Instructions For Form 4255 - Recapture Of Investment Credit


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.
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
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
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
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
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
qualifying therapeutic discovery project
withdrawal from a capital construction
2011-14_IRB/ar08.html; and amplified by
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
debt incurred in connection with a vessel
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
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
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
investment immediately after the grant
whole or in part) as investment credit
was made.
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
instructions for
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
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
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


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