Instructions For Form 3468 - 2009 printable pdf download

2 0 09

Department of the Treasury

Internal Revenue Service

Instructions for Form 3468

Investment Credit

Section references are to the Internal Revenue Code unless

At-Risk Limit for Individuals and Closely

otherwise noted.

Held Corporations

General Instructions

The cost or basis of property for investment credit purposes

may be limited if you borrowed against the property and are

Purpose of Form

protected against loss, or if you borrowed money from a person

who is related or who has an interest (other than as a creditor)

Use Form 3468 to claim the investment credit. The investment

in the business activity. The cost or basis must be reduced by

credit consists of the rehabilitation, energy, qualifying advanced

the amount of the nonqualified nonrecourse financing related to

coal project, qualifying gasification project, and qualifying

the property as of the close of the tax year in which the property

advanced energy project credits. If you file electronically, you

is placed in service. If, at the close of a tax year following the

must send in a paper Form 8453, U.S. Individual Income Tax

year property was placed in service, the nonqualified

Transmittal for an IRS e-file Return, if attachments are required

nonrecourse financing for any property has increased or

to Form 3468.

decreased, then the credit base for the property changes

Investment Credit Property

accordingly. The changes may result in an increased credit or a

recapture of the credit in the year of the change. See sections

Investment credit property is any depreciable or amortizable

49 and 465 for details.

property that qualifies for the rehabilitation credit, energy credit,

qualifying advanced coal project credit, qualifying gasification

Recapture of Credit

project credit, or qualifying advanced energy project credit.

You may have to refigure the investment credit and recapture

You cannot claim a credit for property that is:

•

all or a portion of it if:

Used mainly outside the United States (except for property

•

You dispose of investment credit property before the end of 5

described in section 168(g)(4));

•

full years after the property was placed in service (recapture

Used by a governmental unit or foreign person or entity

period);

(except for a qualified rehabilitated building leased to that unit,

•

You change the use of the property before the end of the

person, or entity; and property used under a lease with a term

recapture period so that it no longer qualifies as investment

of less than 6 months);

•

credit property;

Used by a tax-exempt organization (other than a section 521

•

The business use of the property decreases before the end

farmers’ cooperative) unless the property is used mainly in an

of the recapture period so that it no longer qualifies (in whole or

unrelated trade or business or is a qualified rehabilitated

in part) as investment credit property;

building leased by the organization;

•

Any building to which section 47(d) applies will no longer be a

Used for lodging or in the furnishing of lodging (see section

qualified rehabilitated building when placed in service;

50(b)(2) for exceptions); or

•

Any property to which section 48(b) applies will no longer

Certain MACRS business property to the extent it has been

qualify as investment credit property when placed in service;

expensed under section 179 of the Internal Revenue Code.

•

Before the end of the recapture period, your proportionate

interest is reduced by more than one-third in an S corporation,

Qualified Progress Expenditures

partnership (other than an electing large partnership), estate, or

Qualified progress expenditures are those expenditures made

trust that allocated the cost or basis of property to you for which

before the property is placed in service and for which the

you claimed a credit;

•

taxpayer has made an election to treat the expenditures as

You return leased property (on which you claimed a credit) to

progress expenditures. Qualified progress expenditure property

the lessor before the end of the recapture period;

•

is any property that is being constructed by or for the taxpayer

A net increase in the amount of nonqualified nonrecourse

and which (a) has a normal construction period of two years or

financing occurs for any property to which section 49(a)(1)

more, and (b) it is reasonable to believe that the property will be

applied; or

•

new investment credit property in the hands of the taxpayer

A grant under section 1603 of the American Recovery and

when it is placed in service. The placed in service requirement

Reinvestment Tax Act of 2009 was made for section 48

does not apply to qualified progress expenditures.

property for which a credit was allowed for progress

expenditures before the grant was made.

Qualified progress expenditures for:

•

Exceptions to recapture. Recapture of the investment credit

Self-constructed property means the amount that is properly

does not apply to any of the following.

chargeable (during the tax year) to capital account with respect

to that property; or

1. A transfer due to the death of the taxpayer.

•

Non-self-constructed property means the lesser of: (a) the

2. A transfer between spouses or incident to divorce under

amount paid (during the tax year) to another person for the

section 1041. However, a later disposition by the transferee is

construction of the property, or (b) the amount that represents

subject to recapture to the same extent as if the transferor had

the proportion of the overall cost to the taxpayer of the

disposed of the property at the later date.

construction by the other person which is properly attributable

3. A transaction to which section 381(a) applies (relating to

to that portion of the construction which is completed during the

certain acquisitions of the assets of one corporation by another

tax year.

corporation).

4. A mere change in the form of conducting a trade or

For more information on qualified progress expenditures,

business if:

see section 46(d) (as in effect on November 4, 1990). For

details on qualified progress expenditures for the rehabilitation

a. The property is retained as investment credit property in

credit, see section 47(d).

that trade or business, and

Cat. No. 12277P

Instructions For Form 3468 - 2009

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