Summary of Changes

2006 Form 8820, Orphan Drug Credit (Rev. Dec. 2006)
Circulation: This is the first circulated draft of the 2006 Form 8820 (Rev. Dec. 2006) for your
review and comments. See below for a discussion of the major changes.
TPCC Meeting: None, but one may be arranged if requested.
Prior version: The 2005 Form 8820 is available at: http://www.irs.gov/pub/irs-pdf/f8820.pdf
Other Products: Circulations of draft tax forms, instructions, notices, and publications are
posted at:http://taxforms.web.irs.gov/draft_products.html
Comments: Please email, fax, call, or mail any comments by June 23, 2006.
Mike Cyrus
Tax Forms and Publications
SE:W:CAR:MP:T:B:P
Email: [email protected]
Phone: 202-927-9545
Fax: 202-622-3262

Major Changes
On the Form[1] The text “Rev. December 2006” is added under the form number in the upper left
corner because the form was converted from annual use to continuous use. Accordingly,
the text “2005” was eliminated from the upper right corner and the bottom right corner
(replaced with the text “Rev. 12-2006” in the bottom right corner).
[2] The Part I and Part II headings are eliminated because the function of the old Part II
(to compute the allowable credit) is now on Form 3800. Since there is no longer a Part II,
a Part I designation is unnecessary.
[3] Line 3 is rewritten to eliminate the text “pass-through.”
[4] Line 4 is rewritten. The text “Current year credit” is removed. Estates and trusts are
now directed to line 5 so that an allocation to beneficiaries can be shown. Now
partnerships and S corporations are directed to report the amount on Schedule K. All
others are directed to line 1k of the 2006 Form 3800 (as an example since this will now
be a continuous use form, revised only when necessary).
[5] Lines 5 and 6 are added to allow estates and trusts to show allocations to beneficiaries
and figure the resulting amount to show on Form 3800.
In the Instructions[1] A What’s New section is added with the following bulleted items.
• The tax liability limit is no longer figured on this form; instead, it must be figured
on Form 3800, General Business Credit.

•

•

Taxpayers that are not partnerships, S corporations, cooperatives, estates, trusts,
or members of a controlled group, and whose only source of this credit is
from those pass-through entities, are not required to complete or file this
form. Instead, they can report this credit directly on line 1k of Form 3800.
The IRS will revise this December 2006 version of the form only when
necessary. Continue to use this version for tax years beginning after 2005 until a
new revision is issued.

[2] The Who Must File section is removed as it is unnecessary.
[3] In the first paragraph, under Specific Instructions the text “Skip lines 1 and 2 if you
are only claiming a credit that was allocated to you from an S corporation or partnership”
is removed as it is unnecessary.
[4] The instructions for line 3 are removed because new lines 5 and 6 on the form (in
conjunction with Schedules K) now explain the allocation of the credit to beneficiaries,
partners, and shareholders.
[4] The instructions for S corporations, partnerships, and electing large partnerships, in
the second paragraph under Specific Instructions, are eliminated as the information is
now shown on Schedules K.
[4] All of the Part II instructions are removed to conform to the removal of the Part II on
the form. Accordingly, the Part I heading is removed.