Form 8864 Biodiesel and Renewable Diesel Fuels Credit

Form

8864

OMB No. 1545-1924

Biodiesel and Renewable Diesel Fuels Credit
©

Department of the Treasury
Internal Revenue Service

2007

Attach to your tax return.

Attachment
Sequence No.

141

Identifying number

Name(s) shown on return

Caution:

You cannot claim any amounts on Form 8864 that you claimed (or will claim) on Schedule C (Form 720), Form 8849,
or Form 4136.
Claimant has a certificate from the producer or importer of biodiesel or renewable diesel reported on lines 1 through 6 below and, if
applicable, claimant also has a statement from the reseller. Claimant has no reason to believe that the information in the certificate or
statement is false. Claimant may need to attach a copy of the certificate and statement. See Certification below.
(a)
Number of Gallons
Sold or Used

Type of Fuel

1

$ .50

2
3

$1.00
$1.00

1
2
3

Biodiesel (other than agri-biodiesel)
Agri-biodiesel
Renewable diesel

4

Biodiesel (other than agri-biodiesel) included in a biodiesel
4
mixture
5
Agri-biodiesel included in a biodiesel mixture
6
Renewable diesel included in a renewable diesel mixture
7
Qualified agri-biodiesel production (gallons sold)
Add lines 1 through 7. Include this amount in your income for 2007 (see instructions)

5
6
7
8
9
10
11
12

(b)
Rate

$ .50
$1.00
$1.00
$ .10

Biodiesel and renewable diesel fuels credit from partnerships, S corporations, cooperatives,
estates, and trusts
Add lines 8 and 9. Cooperatives, estates, and trusts, go to line 11; partnerships and S corporations,
report this amount on Schedule K; all others, report this amount on Form 3800, line 1m
Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust
Cooperatives, estates, and trusts. Subtract line 11 from line 10. Report this amount on Form 3800,
line 1m

General Instructions
Section references are to the Internal Revenue Code.

Purpose of Form
Use Form 8864 to figure your biodiesel and renewable
diesel fuels credit. Claim the credit for the tax year in
which the sale or use occurs. This credit consists of the:
● Biodiesel credit,
● Renewable diesel credit,
● Biodiesel mixture credit,
● Renewable diesel mixture credit, and
● Small agri-biodiesel producer credit.

Definitions and Special Rules
Certification
To claim a credit on lines 1 through 6, you generally
must attach the Certificate for Biodiesel and, if
applicable, Statement of Biodiesel Reseller, to Form
8864. To claim a credit on lines 3 or 6, the certificate
must indicate at all appropriate locations that the fuel
to which it relates is renewable diesel and state that
the fuel meets the requirements discussed under
Renewable Diesel on page 2. However, if the certificate
or statement was attached to a previously filed claim,
attach a separate sheet with the following information.

For Paperwork Reduction Act Notice, see instructions.

(c)
Column (a) x Column (b)

8
9
10
11
12

● Certificate identification number.
● Total gallons of agri-biodiesel, biodiesel other than
agri-biodiesel, or renewable diesel on the certificate.
● Total gallons claimed on Schedule 3 (Form 8849).
● Total gallons claimed on Schedule C (Form 720).
● Total gallons claimed on Form 4136.
See Notice 2005-62 on page 443 of Internal Revenue
Bulletin 2005-35 or Pub. 510, Excise Taxes, for the
model certificate and statement.
Biodiesel
Biodiesel means the monoalkyl esters of long chain
fatty acids derived from plant or animal matter which
meet the registration requirements for fuels and fuel
additives established by the Environmental Protection
Agency (EPA) under section 211 of the Clean Air Act,
and the requirements of the American Society of
Testing and Materials (ASTM) D6751.
Biodiesel includes both agri-biodiesel and biodiesel
other than agri-biodiesel.
Agri-Biodiesel
Agri-biodiesel means biodiesel derived solely from
virgin oils, including esters derived from virgin
vegetable oils from corn, soybeans, sunflower seeds,
cottonseeds, canola, crambe, rapeseeds, safflowers,
flaxseeds, rice bran, and mustard seeds, and from
animal fats.

Cat. No. 25778F

Form

8864

(2007)

Form 8864 (2007)

Renewable Diesel
Renewable diesel means diesel fuel derived from biomass
(defined below) using a thermal depolymerization process
which meets the registration requirements for fuels and
fuel additives established by the EPA under section 211
of the Clean Air Act, and the requirements of the ASTM
D975 or D396. Thermal depolymerization processes use
heat and pressure, with or without the presence of
catalysts. For details, see Notice 2007-37 on page 1002
of Internal Revenue Bulletin 2007-17.
Biomass. Biomass means any organic material other than
oil and natural gas (or any product thereof) and coal
(including lignite) or any product thereof.

Biodiesel and Renewable Diesel Credits
The biodiesel or renewable diesel reported on lines 1
through 3 must not be a mixture. The credits are for
biodiesel or renewable diesel which during the tax year
you:
● Used as a fuel in a trade or business, or
● Sold at retail to another person and put in the fuel tank
of that person’s vehicle.
However, no credit is allowed for fuel used in a trade or
business that was purchased in a retail sale described
above.
Caution: You may be liable for a 24.4 cents per gallon
excise tax on biodiesel or renewable diesel you sold (in
your trade or business) for use or used in a
diesel-powered highway vehicle or diesel-powered train.
Report the tax liability on Form 720 on the line for IRS No.
79 for the quarter in which the biodiesel was sold or used
or IRS No. 60(b) for the quarter in which the renewable
diesel was sold or used.

Biodiesel and Renewable Diesel Mixture Credits
The biodiesel or renewable diesel reported on lines 4
through 6 must be used to make a qualified mixture. A
qualified mixture combines biodiesel or renewable diesel
with diesel fuel (defined below), determined without
regard to any use of kerosene. The producer of the
mixture either:
● Used it as fuel, or
● Sold it as fuel to another person.
The credit is available only to the producer of the
mixture. The producer must use or sell the mixture in a
trade or business and the credit is available only for the
year the mixture is sold or used. The credit is not allowed
for casual off-farm production of a qualified mixture.
Caution: You may be liable for a 24.4 cents per gallon
excise tax on biodiesel or renewable diesel used to
produce blended taxable fuel outside the bulk transfer
terminal system if the mixture is diesel fuel. Report the tax
liability on Form 720 on the line for IRS No. 60(c) for the
quarter in which the mixture was sold or used.
Diesel fuel. Diesel fuel means:
● Any liquid that, without further processing or blending,
is suitable for use as a fuel in a diesel-powered highway
vehicle or diesel-powered train, and
● Transmix.

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2

A liquid is suitable for this use if the liquid has practical
and commercial fitness for use in the propulsion engine of
a diesel-powered highway vehicle or diesel-powered train.
A liquid may possess this practical and commercial fitness
even though the specified use is not the liquid’s
predominant use. However, a liquid does not possess this
practical and commercial fitness solely by reason of its
possible or rare use as a fuel in the propulsion engine of a
diesel-powered highway vehicle or diesel-powered train.
Diesel fuel does not include gasoline, kerosene, excluded
liquid, No. 5 and No. 6 fuel oils covered by ASTM
specification D396, or F-76 (Fuel Naval Distillate) covered
by military specification MIL-F-16884.
An excluded liquid is any liquid that (a) contains less
than 4% normal paraffins, or (b) has a (i) distillation range
of 125°F or less, (ii) sulfur content of 10 parts per million
or less, and (iii) minimum color of +27 Saybolt. For
example, biodiesel is always an excluded liquid because it
does not contain paraffins. But a biodiesel mixture may
not be an excluded liquid.
Transmix means a by-product of refined products
created by the mixing of different specification products
during pipeline transportation.

Qualified Agri-Biodiesel Production
Qualified agri-biodiesel production means up to 15 million
gallons of agri-biodiesel which is produced by an eligible
small agri-biodiesel producer (defined below), and which
during the tax year:
1. Is sold by such producer to another person:
a. For use by such person in the production of a
qualified biodiesel mixture in such other person’s trade or
business (other than casual off-farm production),
b. For use by such person as a fuel in a trade or
business, or
c. Who sells such agri-biodiesel at retail to another
person and places such agri-biodiesel in the fuel tank of
such other person, or
2. Is used or sold by such producer for any purpose
described in (1).
Note. Production of renewable diesel is not qualified
agri-biodiesel production.
Eligible small agri-biodiesel producer. An eligible small
agri-biodiesel producer is a person who, at all times
during the tax year, has a productive capacity for
agri-biodiesel not in excess of 60 million gallons.
Aggregation rule. All members of the same controlled
group of corporations (see section 267(f)) and all persons
under common control (see section 52(b) but treat an
interest of more than 50% as a controlling interest) are
treated as 1 person for purposes of the 15 and 60 million
gallon limits.
Partnership, S corporation, and other pass-through
entities. The 15 and 60 million gallon limits discussed
above are applied at both the entity level and at the
partner or similar level.

Registration
All producers and importers of biodiesel or renewable
diesel must be registered with the IRS. All persons
producing blended taxable fuel must be registered. See
Form 637, Application for Registration (For Certain Excise
Tax Activities).

Form 8864 (2007)

Coordination With Excise Tax Credit
Only one credit may be taken with respect to any
amount of biodiesel or renewable diesel. If any amount
is claimed (or will be claimed) with respect to any
amount of biodiesel or renewable diesel on Form 720,
Quarterly Federal Excise Tax Return, Form 8849, Claim
for Refund of Excise Taxes, or Form 4136, Credit for
Federal Tax Paid on Fuels, then a claim cannot be
made on Form 8864 for that amount of biodiesel or
renewable diesel.
Recapture of Credit
You must pay a tax on each gallon of biodiesel or
renewable diesel on which a credit was claimed at the
rate used to figure the credit if you:
● Use it (including a mixture) other than as a fuel,
● Buy it at retail and use it to create a mixture,
● Separate it from a mixture, or
● Use agri-biodiesel on which the small agri-biodiesel
producer credit was claimed for a use not described
under Qualified Agri-Biodiesel Production above.
Report the tax on Form 720, Quarterly Federal Excise
Tax Return.

Additional Information
See Pub. 510, Excise Taxes.

Specific Instructions
Use lines 1 through 8 to figure any biodiesel and
renewable diesel fuels credit from your own trade or
business.
Skip lines 1 through 8 if you are claiming only a
credit that was allocated to you from a pass-through
entity (that is, an S corporation, partnership, estate,
trust, or cooperative).
Line 8
Include this amount in income, under “other income”
on the applicable line of your income tax return, even if
you cannot use all of the credit because of the tax
liability limit. However, if you are subject to alternative
minimum tax (AMT), this amount is not income in
computing AMT and must be subtracted when figuring
your alternative minimum taxable income. Do this by
including this amount on line 26 of Form 6251, line 23
of Schedule I, Form 1041, or line 2o of Form 4626.
Line 9
If you are allocated a small agri-biodiesel producer
credit from a pass-through entity, the entity must tell
you the number of gallons for which it claimed the
credit and its productive capacity for agri-biodiesel.
You, as a shareholder, partner, beneficiary, or patron,
are subject to the 15 million gallon limitation for line 7
and the 60 million gallon productive capacity limitation
for an eligible small agri-biodiesel producer.
Line 11
A cooperative, estate, or trust allocating the small
agri-biodiesel credit must give the patron or beneficiary
a statement providing them with the number of gallons
for which it claimed the credit and its productive
capacity for agri-biodiesel. An estate or trust must also

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provide the amount of the small agri-biodiesel credit
included as part of the pass-through credit. See the
above instructions for line 9.
Cooperatives. A cooperative described in section
1381(a) can elect to allocate any part of the small
agri-biodiesel producer credit among the 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 such patrons for the tax year.
The cooperative is deemed to have made the
election by completing line 11. However, the election is
not effective unless (a) made on a timely filed return
(including extensions) and (b) the organization
designates the apportionment in a written notice
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). Enter “Filed pursuant to
section 301.9100-2” on the amended return.
Once made, the election cannot be revoked.
Estates and trusts. Allocate the biodiesel and
renewable diesel fuels credit on line 10 between the
estate or trust and the beneficiaries in the same
proportion as income was allocated and enter the
beneficiaries’ share on line 11.
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 taxpayers filing this
form is approved under OMB control number
1545-0074 and is included in the estimates shown in
the instructions for their individual income tax return.
The estimated burden for all other taxpayers who file
this form is shown below.
Recordkeeping
Learning about the
law or the form
Preparing and sending the form
to the IRS

8 hrs., 36 min.
57 min.
2 hrs., 20 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.