Renewable Electricity Producation Credit

2013

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.

Future Developments

For the latest information about developments related to
Form 8835 and its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form8835.

What's New

The American Taxpayer Relief Act of 2012 modified
section 45 to allow certain qualified facilities whose
construction begins before 2014 to claim the renewable
electricity production tax credit (PTC) or the energy
investment tax credit (ITC) under section 48, in lieu of the
PTC. Notice 2013-29 provides two methods that a
taxpayer may use to establish that the construction of a
qualified facility has begun before 2014. Notice 2013-60
clarifies Notice 2013-29.

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, later).

the construction of which begins before January 1, 2014
(see Construction of a Qualified facility, later);
No credit has been allowed under section 45 for that
facility; and
An irrevocable election was made to treat the facility as
energy property.
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 tax year in which the grant is made or
any subsequent tax year. See section 48(d) for more
information.
You may have to refigure the investment credit and
recapture all or a portion of it if a grant under section 1603
of the Act was made for section 48 property for which a
credit was allowed for progress expenditures before the
grant was made. Recapture is applicable to those
amounts previously included in the qualified basis for an
energy credit, including progress expenditures, that are
also the basis for the 1603 grant.

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 Form 3800,
Part III, line 1f. 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.

How To Figure the Credit

Election To Treat a Qualified Facility as Energy
Property

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, and the $2
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

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 that:
Is a qualified facility under section 45(d)(1), (2), (3), (4),
(6), (7), (9), or (11) that is placed in service after 2008 and

Nov 18, 2013

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,
later) 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; or
$2 per ton for the sale of Indian coal produced.

Cat. No. 55349M

Municipal solid waste is solid waste as defined under
paragraph 27 of 42 U.S.C. 6903. For electricity produced
and sold after January 2, 2013, in tax years ending after
January 2, 2013, municipal solid waste does not include
paper which is commonly recycled and which has been
segregated from other solid waste (as so defined).

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.

Refined coal is a liquid, gaseous, or solid fuel
produced from coal or high carbon fly ash meeting the
requirements of section 45(c)(7). See Notice 2010-54 for
additional information on refined coal facilities. Notice
2010-54 is available at
www.irs.gov/irb/2010-40_IRB/ar07.html.

Note. For calendar year 2013, the effective credit rate for
electricity, refined coal, and Indian coal produced and
sold is, respectively, 2.3 cents per kWh, $6.590 per ton,
and $2.308 per ton; there is no phaseout adjustment.

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).

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.

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.

Definitions
Construction of a Qualified Facility
Two methods can be used to establish that construction of
a qualified facility has begun. One method establishes the
beginning of construction by starting physical work of a
significant nature as described in section 4 of Notice
2013-29. Another method, establishes the beginning of
construction by meeting the safe harbor provided in
section 5 of Notice 2013-29. Although both methods can
be used, only one method is needed to establish that
construction of a qualified facility has begun.

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.

For more information, see Notice 2013-29, 2013-20
I.R.B. 1085, as clarified by Notice 2013-60, 2013-42 I.R.B.
431. Notice 2013-29 is available at
www.irs.gov/irb/2013-20_IRB/ar09.html, and Notice
2013-60 is available at
www.irs.gov/irb/2013-44_IRB/ar09.html.
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.

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.

Part I

Poultry waste facility placed in service after December
31, 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.

Closed-loop biomass is any organic material from a
plant that is planted exclusively for use at a qualified
facility to produce electricity.

Part II

Wind facility placed in service after October 22, 2004,
and the construction of which begins before January 1,
2014. 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 the construction of which begins
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. The facility will be treated as modified
before January 1, 2014, if the construction of the
modification begins before January 1, 2014. See section
45(d)(2).

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).
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Credit Period

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, the
construction of which begins before January 1, 2014.
Open-loop biomass facility using agricultural livestock
waste placed in service after October 22, 2004, and the
construction of which begins 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 the construction of which begins
before January 1, 2014. The facility does not include any
property described in Code section 48(a)(3) the basis of
which is taken into account by the taxpayer for purposes
of determining the energy credit under Code section 48.
Solar energy facility placed in service after October 22,
2004, and before January 1, 2006. The facility does not
include any property described in Code section 48(a)(3)
the basis of which is taken into account by the taxpayer for
purposes of determining the energy credit under Code
section 48.
Small irrigation power facility placed in service after
October 22, 2004, and before October 3, 2008.
Landfill gas or trash facility using municipal solid waste
placed in service after October 22, 2004, and the
construction of which begins before January 1, 2014.
A refined coal production facility originally placed in
service after October 22, 2004, and before January 1,
2012. See Notice 2010-54 for more information on refined
coal 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 will be treated
as placed in service before January 1, 2014, if the
construction of the improvement or addition begins 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 the
construction of which begins 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 the
construction of which begins before January 1, 2014.

Eligible electricity
production activity:

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

8

Refined coal

10

10

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.

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.

Who Can Take the Credit

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

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.

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.

Fiscal year taxpayers. If you have sales in 2013 and
2014 and the credit rate on lines 1, 13, 14, 18, or 22 (or
the phaseout adjustment on lines 2, 16, or 19) is different
for 2014, 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,
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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.

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.

Line 1 and Line 13

Line 11 and Line 31

Enter the kilowatt-hours of electricity produced at the
applicable qualified facilities and multiply by $.023. Fiscal
year filers with 2014 sales may have to refigure lines 1
and 13 as explained under Fiscal year taxpayers above.

Cooperative election to allocate credit to patrons. A
cooperative described in section 1381(a) that is more than
50 percent owned by agricultural producers or by entities
owned by agricultural producers 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.
If the cooperative is subject to the passive activity rules,
include on line 9 any Part I renewable electricity
production credit and on line 29 any Part II renewable
electricity, refined coal, and Indian coal production credit
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.
The cooperative is deemed to have made the election
by completing line 11 or line 31, 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) or on Form 1099-PATR, Taxable Distributions
Received From Cooperatives.
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.

Line 14

Enter the kilowatt-hours of electricity produced and sold at
the applicable qualified facilities and multiply by $.011.
Fiscal year filers with 2014 sales must figure line 14 as
explained under Fiscal year taxpayers above.

Line 2 and Line 16

Calendar year filers enter zero on line 2 or line 16. Fiscal
year filers with sales in 2014 also enter zero if the
published 2014 reference price is equal to or less than the
2014 adjusted threshold price. See How To Figure the
Credit, earlier, to figure the adjustment.

Line 18

Enter the tons of refined coal produced and sold during
2013 from a qualified refined coal production facility and
multiply by $6.590. Fiscal year filers with 2014 sales must
figure line 18 as explained under Fiscal year taxpayers
above.

Line 19

Calendar year filers enter zero on line 19. Fiscal year filers
with sales in 2014 also enter zero if the published 2014
reference price is equal to or less than 1.7 times the 2002
reference price. See How To Figure the Credit, earlier, to
figure the adjustment.

Line 21

This line is reserved for future use.

Estates and trusts. Allocate the credit on line 10 or
line 30 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 31.
If the estate or trust is subject to the passive activity
rules, include on line 9 any Part I renewable electricity
production credit and on line 29 any Part II renewable
electricity, refined coal, and Indian coal production credit
from passive activities disallowed for prior years and
carried forward to this year. Complete Form 8582-CR,
Passive Activity Credit Limitations, to determine the
allowed credit that must be allocated between the estate
or trust and the beneficiaries. For details, see the
Instructions for Form 8582-CR.

Line 22

Enter the tons of Indian coal produced and sold from a
qualified Indian coal facility and multiply by $2.308.

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;
Proceeds of a tax-exempt issue of state or local
government 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.

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.

Line 10 and Line 30

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

You are not required to provide the information
requested on a form that is subject to the Paperwork
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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 . .

16 hr., 44 min.
2 hr., 47 min.
3 hr., 10 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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