8830 Enhanced Oil Recovery Credit

Form

8830

Department of the Treasury
Internal Revenue Service (99)

Enhanced Oil Recovery Credit
▶

OMB No. 1545-1292

Information about Form 8830 and its instructions is available at www.IRS.gov/form8830.
▶ Attach to your tax return.

Identifying number

Name(s) shown on return

1
2
3
4

Qualified enhanced oil recovery costs (see instructions)
. . . . . . . . . . . .
Multiply line 1 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . .
Enhanced oil recovery credit from partnerships and S corporations (see instructions) . . .
Current year credit. Add lines 2 and 3. Partnerships and S corporations, report this amount
Schedule K. All others, report this amount on Form 3800, Part III, line 1zz . . . . . . .

General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 8830 and its
instructions, such as legislation enacted
after this form and instructions were
published, go to www.IRS.gov/form8830.

What's New
The enhanced oil recovery credit,
completely phased out since 2005, is
applicable for tax years beginning in 2016
because of the lower reference price per
barrel of crude oil in 2015. See
www.IRS.gov/form8830 for details.

Purpose of Form
Use Form 8830 to claim the enhanced oil
recovery credit.
An owner of an operating mineral interest
may claim or elect not to claim this credit
any time within 3 years from the due date
(excluding extensions) of its return on
either its original or an amended return.
Partnerships and S corporations must file
this form to claim the credit. All other
taxpayers aren't required to complete or
file this form if the only source of this credit
is a partnership or S corporation. Instead,
they can report this credit directly on Form
3800, General Business Credit, Part III, line
1zz.

Amount of Credit
The credit generally is 15% of qualified
costs for the tax year, but is reduced when
the reference price per barrel of crude oil
exceeds the base value of $28 (as adjusted
by inflation). For tax years beginning in
2016, there is no reduction of the credit.

Definitions
Qualified enhanced oil recovery costs
means the following.
1. Any amount paid or incurred during
the tax year for tangible property:
a. That is an integral part of a qualified
enhanced oil recovery project, and
b. For which depreciation (or
amortization) is allowable.
2. Any intangible drilling and
development costs:

2016

Attachment
Sequence No. 78

a. That are paid or incurred in
connection with a qualified enhanced oil
recovery project, and
b. For which the taxpayer may make an
election under section 263(c). For an
integrated oil company, this includes
intangible drilling costs required to be
amortized under section 291(b).
3. Any qualified tertiary injectant
expenses (as defined in section 193(b))
paid or incurred in connection with a
qualified enhanced oil recovery project for
which a deduction is allowable for the tax
year. Qualified tertiary injectant expenses
includes expenditures related to the use of
a tertiary injectant as well as expenditures
related to the acquisition (whether
produced or acquired by purchase) of the
tertiary injectant. However, it does not
include costs that would have been paid or
incurred in the development or operation of
a mineral property if an enhanced oil
recovery project had not been
implemented with respect to the property.
Costs that are related to the use of a
tertiary injectant and that also are related to
other activities (for example, primary or
secondary recovery) must be reasonably
allocated among the tertiary injectant and
the other activities to determine the amount
of tertiary injectant expenses paid or
incurred for the tax year. For more details,
see Rev. Rul. 2003-82, 2003-30 I.R.B. 125.
4. Any amount paid or incurred during
the tax year to construct an Alaska natural
gas plant within the meaning of sections
43(c)(1)(D) and 43(c)(5).
Qualified enhanced oil recovery
project means any project involving the
application of one or more tertiary recovery
methods defined in section 193(b)(3) (and
listed below) that can reasonably be
expected to result in more than an
insignificant increase in the amount of
crude oil that will ultimately be recovered.
The project must be located within the
United States, including the seabed and
subsoil adjacent to the territorial waters of
the United States over which the United
States has exclusive rights by international
law for exploration and exploitation of
natural resources (see section 638(1)). The
first injection of liquids, gases, or other
matter must begin after 1990. However,
any significant expansion after 1990 of a
project begun before 1991 is treated as a
project where the first injection begins after
1990.

For Paperwork Reduction Act Notice, see page 2.

Cat. No. 13059B

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on
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1
2
3
4

Additionally, the operator or designated
owner must file a certification from a
petroleum engineer, who is registered or
certified by a state, that the project meets
the above requirements. The operator or
designated owner also must file a
certification each subsequent year
indicating that the project continues to be
implemented substantially in accordance
with the petroleum engineer's certification.
If the application of a tertiary recovery
method is terminated, the operator or
designated owner must file a notice of
project termination for the tax year when
the project terminates.
Send these filings to:
Internal Revenue Service
LB&I Enterprise Activities Practice Area
Attention: Director's Office
1919 Smith Street, Mail Stop 1003-HOU
Houston, TX 77002
by the due date of the operator's or
designated owner's federal income tax
return. See Regulations section 1.43-3 for
the information required in the notice and
certifications.
Tertiary recovery methods qualifying for
the credit include:
• Miscible fluid displacement,
• Steam drive injection,
• Microemulsion flooding,
• In situ combustion,
• Polymer-augmented water flooding,
• Cyclic-steam injection,
• Alkaline (or caustic) flooding,
• Carbonated water flooding,
• Immiscible nonhydrocarbon gas
displacement, or
• Any other method approved by the
Secretary of the Treasury.

Specific Instructions
Figure any enhanced oil recovery credit
from your own trade or business on lines 1
and 2. Skip lines 1 and 2 if you're only
claiming a credit that was allocated to you
from an S corporation or a partnership.

Line 1
Enter the total of the qualified costs paid or
incurred during the year in connection with
a qualified enhanced oil recovery project.
See Definitions above.
Reduce the otherwise allowable
deductions for line 1 costs by the line 2
credit attributable to these costs. Also, if
any part of the line 1 costs are for
expenditures that increase the basis of
Form 8830 (2016)

Form 8830 (2016)

property, reduce the otherwise allowable
basis increase by the line 2 credit
attributable to these costs.

Line 3
Enter total enhanced oil recovery 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 3.
All other taxpayers:
• Report the above credits directly on Form
3800, Part III, line 1zz; and
• Don't file Form 8830.

Page

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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 . . . . 5 hr., 15 min.
Learning about the
law or the form . . . . . . 53 min.
Preparing and
sending the form
to the IRS . . . . . . . 1hr., 1 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.