Exceptions to recapture.

Recapture of the investment credit doesn’t apply to the following.

A mere change in the form of conducting a trade or business includes a corporation that elects to be an S corporation and a corporation whose S election is revoked or terminated.

For more details on the recapture rules, see section 50(a).

Column (a).

Enter credit claimed in prior year(s) (as adjusted, if applicable). See the Instructions for Form 3800.

Column (b).

Enter the gross elective payment election (EPE) amount included in column (a).

Column (c).

Enter gross EPE amount in column (b) applied against regular tax.

Column (d).

Subtract column (c) from column (b) for net EPE amount.

Column (e).

Enter non-EPE credit that was applied against regular tax.

Column (f).

Subtract the sum of columns (b) and (e) from column (a) for the carryover amount.

Column (g).

Enter recapture percentage. See Line 15, later. Enter “N/A” if more than one recapture event on one line.

Column (h).

Enter amount of column (a) recaptured, including reduction of carryover. See Basis Adjustment on Recapture, earlier.

Column (i).

Enter portion of column (h) reducing credit carryover in column (f).

Column (j).

Enter portion of column (h) recapturing non-EPE credit applied against regular tax in column (e).

Column (k).

Enter portion of column (h) recapturing EPE applied against regular tax from column (c).

Column (l).

Enter portion of column (h) recapturing net EPE credit from column (d).

Column (m).

Enter excessive credit transfer, including any additional 20% excessive credit transfer amount, or recapture amount. See sections 6418(g)(2) and 6418(g)(3), and Regulations sections 1.6418-3 and -5 for more details.

Column (n).

Enter the EP related to the net EPE portion if you owe an EP related to a gross EPE in column (b).

Column (o).

Enter the portion of the EP not in column (n), plus any 20% EP you owe, if you owe an EP related to a gross EPE in column (b).

Column (p).

Enter the penalty amount for a failure to meet the prevailing wage requirements and/or the apprenticeship requirements. This includes prevailing wage and/or apprenticeship penalties related to amounts that were generated on Form 8908, Form 7205, or Form 7213, Part II, and reported on line 1i (see Line 1i, column (p), earlier). See Regulations section 1.45-7(c)(1) for prevailing wage correction and penalty payment, and Regulations section 1.45-8(f)(2) for apprenticeship cure provision.

Column (q).

Enter amount that can be reduced by nonrefundable credits. Add lines 1a through 2z in columns (n) and (o); lines 2a through 2z in columns (j), (k), and (l); and any section 6418(g)(2) excessive credit transfer amounts included on lines 1a through 2z in column (m).

Column (r).

Enter amount that can’t be reduced by nonrefundable credits. Add amounts on lines 1a through 1z in columns (j), (k), and (l); lines 1a through 2z in column (p); and any section 6418(g)(3) recapture amounts on lines 1b, 1g, and 1j in column (m).

Column (s).

Enter net EPE repaid. Add columns (l) and (n).

If completing line 1h, column (s), don't include any amount that would have been reported in line 1h, column (o).

Column (t).

Enter any 20% EP in column (o) plus any amounts from column (p) related to a column (b) Gross EPE.

Lines A through D.

Use lines A through D to describe the property(ies) for which you must refigure the credit. If you need to list additional properties, complete and attach additional Forms 4255 to list all the properties for which you must refigure the credit.

Line 1.

Enter the rate you used to figure the original credit from the Form 3468 that you filed. For combined heat and power system property, enter the effective rate used to figure the original credit, taking into account the limit under section 48(c)(3)(B).

Line 2.

Enter the credit base (cost or other basis) that you used to figure the original credit.

If section 49(a)(1) applied to the property and there was a net increase in nonqualified nonrecourse financing with respect to the property in previous tax years, enter the credit base you used to figure the original credit, reduced by the amount of that net increase. If there was a net decrease in nonqualified nonrecourse financing with respect to the property in previous tax years, enter the credit base you used to figure the original credit, increased by the amount of that net decrease. For more details, see the instructions for Section C.

Line 3.

If section 49(a)(1) didn’t apply to the property, enter -0-. If section 49(a)(1) applied to the property, enter the net change in nonqualified nonrecourse financing related to the property during the tax year. Enter a net increase in nonqualified nonrecourse financing as a positive number. Enter a net decrease in nonqualified nonrecourse financing as a negative number. For more information about section 49, see the instructions for Section C.

Line 4.

Subtract line 3 from line 2.

If line 3 is negative, then the entry on line 4 will be larger than the entry on line 2.

Line 5.

Multiply line 1 by line 4. If the credit for the property for which you must refigure the credit was limited to a dollar amount (for example, by the kilowatt limit in section 48(c)(1)(B)), don’t enter more than the amount of the applicable limit on line 5.

Line 6.

Enter the total of all credits taken for the property on Form 3800, General Business Credit, in prior years. But don’t include the amount of any credit previously recaptured due to an increase in nonqualified nonrecourse financing.

Line 8.

If the original credit had been figured using the current-year tax base in the year the property was first placed in service, you may have been able to use other general business credits instead. Use Worksheet 1 to calculate the amount of unused general business credits that would have been allowed under section 38.

When completing Worksheet 1, include any general business credits that could have been carried forward or carried back to a year affected by the recapture of the original credit. Don’t include any credits that were previously recaptured. If you previously used the credit to offset the recapture of a credit on another property, treat it as a credit allowed in a previous tax year.

Line 9.

This is the recapture tax as a result of a net increase in nonqualified nonrecourse financing. Add recapture tax for properties A through D and include amounts in the total for Part I, column (h). See Basis Adjustment on Recapture, earlier.

Line 10.

Enter the date (month/day/year) on which the property was placed in service, using the first day of the month in which the property was placed in service. For example, if the property was placed in service on February 20, 2022, enter 02/01/2022 on line 10. See Regulations section 1.47-1(c) for more information.

Line 11.

Generally, this will be the date you disposed of the property. For more details, see Regulations section 1.47-1(c). For recapture of the advanced manufacturing credit under section 48D, enter the date of the applicable transaction. See section 50(a)(3) and (6) and Regulations section 1.50-2.

Line 12.

Don’t enter partial years. If the property was held less than 12 months, enter -0-. In case of failure to attain or maintain the separation and sequestration requirements applicable to a Phase II or III gasification program or a Phase II or III advanced coal program, enter -0-. In case of an applicable transaction by an applicable taxpayer before the close of the 10-year period beginning on the date such taxpayer placed in service investment credit property that is eligible for the advanced manufacturing investment credit, enter -0-.

Line 13.

If you had never taken the recaptured credit, you may have been able to use other general business credits instead. Use Worksheet 2 to calculate the amount of unused general business credits that would have been allowed under section 38.

When completing Worksheet 2, include any general business credits that could have been carried forward or carried back to a year affected by the recapture of the original credit. Don’t include any credits that were previously recaptured. If you previously used the credit to offset the recapture of a credit on another property, treat it as a credit allowed in a previous tax year.

Line 14.

Subtract line 13 from line 6 to calculate the aggregate decrease in general business credits that would have been allowed under section 38 had there been no credit from this property.

Line 15.

Enter the recapture percentage from the following table. Enter 100 for certain expansions in connection with advanced manufacturing facilities. See section 50(a)(3)(A).

Line 16.

Multiply the amount on line 14 by the percentage on line 15 to calculate the recapture tax due to disposition or cessation of use as an investment credit property. Include the amount on the applicable line(s) in Part I, column (h). For example, enter section 47 rehabilitation credit recapture in Part I, line 1z, column (h). For basis increase, see Line 9, earlier.

Line 17.

If applicable, enter the IRS-issued registration number for your facility with an EPE or credit transfer election.