8830 Enhanced Oil Recovery Credit

Form

8830

Department of the Treasury
Internal Revenue Service (99)

Enhanced Oil Recovery Credit
▶

OMB No. 1545-1292

2018

Go to www.irs.gov/Form8830 for the latest information.
▶ Attach to your tax return.

Attachment
Sequence No. 78
Identifying number

Name(s) shown on return

1
2
3
4

Qualified enhanced oil recovery costs (see instructions)
. . . . . . . . . . . .
Multiply line 1 by the credit rate shown in the instructions . . . . . . . . . . . .
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 1t . . . . . . .

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 section 43 enhanced oil recovery
credit is applicable (but at a reduced
credit rate; see Amount of Credit below)
for tax years beginning in 2018 because
of the reference price per barrel of crude
oil in 2017. See Notice 2018-49.

Purpose of Form
Use Form 8830 to claim the enhanced oil
recovery credit. This credit is part of the
general business 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 1t.

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 is more than the base value of
$28 (as adjusted by inflation). For tax
years beginning in 2018, there is a
reduction of the credit because the
reference price for the 2017 calendar
year, $48.05, exceeds $28 multiplied by
the inflation adjustment factor (1.7008)
for the 2017 calendar year ($28
multiplied by 1.7008 = $47.6224).
Therefore, a portion of the credit is
phased out. Applying the section 43(b)(1)
reduction ratio determines the phased
out portion to be 1.069%, so the
applicable credit rate is 13.931%
(15%-1.069%). See Notice 2018-49.

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:
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 doesn’t 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).

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 13059B

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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.
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,
Form 8830 (2018)

Form 8830 (2018)

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

Line 2
Multiply line 1 by 13.931% (0.13931).

Page

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 1t; and
• Don’t file Form 8830.
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law. Generally, tax returns and return
information are confidential, as required
by section 6103.

2

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
. . . 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.