Instructions For Form 3468 - Investment Credit

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A net increase in the amount of nonqualified nonrecourse

the person who is leasing it from you. Once the election is

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

made, the lessee will be entitled to an investment credit for that

applied; or

property for the tax year in which the property is placed in

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A renewable energy grant was provided for section 48

service and the lessor will generally not be entitled to such a

property that was allowed a credit for progress expenditures

credit.

before the grant was made.

If the leased property is disposed of, or otherwise ceases to

Exceptions to recapture. Recapture of the investment credit

be section 38 property, the property will generally be subject to

does not apply to any of the following.

the recapture rules for early dispositions.

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

For information on making the election, see section 48(d) (as

2. A transfer between spouses or incident to divorce under

in effect on November 4, 1990) and related regulations. For

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

limitations, see sections 46(e)(3) and 48(d) (as in effect on

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

November 4, 1990).

disposed of the property at the later date.

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

Line 2

certain acquisitions of the assets of one corporation by another

Enter the lessor’s full address. Enter the address of the lessor’s

corporation).

principal office or place of business. Include the suite, room, or

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

other unit number after the street address. If the post office

business if:

does not deliver mail to the street address and the lessor has a

a. The property is retained as investment credit property in

P.O. box, show the box number instead.

that trade or business, and

b. The taxpayer retains a substantial interest in that trade or

Note. Do not use the address of the registered agent for the

business.

state in which the lessor is incorporated. For example, if a

business is incorporated in Delaware or Nevada and the

A mere change in the form of conducting a trade or business

lessor’s principal place of business is located in Little Rock, AR,

includes a corporation that elects to be an S corporation and a

you should enter the Little Rock address.

corporation whose S election is revoked or terminated.

If the lessor receives its mail in care of a third party (such as

See section 46(g)(4) (as in effect on November 4, 1990),

an accountant or attorney), enter on the street address line “C/

and related regulations, if you made a withdrawal from a

O” followed by the third party’s name and street address or P.O.

capital construction fund set up under the Merchant

CAUTION

box.

Marine Act of 1936 to pay the principal of any debt incurred in

connection with a vessel on which you claimed investment

Energy Credit: Part II and Part III

credit.

Note. Use Part II to figure the energy credit if your tax year

For details, see Form 4255, Recapture of Investment Credit.

began before October 4, 2008. Use Part III to figure the energy

credit if your tax year began after October 3, 2008.

Specific Instructions

If energy property is financed in whole or in part by

Do not attach this form to your tax return if you are (a)

subsidized energy financing or by tax-exempt private activity

an estate or trust whose entire qualified rehabilitation

bonds, the amount that you can claim as basis is the basis that

expenditures or bases in energy property are allocated

would otherwise be allowed multiplied by a fraction that is 1

CAUTION

to the beneficiaries, (b) an S corporation, or (c) a partnership

reduced by a second fraction, the numerator of which is that

(other than an electing large partnership). However, you must

portion of the basis allocable to such financing or proceeds, and

complete lines 10k and 10l of this form and attach it if you are

the denominator of which is the basis of the property. For

the owner of a certified historic structure.

example, if the basis of the property is $100,000 and the portion

allocable to such financing or proceeds is $20,000, the fraction

Shareholders of S Corporations,

of the basis that you may claim the credit on is

(that is, 1

minus $20,000/$100,000). Subsidized energy financing means

Partners of Partnerships, and

financing provided under a federal, state, or local program, a

Beneficiaries of Estates and Trusts

principal purpose of which is to provide subsidized financing for

projects designed to conserve or produce energy.

If you are a shareholder, partner (other than a partner in an

electing large partnership), or beneficiary of the designated

For periods after December 31, 2008, there is no basis

pass-through entity, the entity will provide to you the information

reduction for property financed by subsidized energy financing.

necessary to complete the following:

For transitional rules, see the instructions for line 5q.

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Lines 10b through 10j for the rehabilitation credit.

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To qualify, energy property must be constructed,

The basis of energy property for Part II, lines 5a, 5b, 5o, 5q,

reconstructed, or erected by the taxpayer. If acquired by the

5r, and 5s or Part III, lines 11a, 11b, 11l, 11n, 11o and 11p.

taxpayer, the original use of such property must begin with the

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The basis for energy property for Part II, lines 5c, 5f, and 5i or

taxpayer. The property must meet the performance and quality

Part III, lines 11c and 11f, and the kilowatt capacity for Part II,

standards, if any, that have been prescribed by regulations and

lines 5d, 5g, and 5j or Part III, lines 11d and 11g, respectively.

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are in effect at the time the property is acquired. For periods

The basis of energy property for Part II, line 5l or Part III, line

before February 14, 2008, energy property does not include any

11i, and the megawatt capacity or horsepower for Part II, line

property that is public utility property as defined by section

5m, or Part III, line 11j.

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46(f)(5) (as in effect on November 4, 1990), and related

The basis of the qualifying investment in advanced coal

regulations.

project property for Part II, lines 6a through 6c.

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The basis of the qualifying investment in gasification project

You must reduce the depreciable basis by 50% of the

property for Part II, lines 7a and 7b.

energy credit determined.

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The basis of the qualifying investment in advanced energy

You also must reduce the basis of energy property by any

project property for Part II, line 8a.

amount attributable to qualified rehabilitation expenditures.

Part I. Information Regarding the Election to

Energy property that qualifies for renewable energy grants

Treat the Lessee as the Purchaser of Investment

under section 1603 of the American Recovery and

Credit Property

Reinvestment Tax Act of 2009 is not eligible for the energy

If you lease property to someone else, you may elect to treat all

credit for the tax year that the grant is made or any subsequent

or part of your investment in new property as if it were made by

tax year.

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Instructions For Form 3468 - Investment Credit - 2008 Page 2

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