement for Payments and Transfers , earlier. Line 3. Enter the address of the facility, the owner’s name, and taxpayer identification number (if different from filer), and a detailed technical description of the facility in which the eligible components that are sold to unrelated persons are produced. Line 4. Enter the coordinates of the facility. Line 5. Check to indicate if you made an election under section 45X(a)(3)(B) to have a sale of components to a related person be deemed to have been made to an unrelated person. See Special Rules , earlier, concerning qualified sales and related person rules. Line 6. You can't claim the advanced manufacturing production credit for eligible components produced using any property that is part of a facility for which a credit under section 48C was previously taken after August 16, 2022. If you check “Yes” on line 6, you must maintain sufficient records to show that you did not include sales of eligible components produced at a section 48C advanced energy project. Part II—Eligible Components Eligible component. Eligible components are certain solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals. Line 1. Solar energy eligible components are the following. Line 1a. Photovoltaic cell is the smallest semiconductor element of a solar module which performs the immediate conversion of light into electricity. Line 1b. Photovoltaic wafer is a thin slice, sheet, or layer of semiconductor material of at least 240 square centimeters produced by a single manufacturer either directly from molten or evaporated solar grade polysilicon or deposition of solar grade thin film semiconductor photon absorber layer, or through formation of an ingot from molten polysilicon and subsequent slicing, and which comprises the substrate or absorber layer of one or more photovoltaic cells. Line 1c. Polymeric backsheet is a sheet on the back of a solar module which acts as an electric insulator and protects the inner components of such module from the surrounding environment. Line 1d. Solar grade polysilicon is a silicon which is suitable for use in photovoltaic manufacturing, and purified to a minimum purity of 99.999999% silicon by mass. Line 1e. Solar module is the connection and lamination of photovoltaic cells into an environmentally protected final assembly which is suitable to generate electricity when exposed to sunlight, and ready for installation without an additional manufacturing process. Line 1f. Torque tube means a structural steel support element (including longitudinal purlins) which is part of a solar tracker, is of any cross-sectional shape, may be assembled from individually manufactured segments, spans longitudinally between foundation posts, supports solar panels and is connected to a mounting attachment for solar panels (with or without separate module interface rails), and is rotated by means of a drive system. Solar tracker means a mechanical system that moves solar modules according to the position of the sun and to increase energy output. Line 1g. Structural fastener means a component which is used to connect the mechanical and drive system components of a solar tracker to the foundation of such solar tracker, to connect torque tubes to drive assemblies, or to connect segments of torque tubes to one another. Solar tracker means a mechanical system that moves solar modules according to the position of the sun and to increase energy output. Column (d) for lines 1a and 1e. Aggregate capacity is determined by multiplying the number of eligible components sold during the tax year (thin film photovoltaic cells, crystalline photovoltaic cells or solar modules, line 1a or 1e) by the wattage capacity of each respective component. For example, if you produced and sold 500 100-watt thin film photovoltaic cells (500 x 100 = 50,000) and 1,500 200-watt crystalline photovoltaic cells (1,500 x 200 = 300,000), the reportable aggregate capacity in line 1, column (d), is 350,000 (50,000 + 300,000). The line 1e, column (d), aggregate capacity is calculated in a similar manner. If you sold 300 100-watt solar modules (300 x 100 = 30,000) and 400 200-watt solar modules (400 x 200 = 80,000), the aggregate capacity on line 1e, column (d), is 110,000 (30,000 + 80,000). Enter on lines 1b, 1c, 1d, 1f, and 1g the number of solar energy component units sold, as specified in column (b) units of measurement. Line 2. Wind energy components are the following. Line 2a. Related offshore wind vessel is any vessel which is purpose-built or retrofitted for purposes of the development, transport, installation, operation, or maintenance of offshore wind energy components. Complete Part III, lines 1–49, with sales prices for any eligible offshore wind vessels produced and sold. Enter the total from Part III on line 2a, column (d). Line 2b. Blade means an airfoil-shaped blade which is responsible for converting wind energy to low-speed rotational energy. Line 2c. Nacelle is the assembly of the drivetrain and other tower-top components of a wind turbine (with the exception of the blades and the hub) within their cover housing. Line 2d. Tower is a tubular or lattice structure which supports the nacelle and rotor of a wind turbine. Lines 2e and 2f. Offshore wind foundation is the component (including transition piece) which secures an offshore wind tower and any above-water turbine components to the seafloor using fixed platforms such as offshore wind monopiles, jackets, or gravity-based foundations, or floating platforms and associated mooring systems. Column (d) for lines 2b–2f. Aggregate capacity is determined by multiplying the number of eligible components produced and sold during the tax year by the rated capacity of each wind turbine for which the component was produced. For example, if you produced and sold 3 blades for a 6-million-watt wind turbine and 3 blades were sold for a 10-million-watt wind turbine, the aggregate capacity is 48 million ((3 x 6 million) plus (3 x 10 million)). Enter 48,000,000 on line 2b, column (d). Line 3. Inverter eligible components are the following. Inverter means an end product which is suitable to convert direct current electricity from one or more solar modules or certified distributed wind energy systems into alternating current electricity. Line 3a. Central inverter means an inverter which is suitable for large utility-scale systems and has a capacity which is greater than 1,000 kilowatts (expressed on a per alternating current watt basis). Line 3b. Utility inverter means an inverter which is suitable for commercial or utility-scale systems, has a rated output of not less than 600 volt three-phase power, and has a capacity greater than 125 kilowatts and not greater than 1,000 kilowatts (expressed on a per alternating current watt basis). Line 3c. Commercial inverter means an inverter which is suitable for commercial or utility-scale applications, has a rated output of 208, 480, 600, or 800 volt three-phase power, and has a capacity which is not less than 20 kilowatts and not greater than 125 kilowatts (expressed on a per alternating current watt basis). Line 3d. Residential inverter means an inverter which is suitable for a residence, has a rated output of 120 or 240 volt single-phase power, and has a capacity which is not greater than 20 kilowatts (expressed on a per alternating current watt basis). Line 3e. Microinverter means an inverter which is suitable to connect with one solar module, has a rated output of 120 or 240 volt single-phase power, or 208 or 480 volt three-phase power, and has a capacity which is not greater than 650 watts (expressed on a per alternating current watt basis). Line 3f. Distributed wind inverter means an inverter which is used in a residential or non-residential system which utilizes one or more certified distributed wind energy systems, and has a rated output of not greater than 150 kilowatts. A “certified distributed wind energy system” is certified by an accredited certification agency to meet standard 9.1-2009 of the American Wind Energy Association (including any subsequent revisions to or modifications of such standard which have been approved by the American National Standards Institute). Column (d) for lines 3a–3f. The inverter component aggregate capacity is determined by multiplying the number of eligible components sold by the capacity of each component (expressed on a per alternating current watt basis). For example, you produce and sell 50 central inverters and each central inverters’ capacity in watts (AC) is 1,000. In addition, you produce and sell 100 central inverters and each of those central inverter’s capacity in watts (AC) is 2,500. Multiply 50 x 1,000 (50,000) and 100 x 2,500 (250,000) to determine total aggregate capacity of 300,000 (50,000 + 250,000) for line 3a, column (d). Line 4. Electrode active material means cathode materials, anode materials, anode foils, and electrochemically active materials including solvents, additives, and electrolyte salts that contribute to the electrochemical processes necessary for energy storage. Enter in line 4a, column (d), the costs incurred for electrode active materials sold. Line 5. Battery eligible components are the following. Line 5a. Battery cell means an electrochemical cell comprised of one or more positive electrodes and one or more negative electrodes, with an energy density of not less than 100 watt-hours per liter, and capable of storing at least 12 watt-hours of energy with a capacity-to-power ratio not exceeding 100:1. Lines 5b and 5c. Battery module means a module (a) in the case of a module using battery cells, with two or more battery cells which are configured electrically, in series or parallel, to create voltage or current, as appropriate, to a specified end use; or (b) with no battery cells. To be eligible, either type of battery module must have an aggregate capacity of not less than 7 kilowatt-hours (or, in the case of a module for a hydrogen fuel cell vehicle, not less than 1 kilowatt-hour) with a capacity-to-power ratio not exceeding 100:1. Capacity-to-power ratio means, with respect to a battery cell or battery module, the ratio of the capacity of the cell or module to the maximum discharge amount of cell or module. Column (d) for lines 5a–5c. The aggregate capacity of eligible battery components is determined by multiplying the number of eligible components produced and sold by the capacity of each component expressed on a kilowatt-hour basis. For example, you produce and sell 50 battery cells and each battery cell has a capacity of 12 kilowatt-hours. In addition, you produce and sell 100 battery cells and each of those battery cells has a capacity of 15 kilowatt-hours. Multiply 50 x 12 (600) and 100 x 15 (1,500) to determine total aggregate capacity of 2,100 kilowatt-hours for line 5a, column (d). Line 6. Critical minerals are the following. Aluminum which is converted from bauxite to a minimum purity of 99% alumina by mass, or purified to a minimum purity of 99.9% aluminum by mass. Antimony which is converted to antimony trisulfide concentrate with a minimum purity of 90% antimony trisulfide by mass, or purified to a minimum purity of 99.65% antimony by mass. Barite which is barium sulfate purified to a minimum purity of 80% barite by mass. Beryllium which is converted to copper-beryllium master alloy, or purified to a minimum purity of 99% beryllium by mass. Cerium which is converted to cerium oxide which is purified to a minimum purity of 99.9% cerium oxide by mass, or purified to a minimum purity of 99% cerium by mass. Cesium which is converted to cesium formate or cesium carbonate, or purified to a minimum purity of 99% cesium by mass. Chromium which is converted to ferrochromium consisting of not less than 60% chromium by mass, or purified to a minimum purity of 99% chromium by mass. Cobalt which is converted to cobalt sulfate, or purified to a minimum purity of 99.6% cobalt by mass. Dysprosium which is converted to not less than 99% pure dysprosium iron alloy by mass, or purified to a minimum purity of 99% dysprosium by mass. Europium which is converted to europium oxide which is purified to a minimum purity of 99.9% europium oxide by mass, or purified to a minimum purity of 99% by mass. Fluorspar which is converted to fluorspar which is purified to a minimum purity of 97% calcium fluoride by mass, or purified to a minimum purity of 99% fluorspar by mass. Gadolinium which is converted to gadolinium oxide which is purified to a minimum purity of 99.9% gadolinium oxide by mass, or purified to a minimum purity of 99% gadolinium by mass. Germanium which is converted to germanium tetrachloride, or purified to a minimum purity of 99.99% germanium by mass. Graphite which is purified to a minimum purity of 99.9% graphitic carbon by mass. Indium (1) which is converted to (a) indium tin oxide or (b) indium oxide which is purified to a minimum purity of 99.9% indium oxide by mass, or (2) which is purified to a minimum purity of 99% indium by mass. Lithium which is converted to lithium carbonate or lithium hydroxide, or purified to a minimum purity of 99.9% lithium by mass. Manganese which is converted to manganese sulphate, or purified to a minimum purity of 99.7% manganese by mass. Neodymium which is converted to neodymium-praseodymium oxide which is purified to a minimum purity of 99% neodymium-praseodymium oxide by mass, converted to neodymium oxide which is purified to a minimum purity of 99.5% neodymium oxide by mass, or purified to a minimum purity of 99.9% neodymium by mass. Nickel which is converted to nickel sulphate, or purified to a minimum purity of 99% nickel by mass. Niobium which is converted to ferronibium, or purified to a minimum purity of 99% niobium by mass. Tellurium which is converted to cadmium telluride, or purified to a minimum purity of 99% tellurium by mass. Tin which is purified to low alpha emitting tin which has a purity of greater than 99.99% by mass, and possesses an alpha emission rate of not greater than 0.01 counts per hour per centimeter square. Tungsten which is converted to ammonium paratungstate or ferrotungsten. Vanadium which is converted to ferrovanadium or vanadium pentoxide. Yttrium which is converted to yttrium oxide which is purified to a minimum purity of 99.999% yttrium oxide by mass, or purified to a minimum purity of 99.9% yttrium by mass. Other Minerals Any of the following minerals, provided that such mineral is purified to a minimum purity of 99% by mass: Arsenic Lanthanum Rubidium Titanium Bismuth Lutetium Ruthenium Ytterbium Erbium Magnesium Samarium Zinc Gallium Palladium Scandium Zirconium Hafnium Platinum Tantalum Holmium Praseodymium Terbium Iridium Rhodium Thulium Complete Part IV and enter total costs for the applicable critical elements from Part IV, line 74, on line 6a, column (d). Line 7. On a separate Form 7207, enter "Credits from Pass-Through Entities" on line 3 of Part I and report your total distributive share from: Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., box 15 (code V); Schedule K-1 (Form 1120-S), Shareholder's Share of Income, Deductions, Credits, etc., box 13 (code V); and Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., box 13 (code D). Line 8a. If you are a partnership or S corporation and you elect payment for any advanced manufacturing production credit under section 6417(c), report the amount with respect to a facility on Form 3800, Part III, line 1b, and not on Schedule K. If you are a partnership or S corporation electing to transfer any advanced manufacturing production credit (or portion thereof) for a facility under section 6418(c), you must report the total credit amount with respect to your facility on Form 3800, Part III, line 1b, and not on Schedule K. See the Instructions for Form 3800 to report any non-transferred portion of advanced manufacturing production credit. Line 8b. Allocate the credit on line 8a, column (e), between the estate or trust and the beneficiaries in the same proportion as income was allocated and enter the beneficiaries’ shares on line 8b, column (e). If the estate or trust is subject to the passive activity rules, complete Form 8582-CR, Passive Activity Credit Limitations, to determine the allowed credit that must be allocated between the estate or trust and the beneficiaries. Instructions for Form 7207 - Notices Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for individual and business taxpayers filing this form is approved under OMB control number 1545-0074 and 1545-0123 and is included in the estimates shown in the instructions for their individual and business income tax return. The estimated burden for all other taxpayers who file this form is shown below. Recordkeeping 2 hr., 52 min. Learning about the law or the form 0 hr., 50 min. Preparing and sending the form to the IRS 0 hr., 34 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed.
