8835 Instructions for Form 8835

2019

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 IRS.gov/
Form8835.

What’s New

The Taxpayer Certainty and Disaster Tax Relief Act of
2019 made the following changes.
• The credit period for Indian coal produced at a qualified
Indian coal production facility has been extended to a
15-year period for Indian coal produced at a qualified
Indian coal facility placed in service before 2009.
• Provided a phase out of the credit for wind facilities.
The credit for wind facilities is reduced by 40% for
facilities the construction of which began during 2020.
See Line 17c.
• The election to treat qualified facilities as energy
property for the energy investment tax credit (ITC) was
extended. For more information, see Election To Treat a
Qualified Facility as Energy Property, later.
• The credit period for small irrigation power electricity
has expired.

Reminder

• The Protecting Americans From Tax Hikes Act of 2015
provides for the phase out of the credit for wind facilities.
The credit for wind facilities is reduced by 60% for
facilities the construction of which began during 2019. For
more information, see Line 17e, later.

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).
Partnerships and S corporations must file this form to
claim the credit. All others are generally not required to
complete or file this form if their only source for this credit
is a partnership, S corporation, estate, trust, or
cooperative. Instead, they can report this credit directly on
Form 3800, General Business Credit. 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, code J.

Dec 30, 2019

• 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.
Election To Treat a Qualified Facility as Energy
Property

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) instead 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
the construction of which begins before January 1, 2021,
for a qualified facility under section 45(d)(1)). See
Construction of a Qualified Facility, later;
• No credit has been allowed under section 45 for that
facility (see Note below); 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
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.
If the energy property is within the recapture period for
the 1603 grant, the taxpayer may have to recapture all or
part of such grant accordingly.
You may not partition the basis of property for which a
section 1603 award was received and claim a production
credit under section 45 or investment credit under section
48 for any part of the basis of that property. However, you
must reduce the basis of the specified energy property by
50% of the amount of the actual section 1603 payment.
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.

Cat. No. 55349M

How To Figure the Credit

has begun. For energy property the construction of which
begins, as determined under the earlier of the Physical
Work Test or the Five Percent Safe Harbor, after
December 31, 2018, construction will be deemed to have
begun on the date the taxpayer first satisfies one of the
two methods. The requirements to begin construction may
be modified in certain limited circumstances involving
significant national security concerns. See Notice 2019-43
for details.

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 you;
• 1/2 of 1.5 cents for open-loop biomass, landfill gas,
trash, hydropower, and marine and hydrokinetic
renewable facilities; or
• $4.375 per ton for the sale of refined coal produced.
• $2 per ton for the sale of Indian coal produced.

Resources means wind, closed-loop biomass,
open-loop biomass, geothermal energy, municipal solid
waste, qualified hydropower production, marine and
hydrokinetic renewables, refined coal, and Indian coal.

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 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
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 4. 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 7.

Closed-loop biomass is any organic material from a
plant that is planted exclusively for use at a qualified
facility to produce electricity.
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).
Municipal solid waste is solid waste, as defined
under paragraph 27 of 42 U.S.C. 6903. Municipal solid
waste doesn't include paper which is commonly recycled
and which has been segregated from other solid waste
(as so defined).
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
IRS.gov/irb/2010-40_IRB/ar07.html.

Credit rates. For calendar year 2019, the effective credit
rate for electricity, refined coal, and Indian coal produced
and sold, is 2.5 cents per kWh, $7.173 per ton, and
$2.525 per ton, respectively; 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 3 credit
in the first entry space on line 4, .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.
1. Physical Work Test is satisfied when physical
work of a significant nature begins and other requirements
provided in section 4 of Notice 2018-59 are met.
2. Five Percent Safe Harbor is satisfied when a
taxpayer pays or incurs (within the meaning of
Regulations section 1.461-1(a)(1) and (2)) five percent or
more of the total cost of the energy property and meets
the requirements provided in section 5 of Notice 2018-59.

Indian coal means coal that 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.

Qualified Facilities

A qualified facility is any of the following facilities owned
by you and used to produce electricity or, in the case of
coal production facilities, refined and Indian coal.

Although both methods can be used, only one method is
needed to establish that construction of a qualified facility
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Instructions for Form 8835 (2019)

• Wind facility placed in service after October 22, 2004,
and the construction of which begins before January 1,
2021. This doesn't 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, 2021.
• Closed-loop biomass facility modified to co-fire with
coal or other biomass (or both), placed in service before
January 1, 2021. The facility will be treated as modified
before January 1, 2021, if the construction of the
modification begins before January 1, 2021. See section
45(d)(2).
• 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, and
the construction of which begins before January 1, 2021.
• Open-loop biomass facility using agricultural livestock
waste placed in service after October 22, 2004, and the
construction of which begins before January 1, 2021, and
the nameplate capacity rating isn't 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, 2021. The facility doesn't include any
property described in section 48(a)(3), the basis of which
is taken into account by you for purposes of determining
the energy credit under section 48.
• 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, 2021.
• 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, 2021, if the
construction of the improvement or addition begins before
January 1, 2021, 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, 2021.
• Indian coal production facility.
• Marine and hydrokinetic renewable energy facility
placed in service after October 2, 2008, and the
construction of which begins before January 1, 2021.

Credit Period

Eligible electricity production
activity:
Wind

10

Closed-loop biomass

10

Open-loop biomass (including
agricultural livestock waste
nutrient facilities)

10

Geothermal

10

Municipal solid waste (including
landfill gas facilities and trash
combustion facilities)

10

Qualified hydropower

10

Marine and hydrokinetic

10

Indian coal

151

Refined coal

10

The 15-year period for Indian coal begins January 1, 2006.

1

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
isn't the producer of the electricity, the lessee or the
operator of the facility is eligible for the credit.

Specific Instructions

Figure any renewable electricity, refined coal, and Indian
coal production credit from your trade or business on lines
1 through 16. Skip lines 1 through 16 if you are only
claiming a credit that was allocated to you from an S
corporation, partnership, cooperative, estate, or trust.
Fiscal year taxpayers. If you have sales in 2019 and
2020 and the credit rate on line 1, 2, 6, or 10 (or the
phaseout adjustment on line 4 or 7) is different for 2020,
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) (line 1, 2, 6, or 10)
or the phaseout adjustment line(s) (line 4 or 7). Attach the
computations to Form 8835 and write “FY” in the margin.

Line 1

Enter the kilowatt-hours of electricity produced at the
applicable qualified facilities and multiply by $0.025.
Fiscal year filers with 2020 sales may have to refigure
line 1 as explained under Fiscal year taxpayers above.

A qualified facility doesn't 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.
Instructions for Form 8835 (2019)

Credit period for facilities
placed in service after August
8, 2005 (years from
placed-in-service date):

Line 2

Enter the kilowatt-hours of electricity produced and sold at
the applicable qualified facilities and multiply by $0.012.

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Line 19

Fiscal year filers with 2020 sales must figure line 2 as
explained under Fiscal year taxpayers above.

Enter total renewable electricity, refined coal, and Indian
coal production credits from:
• Schedule K-1 (Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., box 15 (code P);
• Schedule K-1 (Form 1120-S), Shareholder’s Share of
Income, Deductions, Credits, etc., box 13 (code P);
• Schedule K-1 (Form 1041), Beneficiary’s Share of
Income, Deductions, Credits, etc., box 13 (code J); and
• Form 1099-PATR, Taxable Distributions Received
From Cooperatives, box 11.
Partnerships and S corporations must always report on
line 19 the above credits related to renewable electricity,
refined coal, and Indian coal production. Also, estates and
trusts that can allocate the source credit to beneficiaries
and cooperatives that can allocate the credit to patrons
must always report on line 19 the above credits related to
renewable electricity, refined coal, and Indian coal
production. All other filers figuring a separate credit on
earlier lines must also report the above credits on line 19.
All others not using earlier lines to figure a separate credit
can report the above credits directly on the applicable line
of Form 3800, Part III, line 1f or line 4e.

Line 4

Calendar year filers enter zero on line 4. Fiscal year filers
with sales in 2020 also enter zero if the published 2020
reference price is equal to or less than the 2020 adjusted
threshold price. See How To Figure the Credit, earlier, to
figure the adjustment.

Line 6

Enter the tons of refined coal produced and sold during
2019 from a qualified refined coal production facility and
multiply by $7.173. Fiscal year filers with 2020 sales must
figure line 6 as explained under Fiscal year taxpayers
above.

Line 7

Calendar year filers enter zero on line 7. Fiscal year filers
with sales in 2020 also enter zero if the published 2020
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 9

Line 20

This line is reserved for future use.

When any form, worksheet, or instruction refers to
line 10, treat the amount on line 10 as zero (unless the law
changes and you can claim a credit on line 10).

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
IRS.gov/irb/2007-45_IRB/ar18.html and Announcement
2009-69 is available at
IRS.gov/irb/2009-40_IRB/ar16.html.

Line 12

Line 21

Line 10

Enter the tons of Indian coal produced and sold from a
qualified Indian coal facility and multiply by $2.525.

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.

Cooperative election to allocate credit to patrons. A
cooperative described in section 1381(a) that is more than
50% 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 19 any 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 21, as applicable. However, the
election isn't 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.
If you timely file your return without making an election,
you can still make the election by filing an amended return

Line 17a

Only enter on line 17a the amount included on line 16
applicable to wind facilities the construction of which
began during 2017.

Line 17c

Only enter on line 17c the amount included on line 16
applicable to wind facilities the construction of which
began during 2018 or 2020.

Line 17e

Only enter on line 17e the amount included on line 16
applicable to wind facilities the construction of which
began during 2019.

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Instructions for Form 8835 (2019)

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 can’t be revoked.

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.

Estates and trusts. Allocate the credit on line 20
between the estate or trust and the beneficiaries in the
same proportion as income was allocated and enter the
beneficiaries’ share on line 21.
If the estate or trust is subject to the passive activity
rules, include on line 19 any 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.

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 . .

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

Instructions for Form 8835 (2019)

12 hr., 12 min.
2 hr., 52 min.
3 hr., 12 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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