Instructions For Form 8864 - Biodiesel And Renewable Diesel Fuels Credit

Qualified Agri-Biodiesel Production

Caution. You may be liable for a 24.4 cents per gallon

excise tax on biodiesel or renewable diesel you sold (in

Qualified agri-biodiesel production means up to 15 million

your trade or business) for use or used in a

gallons of agri-biodiesel which is produced by an eligible

diesel-powered highway vehicle or diesel-powered train.

small agri-biodiesel producer (defined below), and which

Report the tax liability on Form 720 on the line for IRS No.

during the tax year:

79 for the quarter in which the biodiesel was sold or used

1. Is sold by such producer to another person:

or IRS No. 60(b) for the quarter in which the renewable

a. For use by such person in the production of a

diesel was sold or used.

qualified biodiesel mixture in such other person's trade or

business (other than casual off-farm production),

Biodiesel and Renewable Diesel Mixture Credits

b. For use by such person as a fuel in a trade or

The biodiesel or renewable diesel reported on lines 4

business, or

through 6 must be used to make a qualified mixture. A

qualified mixture combines biodiesel or renewable diesel

c. Who sells such agri-biodiesel at retail to another

with diesel fuel (defined below), determined without

person and places such agri-biodiesel in the fuel tank of

regard to any use of kerosene. But treat the kerosene as

such other person; or

diesel fuel when figuring a renewable diesel mixture credit

2. Is used or sold by such producer for any purpose

for certain aviation fuel (see Renewable Diesel above).

described in (1).

The producer of the mixture either:

Note. Production of renewable diesel is not qualified

Used it as fuel, or

agri-biodiesel production.

Sold it as fuel to another person.

Eligible small agri-biodiesel producer. An eligible

The credit is available only to the producer of the

small agri-biodiesel producer is a person who, at all times

mixture. The producer must use or sell the mixture in a

during the tax year, has a productive capacity for

trade or business and the credit is available only for the

agri-biodiesel not in excess of 60 million gallons.

year the mixture is sold or used. The credit is not allowed

for casual off-farm production of a qualified mixture.

Aggregation rule. All members of the same controlled

group of corporations (see section 267(f)) and all persons

Caution. You may be liable for a 24.4 cents per gallon

under common control (see section 52(b) but treat an

excise tax on biodiesel or renewable diesel used to

interest of more than 50% as a controlling interest) are

produce blended taxable fuel outside the bulk transfer

treated as 1 person for purposes of the 15- and

terminal system if the mixture is diesel fuel. Report the tax

60-million-gallon limits.

liability on Form 720 on the line for IRS No. 60(c) for the

quarter in which the mixture was sold or used.

Partnership, S corporation, and other pass-through

entities. The 15- and 60-million-gallon limits discussed

Diesel fuel. Diesel fuel means:

above are applied at both the entity level and at the

Any liquid that, without further processing or blending,

partner or similar level.

is suitable for use as a fuel in a diesel-powered highway

vehicle or diesel-powered train; and

Registration

Transmix.

All producers and importers of biodiesel or renewable

A liquid is suitable for this use if the liquid has practical

diesel must be registered with the IRS. All persons

and commercial fitness for use in the propulsion engine of

producing blended taxable fuel must be registered. See

a diesel-powered highway vehicle or diesel-powered train.

Form 637, Application for Registration (For Certain Excise

A liquid may possess this practical and commercial fitness

Tax Activities).

even though the specified use is not the liquid's

predominant use. However, a liquid does not possess this

Coordination With Excise Tax Credit

practical and commercial fitness solely by reason of its

Only one credit may be taken with respect to any amount

possible or rare use as a fuel in the propulsion engine of a

of biodiesel or renewable diesel. If any amount is claimed

diesel-powered highway vehicle or diesel-powered train.

(or will be claimed) with respect to any amount of

Diesel fuel does not include gasoline, kerosene, excluded

biodiesel or renewable diesel on Form 720, Quarterly

liquid, No. 5 and No. 6 fuel oils covered by ASTM

Federal Excise Tax Return, Form 8849, Claim for Refund

specification D396, or F-76 (Fuel Naval Distillate) covered

of Excise Taxes, or Form 4136, Credit for Federal Tax

by military specification MIL-F-16884.

Paid on Fuels, then a claim cannot be made on Form

An excluded liquid is any liquid that (a) contains less

8864 for that amount of biodiesel or renewable diesel.

than 4% normal paraffins, or (b) has a (i) distillation range

Recapture of Credit

of 125 degrees Fahrenheit or less, (ii) sulfur content of 10

parts per million or less, and (iii) minimum color of +27

You must pay a tax on each gallon of biodiesel or

Saybolt. For example, biodiesel is always an excluded

renewable diesel on which a credit was claimed at the rate

liquid because it does not contain paraffins. But a

used to figure the credit if you:

biodiesel mixture may not be an excluded liquid.

Use it (including a mixture) other than as a fuel,

Transmix means a by-product of refined products

Buy it at retail and use it to create a mixture,

created by the mixing of different specification products

Separate it from a mixture, or

during pipeline transportation.

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Instructions for Form 8864 (2015)

Instructions For Form 8864 - Biodiesel And Renewable Diesel Fuels Credit - 2015 Page 2

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