8900 Instructions for Form 8900

2016

Instructions for Form 8900

Department of the Treasury
Internal Revenue Service

Qualified Railroad Track Maintenance Credit
Section references are to the Internal Revenue Code unless
otherwise noted.

General Instructions
Future Developments

For the latest information about developments related to Form
8900 and its instructions, such as legislation enacted after they
were published, go to www.irs.gov/form8900.

Who Must File

Eligible taxpayers use Form 8900 to claim the railroad track
maintenance credit (RTMC) for qualified railroad track
maintenance expenditures (QRTME) paid or incurred during the
tax year. If you are an assignor of miles of eligible railroad track,
you must file Form 8900 even if you do not claim any RTMC.
See the instructions for line 3b for the additional information that
must be provided by assignors.
Partnerships and S corporations 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 or S
corporation. Instead, they can report this credit directly on line 4g
in Part III of Form 3800, General Business Credit.

Definitions
Eligible taxpayers. Eligible taxpayers include the following.
1. Any Class II or Class III railroad, as these terms are
defined by the Surface Transportation Board.
2. Any person (including a Class I railroad (see below)) who
transports property using the rail facilities of a Class II or Class III
railroad.
3. Any person (including a Class I railroad (see below)) who
furnishes railroad-related services or property to a Class II or
Class III railroad.
For purposes of (2) or (3) above, the taxpayer is only eligible
to claim the credit for miles of eligible railroad track assigned to it
by a Class II or Class III railroad for purposes of the credit. See
the instructions for line 3c.
Class I railroads include only the following seven entities.
BNSF.
CSX.
Grand Trunk Corporation (a holding company for all of
Canadian National's U.S. railroad operations).
Kansas City Southern.
Norfolk Southern.
Soo Line (owned by Canadian Pacific).
Union Pacific.
Rail facilities. Rail facilities of a Class II or Class III railroad are
railroad yards, tracks, bridges, tunnels, wharves, docks,
stations, and other related assets that are used in the transport
of freight by a railroad and owned or leased by that railroad.
Railroad-related property. Railroad-related property is
property that is provided directly to a Class II or Class III railroad
and is unique to railroads. For a complete description, see
Regulations section 1.45G-1(b)(7).

Dec 07, 2016

Railroad-related services. Railroad-related services are
services that are provided directly to, and are unique to, a
railroad and that relate to railroad shipping, loading and
unloading of railroad freight, or repairs of rail facilities or
railroad-related property. For examples of what are and what are
not railroad-related services, see Regulations section
1.45G-1(b)(8).
Eligible railroad track. Eligible railroad track is railroad track
located within the United States that is owned or leased by a
Class II or Class III railroad at the close of its tax year. The
railroad is treated as owning the railroad track if it is subject to
depreciation under section 167 by the railroad. Double track is
treated as multiple lines of railroad track, rather than as a single
line of railroad track. That is, one mile of single track is one mile,
but one mile of double track is two miles.
Qualifying railroad structure. Qualifying railroad structure is
property located within the United States that includes, in part,
tunnels, bridges, and railroad track. For a complete description,
see Regulations section 1.45G-1(b)(4).
Qualified railroad track maintenance expenditures
(QRTME). QRTME are expenditures (whether or not otherwise
chargeable to a capital account) for maintaining, repairing, and
improving a qualifying railroad structure that is owned or leased
as of January 1, 2015, by a Class II or Class III railroad. If you
paid or incurred QRTME during the tax year, you do not have to
reduce that QRTME by any amount of direct or indirect
reimbursement to which you are entitled from a Class II or Class
III railroad which made an assignment of eligible railroad track to
you.

Adjustments to Basis

Some or all of the QRTME paid or incurred by an eligible
taxpayer may be required to be capitalized as a tangible asset or
an intangible asset, if applicable. See Regulations section
1.45G-1(e)(1).
Use the amount of RTMC to reduce the basis of a qualifying
railroad structure (including railroad track) asset or intangible
asset, if applicable. The reduction is limited to the amount of
QRTME capitalized for the asset. For further details, see
Regulations section 1.45G-1(e)(2).

Member of Controlled Group or
Business Under Common Control

For purposes of figuring the credit, all members of a “controlled
group of corporations” and all members of a “group of
businesses under common control” are treated as a single
taxpayer. See Regulations section 1.45G-1(f)(2) for a definition
of these terms. As a member, your credit is determined on a
proportionate basis to your share of the aggregate QRTME
taken into account by the group for the RTMC. Enter your share
of the credit on line 5. Attach a statement showing how your
share of the credit was figured, and write “See Attached” next to
the entry space for line 5.

Cat. No. 66497D

The total number of miles of eligible railroad track assigned by
the assignor for the tax year to all assignees.

Specific Instructions

Line 3c

Line 1

The following information must be provided for the assignment in
the form of a statement attached to the tax return for the tax year
for which the assignment is made.
The total number of miles of eligible railroad track assigned to
the assignee for the assignee's tax year.
Attestation that the assignee has in writing, and has retained
as part of the assignee's records for purposes of Regulations
section 1.6001-1(a), the following information from each
assignor.
1. The name and taxpayer identification number of each
assignor.
2. The effective date of each assignment (treated as being
made by the assignor at the end of its tax year) to the assignee.
3. The number of miles of eligible railroad track assigned by
each assignor to the assignee for the tax year of the assignee.

Qualified railroad track maintenance expenditures must be paid
or incurred by an eligible taxpayer during the tax year.
The payment by an eligible taxpayer, as an assignee, to a
Class II or Class III railroad, as an assignor, in exchange for an
assignment of miles of eligible railroad track for purposes of the
credit computation is treated as QRTME paid or incurred by the
assignee and not the assignor.

Line 3a

(This line only applies to you if you are a Class II or Class III
railroad.)
Enter the number of eligible railroad track miles (see Eligible
railroad track, earlier) owned or leased by you.

Line 3b

(This line only applies to you if you are a Class II or Class III
railroad.)
You must reduce on line 3b the number of miles of eligible
railroad track entered on line 3a that you assigned to another
eligible taxpayer for purposes of the credit computation. You can
only assign each mile of railroad track once during your tax year.
Each mile of railroad track you assign is treated as being
assigned on the last day of your tax year.
An assigned mile of eligible railroad track need not
correspond to any specific mile of eligible railroad track for which
the eligible taxpayer actually pays or incurs the QRTME. Further,
an assignment requires no transfer of legal title or other indicia of
ownership of the eligible railroad track, and need not specify the
location of any assigned mile of eligible railroad track. However,
the following information must be provided for the assignment in
the form of a statement attached to the tax return for the tax year
for which the assignment is made.
The name and taxpayer identification number of each
assignee.
The total number of miles of the assignor's eligible railroad
track.
The number of miles of eligible railroad track assigned by the
assignor for the tax year to the assignee.

Notes

The assignee cannot reassign miles.
If the assignor, in its required statement (see the instructions
for line 3b above), assigns more miles than it has at the end of its
tax year, the excess will be used to reduce each assignee's
allocation in the same proportion as the assignee's original
allocation of miles bears in relation to the total miles originally
assigned.

Line 6

Enter total qualified railroad track maintenance credits from:
Schedule K-1 (Form 1065), Partner's Share of Income,
Deductions, Credits, etc., box 15 (code P); and
Schedule K-1 (Form 1120S), Shareholder's Share of Income,
Deductions, Credits, etc., box 13 (code P).
Partnerships and S corporations must always report the
above credits on line 6. All other filers figuring a separate credit
on earlier lines must also report the above credits on line 6. All
others not using earlier lines to figure a separate credit can
report the above credits directly on Form 3800, Part III, line 4g.

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.

h

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for
individual and business taxpayers filing this form is approved under OMB control number 1545-0074 and 1545-0123 and is included in
the estimates shown in the instructions for their individual and business 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., 4 min.
0 hr., 53 min.
1 hr., 00 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.

-2-

Instructions for Form 8900 (2016)