Form 8896 Low Sulfur Diesel Fuel Production Credit

8896

Low Sulfur Diesel Fuel Production Credit

Form
(Rev. January 2008)

©

OMB No. 1545-1914

Attach to your tax return.

Attachment
Sequence No.

Department of the Treasury
Internal Revenue Service

Name(s) shown on return

1
2
3
4
5
6
7

Low sulfur diesel fuel produced (in gallons)
Multiply line 1 by $.05
Qualified costs limitation (see instructions)
Total low sulfur diesel fuel production credits allowed for all prior tax years
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

1
2
3
4
5
6
7

8

Add lines 6 and 7. Cooperatives go to line 9; partnerships and S corporations, report this amount
on Schedule K; all others, report this amount on the applicable line of Form 3800 (e.g., line 1n
of the 2007 Form 3800)
Amount allocated to the patrons of the cooperative
Subtract line 9 from line 8. Report this amount on the applicable line of Form 3800 (e.g., line 1n
of the 2007 Form 3800)

8
9

9
10

General Instructions
Section references are to the Internal
Revenue Code.

What’s New
● Rev. Proc. 2007-69 provides guidance
on obtaining the required certification. See
Qualified Costs.
● The Tax Technical Corrections Act of
2007 clarified the adjustment required
when you deduct qualified costs under
section 179B and also claim this credit in
tax years ending after December 31, 2002.
See TIP on this page.

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.
Taxpayers that are not partnerships, S
corporations, or cooperatives, 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 Form
3800.

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

142

Identifying number

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.

Qualified Costs
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:
● The date 1 year after the date on which
the refiner must comply with these EPA
requirements with respect to such facility
or
● 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 (available in I.R.B. 2007-49
at www.irs.gov/irb).

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 37704F

TIP

10

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.

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 among
the patrons of the cooperative. To make
the election, attach a statement to the
effect that the cooperative elects to
allocate the credit 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.
The election is not effective unless:
● Made on a timely filed return (including
extensions). However, if the cooperative
made an election on a tax return for a tax
year ending after December 31, 2002, and
filed before June 15, 2006, but failed to
attach the required statement, the
cooperative may attach that statement to
the first federal income tax return it files
after June 14, 2006.

● The cooperative designates the
apportionment in a written notice mailed
to its patrons during the payment period
described in section 1382(d).

Form

8896

(Rev. 1-2008)

Form 8896 (Rev. 1-2008)

If you timely file your return without
making an election, you can still make
the election by filing an amended return
with the statement 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.

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

Line 3
On line 3, enter 25% of the qualified
costs (defined above) 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.

Page

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 .2. Next subtract .2 from 1 to get
.8. Then multiply 25% by .8 to get 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).
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

2

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, 6 hr., 13 min.;
Learning about the law or the form, 45
min.;
Preparing and sending the form to the
IRS, 2 hr., 5 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.