Instructions For Form 4255 - Recapture Of Investment Credit printable pdf download

Instructions for Form 4255

Department of the Treasury

Internal Revenue Service

(Rev. December 2016)

Recapture of Investment Credit

Section references are to the Internal Revenue

allocated the cost or other basis of

if the transferor had disposed of the

Code unless otherwise noted.

property to you for which you claimed a

property at the later date.

credit.

A transfer of an interest in an electing

Future Developments

You received a grant under section

large partnership.

1603 of the American Recovery and

A transaction to which section 381(a)

For the latest information about

Reinvestment Tax Act of 2009 for property

applies (relating to certain acquisitions of

developments related to Form 4255 and

for which you were previously allowed an

the assets of one corporation by another

its instructions, such as legislation

investment credit for qualified progress

corporation).

enacted after they were published, go to

expenditures under section 48(d), and the

A mere change in the form of

amounts constituting the qualified basis

conducting a trade or business if:

for the credit are also the basis for the

1. The property is retained as

What’s New

grant.

investment credit property in that trade or

You returned leased property (on which

business, and

Form 4255 has been revised to reflect the

you claimed a credit) to the lessor before

2. The taxpayer retains a substantial

computational steps required under

the end of the recapture period.

interest in that trade or business.

section 50(a)(1) and to provide additional

In the case of a project under the Phase

instructions on how to adjust the unused

A mere change in the form of

II or Phase III gasification program, failure

portion (i.e., carryover) of a recaptured

conducting a trade or business includes a

at any time during the applicable recovery

credit.

corporation that elects to be an S

period (as defined in section 168(c)) to

corporation and a corporation whose S

attain and maintain the separation and

General Instructions

election is revoked or terminated.

sequestration requirements in section

48B(d)(1)(B). For more information, see

For more details on the recapture rules,

Purpose of Form

Notice 2009-23, 2009-16 I.R.B. 802,

see section 50(a).

available at

https://

Use Form 4255 to figure the increase in

See section 46(g)(4) (as in effect

2009-16_irb/ar06.html; as modified by

tax for the recapture of investment credit

on November 4, 1990) to figure

Notice 2011-24, 2011-14 I.R.B. 603

claimed and for the recapture of a

the recapture tax if you made a

available at

https://

CAUTION

qualifying therapeutic discovery project

withdrawal from a capital construction

2011-14_IRB/ar08.html; and amplified by

grant.

fund set up under the Merchant Marine

Notice 2014-81, 2014-53 I.R.B. 1001,

Act of 1936 to pay the principal of any

Credit Recapture Requirements

available at

https://

debt incurred in connection with a vessel

2014-53_IRB/ar09.html.

and Special Rules

on which you claimed investment credit.

In the case of a project under the Phase

Generally, you must refigure the

II or Phase III qualifying advanced coal

Recapture of Qualifying

investment credit and may have to

project program, failure during the

Therapeutic Discovery Project

recapture all or part of it if any of the

applicable recovery period (as defined in

following apply.

section 168(c)) to attain and maintain the

Grant

You disposed of investment credit

separation and sequestration

If you received a grant under section 9023

property before the end of 5 full years after

requirements in section 48A(e)(1)(G). For

of the Affordable Care Act (ACA), you may

the property was placed in service (the

more information, see Notice 2009-24,

have to recapture it if the project for which

recapture period).

2009-16 I.R.B. 817, available at

https://

the grant was awarded ceases to be a

You changed the use of the property

2009-16_irb/ar07.html; as

qualifying therapeutic discovery project. If

before the end of the recapture period so

modified by Notice 2011-24, 2011-14

the amount of the grant is more than the

that it no longer qualifies as investment

I.R.B. 603, and amplified by Notice

amount allowable as a grant, the excess

credit property.

2012-51, 2012-33 I.R.B. 150, available at

must be recaptured as if the investment to

The business use of the property

https:// 2012-33_IRB/

which the excess portion of the grant

decreased before the end of the recapture

ar05.html, and Notice 2015-14, 2015-10

related had ceased to be a qualified

period so that it no longer qualifies (in

I.R.B. 722, available at

https://

investment immediately after the grant

whole or in part) as investment credit

2015-10_IRB/ar10.html.

was made.

property.

A net increase in the amount of

Any building to which section 47(d)

nonqualified nonrecourse financing

The increase in tax for any recapture of

applies will no longer be a qualified

occurred for any property to which section

the grant is imposed on the person to

rehabilitated building when placed in

49(a)(1) applied. For more details, see the

whom the grant was made. In the case of

service.

instructions for

Part

II, later.

pass-through entities (including

Any property to which section 48(b),

Exceptions to recapture. Recapture of

partnerships, S corporations, estates, and

48A(b)(3), 48B(b)(3), 48C(b)(2), or 48D(b)

the investment credit does not apply to the

trusts), the tax is determined at the entity

(4) applies will no longer qualify as

following.

level and allocated to the entity owners as

investment credit property when placed in

a credit recapture.

A transfer because of the death of the

service.

taxpayer.

Before the end of the recapture period,

To recapture a qualifying therapeutic

A transfer between spouses or incident

your proportionate interest was reduced

discovery project grant, skip lines 1–18

to divorce under section 1041. However, a

by more than one-third in a partnership

and complete line 19. For more

later disposition by the transferee is

(other than an electing large partnership),

information, see Notice 2010-45, 2010-23

subject to recapture to the same extent as

S corporation, estate, or trust that

Jan 26, 2017

Cat. No. 68759M

Instructions For Form 4255 - Recapture Of Investment Credit

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