8864 Instructions for Form 8864

Instructions for Form 8864

Department of the Treasury
Internal Revenue Service

(Rev. January 2020)

Biodiesel and Renewable Diesel Fuels Credit

Definitions and Special Rules

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

Certification

Future Developments

For the latest information about developments related to
Form 8864 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form8864.

What's New
Credit extension. The section 40A biodiesel and
renewable diesel fuels credit is retroactively extended for
fuel sold or used in calendar years 2018 through 2022.
Don’t claim the credit for biodiesel and renewable diesel
fuels sold or used after 2022, unless the credit is extended
again.
Periodic updating. Form 8864 and its instructions will no
longer be updated annually. Instead, they’ll only be
updated when necessary. Use these instructions and
Form 8864 (Rev. January 2020) for tax years beginning
after 2017.
For previous years, see the applicable Form 8864 and
instructions.
Example 1. Use the 2017 Form 8864 with the 2017
Instructions for Form 8864 for tax year ending December
31, 2017.
For 2018 claims, use Form 8864 (Rev. January
TIP 2020) because it has lines 1 through 8 available, if
needed.

General Instructions
Purpose of Form

Use Form 8864 (Rev. January 2020) to claim your section
40A biodiesel and renewable diesel fuels credit. Claim the
credit for the tax year in which the sale or use occurs. The
credit consists of the:
• Biodiesel credit,
• Renewable diesel credit,
• Biodiesel mixture credit,
• Renewable diesel mixture credit, and
• Small agri-biodiesel producer credit.
Partnerships, S corporations, cooperatives, estates,
and trusts must file this form to claim the credit. All other
taxpayers aren’t 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 the appropriate line of
Form 3800, General Business Credit.
Example 2. For 2018, report this credit on the 2018
Form 3800, Part III, line 1l; for 2019, report this credit on
the 2019 Form 3800, Part III, line 1l.
Jan 18, 2020

To claim a credit on lines 1 through 6, you generally must
attach the Certificate for Biodiesel and, if applicable,
Statement of Biodiesel Reseller, to Form 8864. To claim a
credit on line 3 or 6, the certificate must indicate at all
appropriate locations that the fuel to which it relates is
renewable diesel and state that the fuel meets the
requirements discussed under Renewable Diesel, later.
However, if the certificate or statement was attached to a
previously filed claim, attach a statement with the
following information.
• Certificate identification number.
• Total gallons of agri-biodiesel, biodiesel other than
agri-biodiesel, or renewable diesel on the certificate.
• Total gallons claimed on Schedule 3 (Form 8849),
Certain Fuel Mixtures and the Alternative Fuel Credit.
• Total gallons claimed on Form 720, Quarterly Federal
Excise Tax Return, Schedule C.
• Total gallons claimed on Form 4136, Credit for Federal
Tax Paid on Fuels.
See Notice 2005-62, 2005-35 I.R.B. 443, or Pub. 510,
Excise Taxes, for the model certificate and statement.

Biodiesel

Biodiesel means the monoalkyl esters of long-chain fatty
acids derived from plant or animal matter that meet the
registration requirements for fuels and fuel additives
established by the Environmental Protection Agency
(EPA) under section 211 of the Clean Air Act, and the
requirements of the American Society of Testing and
Materials (ASTM) D6751.

Biodiesel includes both agri-biodiesel and biodiesel
other than agri-biodiesel. Biodiesel does not include the
following.
• Fuel produced outside the United States or a U.S.
possession for use as a fuel outside the United States or a
U.S. possession.
• Any liquid that is eligible for the section 40 biofuel
producer credit (Form 6478, Biofuel Producer Credit).

Agri-Biodiesel

Agri-biodiesel means biodiesel derived solely from virgin
oils, including esters derived from virgin vegetable oils
from corn, soybeans, sunflower seeds, cottonseeds,
canola, crambe, rapeseeds, safflowers, flaxseeds, rice
bran, mustard seeds, and camelina, and from animal fats.

Renewable Diesel

Renewable diesel means liquid fuel derived from biomass
(defined below) that meets the registration requirements
for fuels and fuel additives established by the EPA under
section 211 of the Clean Air Act, and the requirements of
the ASTM D975 or D396, or other equivalent standard

Cat. No. 66373S

approved by the IRS, or a Department of Defense
specification for military jet fuel, or an ASTM specification
for aviation turbine fuel. For aviation uses, treat kerosene
as diesel fuel when figuring a renewable diesel mixture
credit.

Diesel fuel. Diesel fuel means:
• Any liquid that, without further processing or blending,
is suitable for use as a fuel in a diesel-powered highway
vehicle or diesel-powered train; and
• Transmix.
A liquid is suitable for this use if the liquid has practical
and commercial fitness for use in the propulsion engine of
a diesel-powered highway vehicle or diesel-powered train.
A liquid may possess this practical and commercial fitness
even though the specified use is not the liquid's
predominant use. However, a liquid does not possess this
practical and commercial fitness solely by reason of its
possible or rare use as a fuel in the propulsion engine of a
diesel-powered highway vehicle or diesel-powered train.
Diesel fuel does not include gasoline, kerosene, excluded
liquid, No. 5 and No. 6 fuel oils covered by ASTM
specification D396, or F-76 (Fuel Naval Distillate) covered
by military specification MIL-F-16884.
An excluded liquid is any liquid that (a) contains less
than 4% normal paraffins; or (b) has a (i) distillation range
of 125 degrees Fahrenheit or less, (ii) sulfur content of 10
parts per million or less, and (iii) minimum color of +27
Saybolt. For example, biodiesel is always an excluded
liquid because it does not contain paraffins. However, a
biodiesel mixture may not be an excluded liquid.
Transmix means a by-product of refined products
created by the mixing of different specification products
during pipeline transportation.

Renewable diesel does not include the following.

• Fuel produced outside the United States or a U.S.

possession for use as a fuel outside the United States or a
U.S. possession.
• Any fuel derived from co-processing biomass with
feedstock that is not biomass.
• Any liquid eligible for the section 40 biofuel producer
credit (Form 6478).
Biomass. Biomass means any organic material other
than oil, natural gas, or coal (including lignite), or any
product of them.

Biodiesel and Renewable Diesel Credits

The biodiesel or renewable diesel reported on lines 1
through 3 must not be a mixture. The credits are for
biodiesel or renewable diesel, which during the tax year
you:
• Used as a fuel in a trade or business, or
• Sold at retail to another person and put in the fuel tank
of that person's vehicle.

However, no credit is allowed for fuel used in a trade or
business that was purchased in a retail sale described
above.

Qualified Agri-Biodiesel Production

You may be liable for a 24.4 cents per gallon
excise tax on biodiesel or renewable diesel you
CAUTION sold (in your trade or business) for use or used in
a diesel-powered highway vehicle or diesel-powered train.
Report the tax liability on Form 720 on the line for IRS No.
79 for the quarter in which the biodiesel was sold or used,
or IRS No. 60(b) for the quarter in which the renewable
diesel was sold or used.

!

Qualified agri-biodiesel production means up to 15 million
gallons of agri-biodiesel that is produced by an eligible
small agri-biodiesel producer (defined below), and that
during the tax year:
1. Is sold by such producer to another person:
a. For use by such person in the production of a
qualified biodiesel mixture in such other person's trade or
business (other than casual off-farm production),
b. For use by such person as a fuel in a trade or
business, or
c. Who sells such agri-biodiesel at retail to another
person and places such agri-biodiesel in the fuel tank of
such other person; or
2. Is used or sold by such producer for any purpose
described in (1).
Note. Production of renewable diesel is not qualified
agri-biodiesel production.

Biodiesel and Renewable Diesel Mixture Credits
The biodiesel or renewable diesel reported on lines 4
through 6 must be used to make a qualified mixture. A
qualified mixture combines biodiesel or renewable diesel
with diesel fuel (defined below), determined without
regard to any use of kerosene. However, treat the
kerosene as diesel fuel when figuring a renewable diesel
mixture credit for certain aviation fuel (see Renewable
Diesel above). The producer of the mixture either:
• Used it as fuel, or
• Sold it as fuel to another person.

Eligible small agri-biodiesel producer. An eligible
small agri-biodiesel producer is a person who, at all times
during the tax year, has a productive capacity for
agri-biodiesel not in excess of 60 million gallons.

The credit is available only to the producer of the
mixture. The producer must use or sell the mixture in a
trade or business and the credit is available only for the
year the mixture is sold or used. The credit is not allowed
for casual off-farm production of a qualified mixture.

Aggregation rule. All members of the same controlled
group of corporations (see section 267(f)) and all persons
under common control (see section 52(b) but treat an
interest of more than 50% as a controlling interest) are
treated as 1 person for purposes of the 15- and
60-million-gallon limits.

You may be liable for a 24.4 cents per gallon
excise tax on biodiesel or renewable diesel used
CAUTION to produce blended taxable fuel outside the bulk
transfer terminal system if the mixture is diesel fuel.
Report the tax liability on Form 720 on the line for IRS No.
60(c) for the quarter in which the mixture was sold or
used.

!

Partnership, S corporation, and other pass-through
entities. The 15- and 60-million-gallon limits discussed
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Instructions for Form 8864 (1-2020)

above are applied at both the entity level and at the
partner or similar level.

production and the 60-million-gallon productive capacity
limitation for an eligible small agri-biodiesel producer.

Registration

Line 10

For 2018, report this amount on the 2018 Form 3800, Part
III, line 1l; for 2019, report this amount on the 2019 Form
3800, Part III, line 1l.

All producers and importers of biodiesel or renewable
diesel must be registered with the IRS. All persons
producing blended taxable fuel must be registered. See
Form 637, Application for Registration.

At the time this form went to print, the 2020 and
later year tax forms hadn't been developed. Go to
CAUTION IRS.gov/F8864 later this year to determine which
line to use.

!

Coordination With Excise Tax Credit

Only one credit may be taken with respect to any amount
of biodiesel or renewable diesel. If any amount is claimed
(or will be claimed) with respect to any amount of
biodiesel or renewable diesel on Form 720, Form 8849,
Claim for Refund of Excise Taxes, or Form 4136, then a
claim cannot be made on Form 8864 for that amount of
biodiesel or renewable diesel.

Line 11

A cooperative, estate, or trust allocating the small
agri-biodiesel credit must give the patron or beneficiary a
statement providing them with the number of gallons for
which it claimed the credit and its productive capacity for
agri-biodiesel. An estate or trust must also provide the
amount of the small agri-biodiesel credit included as part
of the pass-through credit. See the above instructions for
line 9.

Recapture of Credit

You must pay a tax (recapture) on each gallon of biodiesel
or renewable diesel on which a credit was claimed at the
rate used to figure the credit if you:
• Use it (including a mixture) other than as a fuel,
• Buy it at retail and use it to create a mixture,
• Separate it from a mixture, or
• Use agri-biodiesel on which the small agri-biodiesel
producer credit was claimed for a use not described under
Qualified Agri-Biodiesel Production, earlier.

Cooperatives. A cooperative described in section
1381(a) can elect to allocate any part of the small
agri-biodiesel 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 9 any Form 8864 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 11. However, the election is not
effective unless:
• It is made on a timely filed return (including extensions);
and
• The cooperative designates the apportionment in a
written notice or Form 1099-PATR, Taxable Distributions
Received From Cooperatives, 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). Enter “Filed pursuant to
section 301.9100-2” on the amended return.
Once made, the election cannot be revoked.

Report the tax on Form 720, Part II, IRS No. 117, for the
quarter in which you did any of the above.

Additional Information

See Pub. 510, Excise Taxes.

Specific Instructions
Use lines 1 through 8 to figure any biodiesel and
renewable diesel fuels credit from your own trade or
business.
Skip lines 1 through 8 if you are claiming only a credit that
was allocated to you from a pass-through entity (that is, an
S corporation, partnership, estate, trust, or cooperative).

Line 8

Include this amount 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 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 the appropriate line of:
• Form 6251, Alternative Minimum Tax—Individuals
• Form 1041, Schedule I

Estates and trusts. Allocate the biodiesel and
renewable diesel fuels credit on line 10 between the
estate or trust and the beneficiaries in the same proportion
as income was allocated and enter the beneficiaries’
share on line 11.
If the estate or trust is subject to the passive activity
rules, include on line 9 any Form 8864 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

Line 9

If you are allocated a small agri-biodiesel producer credit
from a pass-through entity, the entity must tell you the
number of gallons for which it claimed the credit and its
productive capacity for agri-biodiesel. You, as a
shareholder, partner, beneficiary, or patron are subject to
the 15-million-gallon limitation for qualified agri-biodiesel

Instructions for Form 8864 (1-2020)

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that must be allocated between the estate or trust and the
beneficiaries. For details, see the Instructions for Form
8582-CR.

At the time this form went to print, the 2020 and
later year tax forms hadn't been developed. Go to
CAUTION IRS.gov/F8864 later this year to determine which
line to use.

!

Line 12

For 2018, report this amount on the 2018 Form 3800, Part
III, line 1l; for 2019, report this amount on the 2019 Form
3800, Part III, line 1l.

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Instructions for Form 8864 (1-2020)

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

1 hr., 25 min.
45 min.
2 hr., 01 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.

Instructions for Form 8864 (1-2020)

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