Instructions For Form 3468 - 2016 printable pdf download

2016

Department of the Treasury

Internal Revenue Service

Instructions for Form 3468

Investment Credit

Qualified Progress Expenditures

Section references are to the Internal Revenue Code unless

otherwise noted.

Qualified progress expenditures are those expenditures made

before the property is placed in service and for which the

Future Developments

taxpayer has made an election to treat the expenditures as

progress expenditures. Qualified progress expenditure property

For the latest information about developments related to Form

is any property that is being constructed by or for the taxpayer

3468 and its instructions, such as legislation enacted after they

and which (a) has a normal construction period of two years or

were published, go to

more, and (b) it is reasonable to believe that the property will be

What’s New

new investment credit property in the hands of the taxpayer

when it is placed in service. The placed in service requirement

The increased rehabilitation credit rate lines for the Gulf

doesn't apply to qualified progress expenditures.

Opportunity Zone and the Midwestern disaster were removed

Qualified progress expenditures for:

since those credit rates have expired.

Self-constructed property means the amount that is properly

The Protecting Americans from Tax Hikes Act of 2015 has

chargeable (during the tax year) to a capital account with respect

implemented the phasing out of the investment credit for wind

to that property; or

facilities. The credit for wind facilities is reduced by 20% for

Non-self-constructed property means the lesser of: (a) the

facilities the construction of which begins in 2017.

amount paid (during the tax year) to another person for the

construction of the property, or (b) the amount that represents

The investment credit for the following energy properties are

the proportion of the overall cost to the taxpayer of the

set to expire for periods after 2016:

construction by the other person which is properly attributable to

Solar (except property under section 48(a)(3)(A)(i)),

that portion of the construction which is completed during the tax

Geothermal,

year.

Qualified fuel cell,

Qualified microturbine,

For more information on qualified progress expenditures, see

Combined heat and power system,

section 46(d) (as in effect on November 4, 1990). For details on

Qualified small wind, and

qualified progress expenditures for the rehabilitation credit, see

Geothermal heat pump.

section 47(d).

At-Risk Limit for Individuals and

General Instructions

Closely Held Corporations

Purpose of Form

The cost or basis of property for investment credit purposes may

be limited if you borrowed against the property and are protected

Use Form 3468 to claim the investment credit. The investment

against loss, or if you borrowed money from a person who is

credit consists of the rehabilitation, energy, qualifying advanced

related or who has an interest (other than as a creditor) in the

coal project, qualifying gasification project, and qualifying

business activity. The cost or basis must be reduced by the

advanced energy project credits. If you file electronically, you

amount of the nonqualified nonrecourse financing related to the

must send in a paper Form 8453, U.S. Individual Income Tax

property as of the close of the tax year in which the property is

Transmittal for an IRS e-file Return, if attachments are required

placed in service. If, at the close of a tax year following the year

to Form 3468.

property was placed in service, the nonqualified nonrecourse

Investment Credit Property

financing for any property has increased or decreased, then the

credit base for the property changes accordingly. The changes

Investment credit property is any depreciable or amortizable

may result in an increased credit or a recapture of the credit in

property that qualifies for the rehabilitation credit, energy credit,

the year of the change. See sections 49 and 465 for details.

qualifying advanced coal project credit, qualifying gasification

project credit, or qualifying advanced energy project credit.

Recapture of Credit

You can't claim a credit for property that is:

You may have to refigure the investment credit and recapture all

Used mainly outside the United States (except for property

or a portion of it if:

described in section 168(g)(4));

You dispose of investment credit property before the end of 5

Used by a governmental unit or foreign person or entity

full years after the property was placed in service (recapture

(except for a qualified rehabilitated building leased to that unit,

period);

person, or entity; and property used under a lease with a term of

You change the use of the property before the end of the

less than 6 months);

recapture period so that it no longer qualifies as investment

Used by a tax-exempt organization (other than a section 521

credit property;

farmers' cooperative) unless the property is used mainly in an

The business use of the property decreases before the end of

unrelated trade or business or is a qualified rehabilitated building

the recapture period so that it no longer qualifies (in whole or in

leased by the organization;

part) as investment credit property;

Used for lodging or in the furnishing of lodging (see section

Any building to which section 47(d) applies will no longer be a

50(b)(2) for exceptions); or

qualified rehabilitated building when placed in service;

Certain MACRS business property to the extent it has been

expensed under section 179 of the Internal Revenue Code.

Jan 05, 2017

Cat. No. 12277P

Instructions For Form 3468 - 2016

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