Biofuel Producer Credit

2015

Instructions for Form 6478

Department of the Treasury
Internal Revenue Service

Biofuel Producer Credit
Section references are to the Internal Revenue Code
unless otherwise noted.

produced in the United States or a U.S. possession and
used as a fuel in the United States or a U.S. possession.

Future Developments

A qualified second generation biofuel mixture combines
second generation biofuel with gasoline or a special fuel.
The producer of the mixture either:
Used it as a fuel, or
Sold it as fuel to another person.

What's New

Second Generation Biofuel

For the latest information about developments related to
Form 6478 and its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form6478.
The section 40 biofuel producer credit has been
extended.

General Instructions
Purpose of Form

Use Form 6478 to figure your section 40 biofuel producer
credit. You claim the credit for the tax year in which the
sale or use occurs. This credit consists of the second
generation biofuel producer credit.
You may claim or elect not to claim the biofuel producer
credit at any time within 3 years from the due date of your
return (determined without regard to extensions) on either
an original or an amended return for the tax year of the
sale or use.
Partnerships, S corporations, cooperatives, estates,
and trusts must file this form to claim the credit. All other
taxpayers are not required to complete or file this form if
their only source for this credit is a partnership, S
corporation, cooperative, estate, or trust. Instead, they
can report this credit directly on line 4c in Part III of Form
3800, General Business Credit.

Qualified Second Generation Biofuel
Production

This is second generation biofuel which during the tax
year:
1. Is sold by the producer to another person—
a. For use by the buyer in the buyer’s trade or
business to produce a qualified second generation biofuel
mixture (other than casual off-farm production),
b. For use by the buyer as a fuel in a trade or
business, or
c. Who sells the second generation biofuel at retail to
another person and puts the second generation biofuel in
the retail buyer’s fuel tank; or
2. Is used or sold by the producer for any purpose
described in (1) above.
Qualified second generation biofuel production does
not include purchasing alcohol and increasing the proof of
the alcohol through additional distillation. Nor does it
include second generation biofuel that is not both

Dec 30, 2015

Generally, second generation biofuel, for credit purposes,
is any liquid fuel, which:
Is derived by, or from, qualified feedstocks;
Meets the registration requirements for fuels and fuel
additives established by the Environmental Protection
Agency under section 211 of the Clean Air Act (42 U.S.C.
7545); and
Is not alcohol of less than 150 proof. In figuring the
proof of any alcohol, disregard any added denaturants
(additives that make the alcohol unfit for human
consumption).
A qualified feedstock is:
Any lignocellulosic or hemicellulosic matter that is
available on a renewable or recurring basis; and
Any cultivated algae, cyanobacteria, or lemna.
However, second generation biofuel does not include
any fuel if:
More than 4% of the fuel (determined by weight) is any
combination of water and sediment,
The ash content of the fuel is more than 1%
(determined by weight), or
The fuel has an acid number greater than 25.
Special rules for algae. For sales described in (1) under
Qualified Second Generation Biofuel Production, earlier,
second generation biofuel also includes certain liquid fuel,
which:
Is derived by, or from, any cultivated algae,
cyanobacteria, or lemna; and
Is not alcohol of less than 150 proof (disregard any
added denaturants).
But only if this fuel is sold by the producer to another
person for refining by such other person into a liquid fuel
which will meet the registration requirements for fuels and
fuel additives established by the Environmental Protection
Agency under section 211 of the Clean Air Act (42 U.S.C.
7545), and not include any fuel if:
More than 4% of the fuel (determined by weight) is any
combination of water and sediment,
The ash content of the fuel is more than 1%
(determined by weight), or
The fuel has an acid number greater than 25.
Also, once this fuel is sold by the producer to another
person for refining by such person into a fuel which will

Cat. No. 13606U

meet these requirements, neither the producer nor any
other person can use such fuel (or any fuel derived from
such fuel) to figure a second credit for qualified second
generation biofuel production.

Form 1099-PATR, Taxable Distributions Received
From Cooperatives, box 10, or other notice of credit
allocation.
Partnerships, S corporations, cooperatives, estates,
and trusts must always report the above credits on line 3.
All other taxpayers:
Report the above credits directly on Form 3800, Part III,
line 4c; and
Do not file Form 6478.

Registration

All producers of second generation biofuel must be
registered with the IRS. See Form 637, Application for
Registration.

Recapture of Credit

Line 5

You must pay a tax on each gallon of second generation
biofuel at the rate you used to figure the credit if you do
not use the fuel for the purposes described under
Qualified Second Generation Biofuel Production, earlier.
Report the tax on Form 720, Quarterly Federal Excise
Tax Return.

Cooperatives. A cooperative described in section
1381(a) can elect to allocate any part of the biofuel
producer credit to patrons of the cooperative. The credit is
allocated pro rata 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.
If the cooperative is subject to the passive activity rules,
include on line 3 any Form 6478 credits 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 producer 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 5. However, the election is not effective
unless:
It is made on a timely filed tax return (including
extensions), and
The cooperative designates the apportionment in a
written notice or on Form 1099-PATR mailed to its patrons
during the payment period described in section 1382(d).
If you timely filed 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). Write “Filed pursuant to
section 301.9100-2” on the amended return.
Once made, the election cannot be revoked.

Specific Instructions
Line 1

Enter the number of gallons of second generation biofuel
sold or used after 2014 and before 2016 that meets the
conditions listed under Qualified Second Generation
Biofuel Production, earlier. Multiply by the rate of $1.01
per gallon.

Line 2

The credit shown in column (c) on line 1 must be included
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 the alternative minimum tax (AMT), this amount
is not income in figuring AMT and must be subtracted
when figuring your alternative minimum taxable income.
Do this by including this amount on line 27 of Form 6251,
line 23 of Schedule I (Form 1041), or line 2o of Form
4626.
Registration number. To claim a second generation
biofuel producer credit on line 1, you must be registered
with the IRS. Enter your CB registration number in the
space provided. For more information, see Form 637 and
Publication 510, Excise Taxes.

Estates and trusts. Allocate the biofuel producer credit
on line 4 between the estate or trust and the beneficiaries
in the same proportion as income was allocated and enter
the beneficiaries’ share on line 5.
If the estate or trust is subject to the passive activity
rules, include on line 3 any Form 6478 credits 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 3

Enter total biofuel producer credits from:
Schedule K-1 (Form 1065), Partner's Share of Income,
Deductions, Credits, etc., box 15 (code I);
Schedule K-1 (Form 1120S), Shareholder's Share of
Income, Deductions, Credits, etc., box 13 (code I);
Schedule K-1 (Form 1041), Beneficiary's Share of
Income, Deductions, Credits, etc., box 13 (code H); and

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Instructions for Form 6478 (2015)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 hr., 32 min.
53 min.
1 hr.

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.

Instructions for Form 6478 (2015)

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