Federal Low Sulfur Diesel Fuel Production Credit

Low Sulfur Diesel Fuel Production Credit
Form 8896 (Rev. December 2019)
Form

8896

(Rev. December 2019)
Department of the Treasury
Internal Revenue Service

Low Sulfur Diesel Fuel Production Credit
▶

▶ Attach to your tax return.
Go to www.irs.gov/Form8896 for the latest information.

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Attachment
Sequence No. 142
Identifying number

Name(s) shown on return

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OMB No. 1545-1914

Low sulfur diesel fuel produced (in gallons) . . . . . . . . . . . . . . . . . . . .
Multiply line 1 by $0.05 . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified costs limitation (see instructions) . . . . . . . . . . . . . . . . . . . .
Total low sulfur diesel fuel production credits allowed for all prior tax years (see instructions) . . .
Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the smaller of line 5 or line 2 . . . . . . . . . . . . . . . . . . . . . . .
Low sulfur diesel fuel production credit from partnerships, S corporations, and cooperatives (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add lines 6 and 7. Cooperatives, go to line 9. Partnerships and S corporations, stop here and report
this amount on Schedule K. All others, stop here and report this amount on Form 3800, Part III,
line 1m
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Amount allocated to patrons of the cooperative (see instructions) . . . . . . . . . . . .
Cooperatives, subtract line 9 from line 8. Report this amount on Form 3800, Part III, line 1m . . .

General Instructions

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Qualified Costs

Future Developments

For each facility, qualified costs are costs paid or incurred to
comply with the highway diesel fuel sulfur control requirements
of the Environmental Protection Agency (EPA) during the period
beginning January 1, 2003, and ending on the earlier of:

For the latest information about developments related to Form
8896 and its instructions, such as legislation enacted after they
were published, go to www.irs.gov/Form8896.

• The date 1 year after the date on which the refiner must
comply with these EPA requirements with respect to such
facility; or

Section references are to the Internal Revenue Code unless
otherwise noted.

Purpose of Form
Use Form 8896 to claim the low sulfur diesel fuel production
credit.
The credit generally is 5 cents for every gallon of low sulfur
diesel fuel produced by a qualified small business refiner during
the tax year. However, the total credits allowed for all tax years
cannot be more than the refiner’s qualified costs limitation on
line 3. This credit is part of the general business credit.
Partnerships, S corporations, and cooperatives must file this
form to claim the credit. All other taxpayers are not
required to complete or file this form if their only source for this
credit is a partnership, S corporation, or cooperative.
Instead, they can report this credit directly on line 1m in Part III
of Form 3800, General Business Credit.

Definitions
Low Sulfur Diesel Fuel
This is diesel fuel with a sulfur content of 15 parts per million or
less.

Small Business Refiner
A small business refiner generally is a refiner of crude oil with an
average daily domestic refinery run or average retained
production for all facilities that did not exceed 205,000 barrels
for the 1-year period ending on December 31, 2002. To figure
the average daily domestic refinery run or retained production,
only include refineries that were refineries of the refiner or a
related person (within the meaning of section 613A(d)(3)) on
April 1, 2003. However, a refiner is not a small business refiner
for a tax year if more than 1,500 individuals are engaged in the
refinery operations of the business on any day during the tax
year.

For Paperwork Reduction Act Notice, see instructions.

• December 31, 2009.
Qualified costs include costs for the construction of new
process operation units or the dismantling and reconstruction
of existing process units to be used in the production of low
sulfur diesel fuel, associated adjacent or offsite equipment
(including tankage, catalyst, and power supply), engineering,
construction period interest, and site work.
In addition, the small business refiner must obtain certification
from the IRS (which will consult with the EPA) that the
taxpayer’s qualified costs will result in compliance with the
applicable EPA regulations. This certification must be obtained
not later than June 29, 2008, or, if later, the date that is 30
months after the first day of the first tax year in which the credit
is determined. For details, see Rev. Proc. 2007-69, 2007-49
I.R.B. 1137, available at
www.irs.gov/irb/2007-49_IRB#RP-2007-69.

TIP

Unless you elect not to take this credit, your
deductions will be reduced by the amount of your
credit. For details, see section 280C(d).

Additional Information
For more information, see section 45H.

Specific Instructions
Use lines 1 through 6 to figure any low sulfur diesel fuel
production credit from your own trade or business.

Line 1
Enter the number of gallons of diesel fuel produced with a sulfur
content of 15 parts per million or less.

Cat. No. 37704F

Form

8896 (Rev. 12-2019)

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Form 8896 (Rev. 12-2019)

Line 3
Enter 25% of the qualified costs (defined earlier) for the facility
that produced the fuel reported on line 1 if your average daily
domestic refinery runs were not more than 155,000 barrels for
the 1-year period ending on December 31, 2002. If your average
daily domestic refinery runs were more than 155,000 barrels, the
25% is reduced (but not below zero) by multiplying it by 1 minus
your excess over 155,000 barrels divided by 50,000 barrels.
Example. Your average daily domestic refinery runs were
165,000 barrels for the 1-year period ending on December 31,
2002. First divide 10,000 (your excess over 155,000 barrels) by
50,000 to get 0.2. Next subtract 0.2 from 1.0 to get 0.8. Then
multiply 25% (0.25) by 0.8 to get 20% (0.20). On line 3, enter
20% of the qualified costs for the facility that produced the fuel
reported on line 1.

Line 4
Enter the total low sulfur diesel fuel production credits allowed
for all prior tax years (as determined for line 6).

Line 7
Enter total low sulfur diesel fuel production credits from:
• Schedule K-1 (Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., box 15 (code P);
• Schedule K-1 (Form 1120-S), Shareholder’s Share of Income,
Deductions, Credits, etc., box 13 (code P); and
• Form 1099-PATR, Taxable Distributions Received From
Cooperatives, box 12 (box 11 for 2019; box 10 before 2019), or
other notice of credit allocation.
Partnerships, S corporations, and cooperatives report the
above credits on line 7. All other filers figuring a separate credit
on earlier lines also report the above credits on line 7. All others
not using earlier lines to figure a separate credit can report the
above credits directly on Form 3800, Part III, line 1m.

The cooperative is deemed to have made the election by
completing line 9. However, the election is not effective unless:
• It is made on a timely filed return (including extensions), and
• The cooperative designates the apportionment in a written
notice or on Form 1099-PATR mailed to its patrons during the
payment period described in section 1382(d).
If you timely file your return without making an election, you
can still make the election by filing an amended return within 6
months of the due date of the return (excluding extensions).
Write “Filed pursuant to section 301.9100-2” on the amended
return.
Once made, the election cannot be revoked.
Paperwork Reduction Act Notice. We ask for the information
on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it
to ensure that you are complying with these laws and to allow
us to figure and collect the right amount of tax.
You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or
records relating to a form or its instructions must be retained as
long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for individual and business taxpayers filing this form is approved
under OMB control number 1545-0074 and 1545-0123 and is
included in the estimates shown in the instructions for their
individual and business income tax return. The estimated
burden for all other taxpayers who file this form is shown below.
Recordkeeping

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Line 9

Learning about the law or the form .

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Cooperative election to allocate credit to patrons. A
cooperative described in section 1381(a) can elect to allocate
any part of the low sulfur diesel fuel production credit to patrons
of the cooperative. The credit is allocated among the patrons
eligible to share in patronage dividends on the basis of the
quantity or value of business done with or for the patrons for the
tax year.

Preparing and sending the form to the IRS .

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If the cooperative is subject to the passive activity rules,
include on line 7 any Form 8896 credits from passive activities
disallowed for prior years and carried forward to this year.
Complete Form 8810, Corporate Passive Activity Loss and
Credit Limitations, to determine the allowed credits that can be
allocated to patrons. For details, see the Instructions for Form
8810.

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. 2 hr., 52 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would
be happy to hear from you. See the instructions for the tax
return with which this form is filed.