Form Osc - Oilseed Crushing And Biodiesel/biolubricant Production Facilities Credit - 2011 Page 2
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1
2Form OSC General Instructions
What is “biodiesel”?
What cost do I use to calculate my oilseed crushing facility
credit?
Biodiesel is a fuel produced from monoalkyl esters of long-chain
fatty acids derived from vegetable oils, renewable lipids, animal
The cost used to calculate your oilseed crushing facility credit is
fats, or any combination of these ingredients. This fuel must meet
the amount of the investment that you have made in the specifi c
the requirements of ASTM D6751, also known as the Standard
property used to calculate your depreciation deduction for federal
Specifi cation for Biodiesel Fuel (B-100) Blend Stock for Distillate
income tax purposes. It does not include the installation cost of
Fuels, as adopted by the American Society for Testing and
the equipment.
Materials.
If I am claiming the oilseed crushing facility credit, can I also
What is “biolubricant”?
deduct the annual depreciation on my investment?
Biolubricant is a product, other than food or feed, substantially
Yes, you can. This credit is not in lieu of any depreciation or
amortization deduction that you are allowed for your investment.
composed of certain biological products, agricultural materials or
forestry materials. The product is used in place of a petroleum-
What requirements do I have to meet in order to qualify for
based lubricant.
the oilseed crushing facility credit?
Am I able to carry forward my oilseed crushing facility credit
In order for your investment to qualify for this credit the following
or my biodiesel/biolubricant production facility credit if I
requirements must be met:
cannot apply the full amount against my tax liability in the
• The property is used primarily to crush oilseed or to
fi rst year of production?
manufacture a product from oilseed and is operational before
Yes, the credits can be carried forward for up to seven years.
January 1, 2015.
However, if you are not crushing oilseed or producing biodiesel or
• You are an individual or entity who as the owner, including a
biolubricant, you cannot claim any tax credit for that year.
contract purchaser, has a benefi cial interest in the business
Am I subject to recapturing the credit that I previously
that crushes oilseed or manufacturers a product from oilseed.
received if I cease operating my business?
• Your business has been processing oilseed or manufacturing a
Yes, you are. If you cease operating your business for a period of
product from oilseed during your tax year.
12 continuous months, within fi ve years from the year you claimed
Part II: Biodiesel/Biolubricant Production Facility Credit
the credit, you are required to recapture this credit in the year you
ceased operations.
I am constructing a facility to produce biodiesel/biolubricant.
What costs are available to me to be eligible for the biodiesel/
If my business is a partnership or an S corporation, are my
biolubricant production facility tax credit?
partners or shareholders entitled to the oilseed crushing and
The costs used to calculate your biodiesel/biolubricant production
biodiesel/biolubricant production facilities credit?
facilities credit are the costs of investing in depreciable property
As a partnership, your partners are entitled to apply these credits
for constructing or equipping your facility.
against their income tax or corporation license tax liability. The
amount of each partner’s credit is based on the percentage used
The costs incurred in the two years before you began production
to report the partnership’s income or loss for Montana income tax
are eligible for the credit.
purposes.
If I am claiming the biodiesel/biolubricant production facility
As an S corporation, the shareholders are entitled to apply these
credit, can I also deduct the annual depreciation on my
credits against their income tax or corporation license tax liability.
investment?
The amount of each shareholder’s credit is based on their pro rata
Yes, you can. This credit is not in lieu of any depreciation or
share of the corporation’s cost of investing in equipment or the
amortization deduction that you are allowed for your investment.
facility.
When am I eligible for the biodiesel/biolubricant production
For example, if your business is an S corporation with four
facility credit?
shareholders with equal ownership interest, each shareholder
You are eligible to claim the biodiesel/biolubricant production
would be entitled to 25% of the total credit.
facility credit in a tax year that your facility produces this product.
When fi ling your Montana partnership return, Form PR-1, or your
If you are in the process of constructing a facility in one tax year
Montana S corporation return, Form CLT-4S, report your Oilseed
but have not begun processing in the same tax year you are not
Crushing and Biodiesel/Biolubricant Production Facilities Credit
eligible for this credit until the year your production begins.
on Schedule II. Include with your tax return a completed Form
OSC and a supplemental schedule identifying each partner or
What requirements do I have to meet in order to qualify for
shareholder and their share of the credit.
the biodiesel/biolubricant production facility credit?
In order for your investment to qualify for this credit, the following
Part I: Oilseed Crushing Facility Credit
requirements must be met:
I purchased equipment to begin crushing oilseed but have
• The property is used primarily to manufacture biodiesel or
not completed installation or began crushing the oilseed. Am
biolubricant and is operational before January 1, 2015.
I eligible for the oilseed crushing facility credit in the year I
purchase the equipment?
• You are an individual or entity who as the owner, including a
contract purchaser, has a benefi cial interest in the business
No, you are not. The investment you have made in the equipment
that manufactures biodiesel or biolubricant.
does not allow you to apply for the oilseed crushing facility credit
until the fi rst year your facility begins processing oilseed or your
• Y our business has been manufacturing biodiesel or
facility manufactures a product from oilseed.
biolubricant during your tax year.
The costs incurred in the two years before you began crushing
Questions? Please call us toll free at (866) 859-2254 (in Helena,
oilseed are eligible for the credit.
444-6900).
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