Renewable Electricity Producation Credit

2010 Instructions for Form 8835, Renewable Electricity, Refined Coal,
and Indian Coal Production Credit
Purpose: This is the first circulated draft of the 2010 Instructions for Form 8835 for
your review and comments. See below for a discussion on the major changes.
TPCC Meeting: None, but one may be arranged if requested.
Prior Version: The 2009 Instructions for Form 8835 is available at:
http://www.irs.gov/pub/irs-pdf/f8835.pdf.
Form: The 2010 Form 8835 was circulated earlier at:
http://linprod1.publish.no.irs.gov/tfpcirc/circ/2010/circ_10f8835_20100707130736.pdf.
Other Products: Circulations of draft tax forms, instructions, notices, and publications
are posted at: http://taxforms.web.irs.gov/Circulations/index.htm.
Comments: Please email, call, or mail any comments by September 24, 2010.
Comments submitted by telephone must be followed up in writing to be considered.
Send a copy of any email comments to the form’s reviewer, Sharon A. Dewsbury, at
[email protected].
Emile R. Beausejour
Tax Forms and Publications
SE:W:CAR:MP:T:B:C
Email: [email protected]
Phone: 202-622-8003

Major Changes to the 2010 Instructions for Form 8835
¾ We updated tax years and dates where appropriate.
¾ We updated page references where appropriate.
¾ We separated the instructions from the form.
Page 1
First Column
We added section titled What’s New which notifies the reader that lines 13 and 14 have
been redesigned. The redesigned lines 13 and 14 are based on an analysis and impact
of numerous expiring tax provisions was made by the Office of Research, Analysis, and
Statistics and the Joint Committee on Taxation.
Second Column
• In the fourth bullet under the section titled How To Figure the Credit (began in the first
column), the phrase “section 45(e)(8)(A)” now reads “section 45(e)(8)(D).” This is

based the discussion pertaining to base credit rate for steel industry fuel is discussed
in subparagraph (D) of Code section 45(e)(8).
• Under the section titled Note, the following changes are made.
o The phrase “steel industry fuel” was added immediately after “refined coal.”
o The credit rate for electricity of “2.1 cents per kWh” now reads “2.2 cents per
kWh.”
o The credit rate for refined coal of “$6.20 per ton” now reads “$6.27 per ton.”
o We added the credit rate of “$2.87 per ton” for steel industry fuel.
o The credit rate for Indian coal of “$1.625 per ton” now reads “$2.20 per ton.”
These changes are based on Notice 2010-37.
• In the paragraph that begins with “Refined coal,” we added a second sentence
concerning Notice 2009-90, Production Tax Credit for Refined Coal. This notice
provides interim guidance for the tax credit for refined coal under Code section 45.
Page 2
First Column
In the twelfth bullet item under the section titled Part II, we added a second sentence
concerning Notice 2009-90. The notice provides additional information on refined coal
facilities and modifications to those facilities.
Second Column
• We deleted the section that begins with the phrase “Credit period is” and the seven
bullet items that followed and replaced these items with a table. This change is made to
provide an easy to read overview for each eligible electricity production activity.
• In the second sentence under the section titled Who Can Take the Credit, the phrase
“or both, and open-loop biomass facilities” now reads “or both, open-loop biomass
facilities, and refined coal facilities.” This change is made for clarification purposes.
Page 3
First Column
• Under the section titled Line 1 and Line 13, the following changes are made.
o In the first sentence, we inserted the phrase “the applicable” after the phrase “of
electricity produced at.” This change is made for clarification purposes.
o In the first sentence, the amount of “$.021” now reads “$.022.” This is based on
Notice 2010-37.
o We deleted the second paragraph as it is no longer required.
• In the section titled Line 14, the following changes are made.
o We inserted the phrase “the applicable” after the phrase “electricity produced and
sold at.” This change is made for clarification purposes.
o We inserted “year” after the word “Fiscal” at the beginning of the second sentence.
This change is made for clarification purposes.
• In the section titled Line 18, the following changes are made.
o In the first sentence, the amount of “$6.20” now reads “$6.27.” This is based on
Notice 2010-37.
o We inserted “year” after the word “Fiscal” at the beginning of the second sentence.
This change is made for clarification purposes.

• Under the section titled Line 21, the amount of “$2.00” now reads “$2.87.” This is
based on Notice 2010-37.
• Under the section titled Line 22, the amount of “$1.625” now reads “$2.20.” This is
based on Notice 2010-37.
• Under the section titled Line 10 and Line 30, the following changes are made.
o In the first sentence, the phrase “I.R.B. 967, for” now reads “I.R.B. 967, as
modified by Announcement 2009-68, 2009-40 I.R.B. 475, for.”
o The end of the second sentence now reads “and Announcement 2009-69 is
available at www.irs.gov/irb/2009-40_IRB/ar16.html.”
Announcement 2009-69 modifies Revenue Procedure 2007-65 and needed to be
added to provide all reference material needed for this section of the instructions.

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Page 1 of 4 Instructions for Form 8835

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2010

Instructions for Form 8835

Department of the Treasury
Internal Revenue Service

Renewable Electricity, Refined Coal, and Indian Coal Production Credit
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New
Lines 13 and 14 have been redesigned to list each qualified
facility on its own line. See Line 1 and Line 13 and Line 14 for
more details.

General Instructions
Purpose of Form
Use Form 8835 to claim the renewable electricity, refined coal,
and Indian coal production credit. The credit is allowed only for
the sale of electricity, refined coal, or Indian coal produced in
the United States or U.S. possessions from qualified energy
resources at a qualified facility (see Definitions below).
Generally, if you are a taxpayer that is not a partnership or S
corporation, and your only source of this credit is from a
partnership, S corporation, estate, trust, or cooperative, you are
not required to complete Part I of this form. Instead, you can
report this credit directly on line 1f of Form 3800. The following
exceptions apply.
• You are an estate or trust and the source credit can be
allocated to beneficiaries. For more details, see the Instructions
for Form 1041, Schedule K-1, box 13.
• You are a cooperative and the source credit can or must be
allocated to patrons. For more details, see the Instructions for
Form 1120-C, Schedule J, line 5c.

Election To Treat a Qualified Facility as Energy
Property
Section 48(a)(5) provides an irrevocable election to treat
qualified property (described in section 48(a)(5)(D)) that is part
of a qualified investment credit facility (described in section
48(a)(5)(C)) as energy property eligible for the investment credit
(reported on Form 3468, Investment Credit) in lieu of a
production credit reportable on this form. This election applies
to a facility placed in service after December 31, 2008, and
before January 1, 2014, (before January 1, 2013 for a wind
facility). See Notice 2009-52 and Form 3468, for information on
making the election. Notice 2009-52 is available at
www.irs.gov/irb/2009-25_IRB/ar09.html.

Coordination with Department of Treasury
Grants
If a grant is paid under the American Recovery and
Reinvestment Act of 2009 (the Act), section 1603, for placing
into service specified energy property (described in Act section
1603(d)), no production credit under section 45, or investment
credit under section 48, is allowed for the property for the
current tax year or any subsequent tax year. See section 48(d)
for more information.

How To Figure the Credit
Generally, the credit for electricity, refined coal, and Indian coal
produced from qualified energy resources at a qualified facility
during the credit period (see Definitions below) is:
• 1.5 cents per kilowatt-hour (kWh) for the sale of electricity
produced by the taxpayer;

• 1/2 of 1.5 cents for open-loop biomass, small irrigation,

landfill gas, trash, hydropower, and marine and hydrokinetic
renewable facilities;
• $4.375 per ton for the sale of refined coal produced, see
section 45(e)(8)(A);
• $2 per barrel-of-oil equivalent for the sale of steel industry
fuel, see section 45(e)(8)(D); or
• $1.50 per ton for the sale of Indian coal produced.
The credit for electricity produced is proportionately phased
out over a 3-cent range when the reference price exceeds the
8-cent threshold price. The refined coal credit is proportionately
phased out over an $8.75 range when the reference price of
fuel used as feedstock exceeds 1.7 times the 2002 reference
price. The 1.5-cent credit rate, the 8-cent threshold price, the
$4.375 refined coal rate, the reference price of fuel used as a
feedstock, the $2 steel industry fuel rate, and the $1.50 Indian
coal rate are adjusted for inflation. The reference price and the
inflation adjustment factor (IAF) for each calendar year are
published during the year in the Federal Register. If the
reference price is less than the threshold price (adjusted by the
IAF), there is no reduction. For electricity produced, if the
reference price is more than 3 cents over the adjusted threshold
price, there is no credit; if the reference price is more than the
threshold price, but not more than 3 cents over the adjusted
threshold price, there is a phaseout adjustment on line 2 or line
16. For refined coal produced, if the reference price is more
than $8.75 over the adjusted threshold price, there is no credit;
if the reference price is more than the threshold price, but not
more than $8.75 over the adjusted threshold price, there is a
phaseout adjustment on line 19.
Note. For calendar year 2010, the effective credit rate for
electricity, refined coal, steel industry fuel, and Indian coal
produced and sold is, respectively, 2.2 cents per kWh, $6.27
per ton, $2.87 per ton, and $2.20 per ton; there is no phaseout
adjustment.
Example. If the reference price of electricity is 10.0¢ and
the adjusted threshold price is 9.0¢, reduce the credit by 1/3
((10.0¢ – 9.0¢) ÷ 3¢ = .3333). Enter the line 1 credit in the first
entry space on line 2, .3333 in the second entry space, and
multiply to figure the reduction.

Definitions
Resources means wind, closed-loop biomass, poultry waste,
open-loop biomass, geothermal energy, solar energy, small
irrigation power, municipal solid waste, hydropower production,
marine and hydrokinetic renewables, refined coal, and Indian
coal.
Closed-loop biomass is any organic material from a plant
that is planted exclusively for use at a qualified facility to
produce electricity.
Poultry waste is poultry manure and litter, including wood
shavings, straw, rice hulls, and other bedding material for the
disposition of manure.
Open-loop biomass is solid, nonhazardous, cellulosic
waste material; lignin material; or agricultural livestock waste
nutrients as defined in section 45(c)(3). See Notice 2008-60,
2008-30 I.R.B. 178, for rules related to open-loop biomass,
including an expanded definition of a qualified facility and rules
related to sales.
Geothermal energy is energy derived from a geothermal
deposit as defined by section 613(e)(2).
Small irrigation power is power generated without any dam
or impoundment of water. See section 45(c)(5).

Cat. No. 55349M

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• Small irrigation power facility placed in service after October

Municipal solid waste is solid waste as defined under
paragraph 27 of 42 U.S.C. 6903.
Refined coal is (1) a liquid, gaseous, or solid fuel produced
from coal or high carbon fly ash meeting the requirements of
section 45(c)(7), or (2) steel industry fuel (defined below). See
Notice 2009-90 for additional information on refined coal
facilities. Notice 2009-90 is available at
www.irs.gov/irb/2009-51_IRB/ar09.html.
Steel industry fuel is a fuel that is produced through a
process of liquifying coal waste sludge (as defined by section
45(c)(7)(C)(ii)) and distributing it on coal and is used as a
feedstock for the manufacture of coke.
Hydropower production means the incremental
hydropower production for the tax year from any hydroelectric
dam placed in service on or before August 8, 2005, and the
hydropower production from any nonhydroelectric dam
described in section 45(c)(8)(C).
Marine and hydrokinetic renewable energy means energy
derived from waves, tides, and currents in oceans, estuaries,
and tidal areas; free flowing water in rivers, lakes, and streams;
free flowing water in an irrigation system, canal, or other
man-made channel, including projects that utilize
nonmechanical structures to accelerate the flow of water for
electric power production purposes; or differentials in ocean
temperature (ocean thermal energy conversion). See section
45(c)(10)(B) for exceptions.
Indian coal means coal which is produced from coal
reserves which on June 14, 2005, were owned by an Indian
tribe or held in trust by the United States for the benefit of an
Indian tribe or its members.
Qualified facility is any of the following facilities owned by
the taxpayer and used to produce electricity or, in the case of
coal production facilities, refined and Indian coal. The facilities
are shown by form section.

22, 2004, and before October 3, 2008.
• Landfill gas or trash facility using municipal solid waste
placed in service after October 22, 2004, and before January 1,
2014.
• A refined coal production facility originally placed in service
after October 22, 2004, and before January 1, 2010, or a facility
producing steel industry fuel (or any modification to such a
facility) placed in service before January 1, 2010. See Notice
2009-90 for more information on refined coal facilities and
modifications to those facilities.
• Hydropower facility producing incremental hydroelectric
production attributable to efficiency improvements or additions
to capacity described in section 45(c)(8)(B) placed in service
after August 8, 2005, and before January 1, 2014, and any
other facility producing qualified hydroelectric production
described in section 45(c)(8) placed in service after August 8,
2005, and before January 1, 2014.
• Indian coal production facility placed in service before
January 1, 2009.
• Marine and hydrokinetic renewable energy facility placed in
service after October 2, 2008, and before January 1, 2014.
A qualified facility does not include a refined coal production
facility or landfill gas facility using municipal solid waste to
produce electricity, if the production from that facility is allowed
as a credit under section 45K. This does not apply to a refined
coal facility producing steel industry fuel.

Credit Period.

Part I
• Poultry waste facility placed in service after December 31,

Eligible electricity
production activity:

1999, and before January 1, 2005.
• Wind facility placed in service after December 31, 1993, and
before October 23, 2004.
• Closed-loop biomass facility placed in service after
December 31, 1992, and before October 23, 2004.

Part II
• Wind facility placed in service after October 22, 2004, and

before January 1, 2013. This does not include any facility for
which any qualified small wind energy property expenditure (as
defined in section 25D(d)(4)) is used in determining the
residential energy efficient property credit.
• Closed-loop biomass facility placed in service after October
22, 2004, and before January 1, 2014.
• Closed-loop biomass facility modified to co-fire with coal or
other biomass (or both), placed in service before January 1,
2014. See section 45(d)(2).
• Closed-loop biomass facility that is a new unit placed in
service after October 3, 2008, in connection with a facility
described in section 45(d)(2)(A)(i), but only to the extent of the
increased amount of electricity produced at the facility by
reason of the new unit.
• Open-loop biomass facility using cellulosic waste placed in
service before January 1, 2014.
• Open-loop biomass facility using agricultural livestock waste
placed in service after October 22, 2004, and before January 1,
2014, and the nameplate capacity rating is not less than 150
kilowatts.
• Open-loop biomass facility that is a new unit placed in service
after October 3, 2008, in connection with a facility described in
section 45(d)(3)(A), but only to the extent of the increased
amount of electricity produced at the facility by reason of the
new unit.
• Geothermal energy facility placed in service after October 22,
2004, and before January 1, 2014.
• Solar energy facility placed in service after October 22, 2004,
and before January 1, 2006.

Credit period for
facilities placed in
service before
August 9, 2005
(years from
placed-in-service
date):

Credit period for
facilities placed in
service after August
8, 2005 (years from
placed-in-service
date):

Wind

10

10

Closed-loop biomass

10

10

Open-loop biomass
(including agricultural
livestock waste
nutrient facilities)

51

10

Geothermal

5

10

Solar (pre-2006
facilities only)

5

10

Small irrigation power

5

10

Municipal solid waste
(including landfill gas
facilities and trash
combustion facilities)

5

10

Qualified hydropower

N/A

10

Marine and
hydrokinetic

N/A

10

Indian coal

N/A

7

Refined coal

10

10

Steel industry fuel

N/A

1

The 5-year credit period for qualified open-loop biomass facilities (other than a
facility described in section 45(d)(3)(A)(i) that uses agricultural livestock waste
nutrients) placed in service before October 22, 2004, begins on January 1,
2005.
1

United States and U.S. possessions include the seabed
and subsoil of those submarine areas that are adjacent to the
territorial waters over which the United States has exclusive
rights according to international law.

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• Proceeds of a tax-exempt issue of state or local government

Who Can Take the Credit

obligations used to provide financing for the project;
• Total of subsidized energy financing provided directly or
indirectly under a federal, state, or local program provided for
the project; and
• The amount of any federal tax credit allowable for any
property that is part of the project.

Generally, the owner of the facility is allowed the credit. In the
case of closed-loop biomass facilities modified to co-fire with
coal, other biomass, or both, open-loop biomass facilities, and
refined coal facilities, if the owner is not the producer of the
electricity, the lessee or the operator of the facility is eligible for
the credit.

Specific Instructions for Part I and Part II

Line 10 and Line 30

Figure any renewable electricity, refined coal, and Indian coal
production credit from your trade or business on lines 1 through
8 or lines 13 through 28. Skip lines 1 through 8 or lines 13
through 28 if you are only claiming a credit that was allocated to
you from an S corporation, partnership, cooperative, estate, or
trust.

Partnerships that own and produce electricity from qualified
wind facilities should see Rev. Proc. 2007-65, 2007-45 I.R.B.
967, as modified by Announcement 2009-69, 2009-40 I.R.B.
475, for information on how to allocate the credit. Rev. Proc.
2007-65 is available at www.irs.gov/irb/2007-45_IRB/ar18.html
and Announcement 2009-69 is available at
www.irs.gov/irb/2009-40_IRB/ar16.html.

Fiscal year taxpayers. If you have sales in 2010 and 2011
and the credit rate on lines 1, 13, 14, 18, 21, or 22 (or the
phaseout adjustment on lines 2, 16, or 19) is different for 2011,
make separate computations for each line. Use the respective
sales, credit rate, and phaseout adjustment for each calendar
year. Enter the total of the two computations on the credit rate
line(s) (lines 1, 13, 14, 18, 21, or 22) or the phaseout
adjustment line(s) (lines 2, 16, or 19). Attach the computations
to Form 8835 and write “FY” in the margin.

Line 31
Enter the amount included on line 30 that is from a passive
activity. Generally, a passive activity is a trade or business in
which you did not materially participate. Rental activities are
generally considered passive activities, whether or not you
materially participate. For details, see Form 8582-CR, Passive
Activity Credit Limitations (for individuals, trusts, and estates),
or Form 8810, Corporate Passive Activity Loss and Credit
Limitations (for corporations).

Line 1 and Line 13
Enter the kilowatt-hours of electricity produced at the applicable
qualified facilities and multiply by $.022. Fiscal year filers with
2011 sales may have to refigure lines 1 and 13 as explained
under Fiscal year taxpayers above.

Line 33
Enter the passive activity credit allowed for the 2010 renewable
electricity, refined coal, and Indian coal production credit from
Form 8582-CR or Form 8810.

Line 14
Enter the kilowatt-hours of electricity produced and sold at the
applicable qualified facilities and multiply by $.011. Fiscal year
filers with 2011 sales must figure line 14 as explained under
Fiscal year taxpayers above.

Line 35
Use only if you amend your 2010 return to carry back an
unused renewable electricity, refined coal, and Indian coal
production credit from 2011.

Line 2 and Line 16
Calendar year filers enter zero on line 2 or line 16. Fiscal year
filers with sales in 2011 also enter zero if the published 2011
reference price is equal to or less than the 2011 adjusted
threshold price. See How To Figure the Credit on page 1 to
figure the adjustment.

Line 11 and Line 37
Cooperative election to allocate credit to patrons. A
cooperative described in section 1381(a) can elect to allocate
any part of the renewable electricity, refined coal, and Indian
coal production 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.

Line 18
Enter the tons of refined coal (other than steel industry fuel)
produced and sold during 2010 from a qualified refined coal
production facility and multiply by $6.27. Fiscal year filers with
2011 sales must figure line 18 as explained under Fiscal year
taxpayers above.

The cooperative is deemed to have made the election by
completing line 11 or line 37, as applicable. 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).

Line 19
Calendar year filers enter zero on line 19. Fiscal year filers with
sales in 2011 also enter zero if the published 2011 reference
price is equal to or less than 1.7 times the 2002 reference price.
See How To Figure the Credit on page 1 to figure the
adjustment.

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.

Line 21
Enter the barrel-of-oil equivalents of steel industry fuel
produced and sold from a qualified refined coal facility and
multiply by $2.87.

Line 22

Once made, the election cannot be revoked.

Enter the tons of Indian coal produced and sold from a qualified
Indian coal facility and multiply by $2.20.

Estates and trusts. Allocate the credit on line 10 or line 36
between the estate or trust and the beneficiaries in the same
proportion as income was allocated and enter the beneficiaries’
share on line 11 or line 37.

Line 4 and Line 24
Enter the sum, for this and all prior tax years, of:
• Grants provided by the United States, a state, or political
subdivision of a state for the project;

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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.

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

Recordkeeping . . . . . . . . . . . . . . . .
Learning about the law or the form . .
Preparing, copying, assembling, and
sending the form to the IRS . . . . . . .

XX hr., XX min.
X hr., X min.
X hr., XX 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.

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