3468 Instructions for Form 3468

2022

Instructions for Form 3468

Department of the Treasury
Internal Revenue Service

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

Purpose of Form

Future Developments
For the latest information about developments related to Form
3468 and its instructions, such as legislation enacted after they
were published, go to IRS.gov/Form3468.

What’s New
New advanced manufacturing investment credit. The
Creating Helpful Incentives To Produce Semiconductors
(CHIPS) Act of 2022, P.L. 117-167, Div. A, sec. 107, added a
new investment credit equal to 25% of the qualified investment
in any advanced manufacturing facility for the primary purpose of
manufacturing of semiconductors or semiconductor
manufacturing equipment. This credit applies to property placed
in service after 2022, and, for any property the construction of
which begins prior to 2023, only to the extent of the basis thereof
attributable to the construction, reconstruction, or erection after
August 9, 2022. See Advanced Manufacturing Investment
Credit, later.
If properly elected, an eligible taxpayer, can treat the amount
of the credit attributable to any advanced manufacturing facility
for the tax year as a payment against the tax. A partnership or S
corporation can elect to receive a payment rather than a credit.
See Deemed Payment, later.
Inflation Reduction Act of 2022 (IRA 2022). IRA 2022
included several new or enhanced energy investment credits
effective for periods after 2022. Fiscal year filers may claim
these credits for periods in 2023. IRA 2022 enacted the
following.
• Established new credits for energy storage technology,
qualified biogas property, and microgrid controllers.
• Established bonus credits for domestic content bonus
credit, energy communities, and certain solar and wind
facilities in connection with low-income communities.
• Established an election to treat clean hydrogen production
facilities as energy properties.
• Established new rules regarding prevailing wage
requirements and apprenticeship requirements.
• Enhanced rules regarding qualifying advanced energy
project. Additional guidance related to qualifying advanced
energy project will be posted at IRS.gov/Form3468 in the
coming weeks.
• Established new rules for certain filers to elect to treat credit
amounts as deemed payments and rules related to the
transfer of certain credits for tax years beginning in 2023,
including short tax years beginning and ending in 2023.
Additional guidance related to electing the deemed payment
will be posted at IRS.gov/Form3468 in the coming weeks.
See Energy Credit and lines 12a–12hh, later, for more
information.

General Instructions
Use Form 3468 to claim the investment credit. The investment
credit consists of the following credits.
• Rehabilitation.
• Energy.
• Qualifying advanced coal project.
• Qualifying gasification project.
• Qualifying advanced energy project.
• Advanced manufacturing investment.
If you file electronically, you must send in a paper Form 8453,
U.S. Individual Income Tax Transmittal for an IRS e-file Return, if
attachments are required for Form 3468.

Investment Credit Property

Investment credit property is any depreciable or amortizable
property that qualifies for the rehabilitation credit, energy credit,
qualifying advanced coal project credit, qualifying gasification
project credit, qualifying advanced energy project credit, or
advanced manufacturing investment credit.
You can't claim a credit for property that is:

• Used mainly outside the United States (except for property
described in section 168(g)(4));

• Used by a governmental unit or foreign person or entity
•
•

(except for a qualified rehabilitated building leased to that
unit, person, or entity; and property used under a lease with
a term of less than 6 months);
Used for lodging or in the furnishing of lodging (see section
50(b)(2) for exceptions); or
Certain MACRS business property to the extent it has been
expensed under section 179.

Qualified Progress Expenditures

Qualified progress expenditures are those expenditures made
before the property is placed in service and for which the
taxpayer has made an election to treat the expenditures as
progress expenditures. Qualified progress expenditure property
is any property that is being constructed by or for the taxpayer
and which (a) has a normal construction period of 2 years or
more, and (b) it is reasonable to believe that the property will be
new investment credit property in the hands of the taxpayer
when it is placed in service. The placed-in-service requirement
doesn't apply to qualified progress expenditures.
Qualified progress expenditures for:

• Self-constructed property means the amount that is properly
•

chargeable (during the tax year) to a capital account with
respect to that property; or
Non-self-constructed property means the lesser of: (a) the
amount paid (during the tax year) to another person for the
construction of the property, or (b) the amount that
represents the proportion of the overall cost to the taxpayer
of the construction by the other person, which is properly
attributable to that portion of the construction that is
completed during the tax year.

For more information on qualified progress expenditures, see
section 46(d) (as in effect on November 4, 1990). For details on
Jan 30, 2023

Cat. No. 12277P

is subject to recapture to the same extent as if the transferor
had disposed of the property at the later date.

qualified progress expenditures for the rehabilitation credit, see
section 47(d).
For details on qualified progress expenditures for the
advanced manufacturing investment credit, see section 48D(b)
(5).

3. A transaction to which section 381(a) applies (relating to
certain acquisitions of the assets of one corporation by
another corporation).

At-Risk Limit for Individuals and
Closely Held Corporations

4. A mere change in the form of conducting a trade or
business if:
a. The property is retained as investment credit property in
that trade or business, and

The cost or basis of property for investment credit purposes may
be limited if you borrowed against the property and are protected
against loss, or if you borrowed money from a person who is
related or who has an interest (other than as a creditor) in the
business activity. The cost or basis must be reduced by the
amount of the nonqualified nonrecourse financing related to the
property as of the close of the tax year in which the property is
placed in service. If, at the close of a tax year following the year
property was placed in service, the nonqualified nonrecourse
financing for any property has increased or decreased, then the
credit base for the property changes accordingly. The changes
may result in an increased credit or a recapture of the credit in
the year of the change. See sections 49 and 465 for details.

b. The taxpayer retains a substantial interest in that trade
or business.
A mere change in the form of conducting a trade or business
includes a corporation that elects to be an S corporation and a
corporation whose S election is revoked or terminated.
For more information, see the Instructions for Form 4255,
Recapture of Investment Credit.
See section 46(g)(4) (as in effect on November 4, 1990),
and related regulations, if you made a withdrawal from a
CAUTION capital construction fund set up under the Merchant
Marine Act of 1936 to pay the principal of any debt incurred in
connection with a vessel on which you claimed investment
credit.

!

Recapture of Credit

You may have to refigure the investment credit and recapture all
or a portion of it if:
• You dispose of investment credit property before the end of
5 full years after the property was placed in service
(recapture period);
• You change the use of the property before the end of the
recapture period so that it no longer qualifies as investment
credit property;
• The business use of the property decreases before the end
of the recapture period so that it no longer qualifies (in whole
or in part) as investment credit property;
• Any building to which section 47(d) applies will no longer be
a qualified rehabilitated building when placed in service;
• Any property to which section 48(b), 48A(b)(3), 48B(b)(3),
48C(b)(2), 48D(b)(5), or 48E(e) applies will no longer qualify
as investment credit property when placed in service;
• Before the end of the recapture period, your proportionate
interest is reduced by more than 1/3 in an S corporation,
partnership, estate, or trust that allocated the cost or basis
of property to you for which you claimed a credit;
• You return leased property (on which you claimed a credit)
to the lessor before the end of the recapture period;
• A net increase in the amount of nonqualified nonrecourse
financing occurs for any property to which section 49(a)(1)
applied;
• A grant under section 1603 of the American Recovery and
Reinvestment Tax Act of 2009 (Section 1603 grant) 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
Section 1603 grant;
• A grant under section 9023 of the Patient Protection and
Affordable Care Act was made for investment for which a
credit was determined under section 48D (as in effect before
its repeal on March 23, 2018) before the grant was made; or
• You engage in an applicable transaction, as defined in
section 50(a)(6)(D).

Any required recapture is reported on Form 4255. For details,
see Form 4255.

Specific Instructions
Generally, (a) an estate or trust whose entire qualified
rehabilitation expenditures or bases in energy property
CAUTION are allocated to beneficiaries, (b) an S corporation, or (c)
a partnership doesn’t have to complete and attach Form 3468 to
its tax return. However, if the estate or trust, S corporation, or
partnership is the owner of or passing through qualified
rehabilitation expenditures for a certified historic structure, the
entity must complete lines 11h and 11i of the form and attach it
to its tax return even if the credit is not being claimed by the
entity. See Shareholders of S Corporations, Partners of
Partnerships, and Beneficiaries of Estates and Trusts below for
information that the entity must provide when allocating the
credit.

!

Shareholders of S Corporations,
Partners of Partnerships, and
Beneficiaries of Estates and Trusts

If you are a shareholder, partner, or beneficiary of the
designated pass-through entity, the entity will provide to you the
information necessary to complete the following.
• The qualified investment in qualifying advanced coal project
property for lines 5a through 5c.
• The qualified investment in qualifying gasification or
advanced energy project property for lines 6a and 6b.
• The information for line 7 less any amount for advanced
manufacturing investment credit that is treated as deemed
payment (if elected on line 10).
• The information for lines 11b through 11g for the
rehabilitation credit.
• The basis of energy property for lines 12a, 12b, 12c, 12e,
12h, 12k, 12q, 12t, 12w, 12y, 12z, 12bb,12cc, and 12dd.
• The kilowatt capacity for lines 12f, 12i, 12l, and 12r.
• The megawatt capacity or horsepower for line 12u.
• Lines 1 through 4 and lines 11h and 11i, if the lessor has
elected to treat the lessee as having acquired the property.

Exceptions to recapture. Recapture of the investment credit
doesn't apply to any of the following.
1. A transfer due to the death of the taxpayer.
2. A transfer between spouses or incident to divorce under
section 1041. However, a later disposition by the transferee
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Instructions for Form 3468 (2022)

Part I—Information Regarding the
Election To Treat the Lessee as the
Purchaser of Investment Credit
Property

For more information on the new allocation round for section
48A credits, see Notice 2020-88, 2020-53 I.R.B. 1795, available
at IRS.gov/irb/2020-53_IRB#NOT-2020-88.
Basis. Qualified investment for any tax year is the basis of
eligible property placed in service by the taxpayer during the tax
year that is part of a qualifying advanced coal project. Eligible
property is limited to property that can be depreciated or
amortized and that was constructed, reconstructed, or erected
and completed by the taxpayer; or that is acquired by the
taxpayer if the original use of such property commences with the
taxpayer.

Generally, for purposes of eligibility for and figuring the amount
of the investment credit, a lessor of property may elect to treat
the lessee as having acquired the property. Once the election is
made, the lessee will be entitled to an investment credit for that
property for the tax year in which the property is placed in
service and the lessor will not be entitled to such a credit.

Basis reduction for certain financing. If property is financed
in whole or in part by subsidized energy financing or by
tax-exempt private activity bonds, the amount that you can claim
as basis is the basis that would otherwise be allowed multiplied
by a fraction that is 1 reduced by a second fraction, the
numerator of which is that portion of the basis allocable to such
financing or proceeds, and the denominator of which is the basis
of the property.
For example, if the basis of the property is $100,000 and the
portion allocable to such financing or proceeds is $20,000, the
fraction of the basis that you may claim the credit on is 4/5 (that
is, 1 minus $20,000/$100,000).
Subsidized energy financing means financing provided under
a federal, state, or local program, a principal purpose of which is
to provide subsidized financing for projects designed to
conserve or produce energy.

If the leased property is disposed of, or otherwise ceases to
be investment credit property, the property will generally be
subject to the recapture rules for early dispositions.
The lessor will provide the lessee with all the information
needed to complete lines 11h and 11i, if applicable.
For information on making the election, see section 48(d) (as
in effect on November 4, 1990) and related regulations. For
limitations, see sections 46(e)(3) and 48(d) (as in effect on
November 4, 1990).

Line 2

Enter the lessor's full address. Enter the address of the lessor's
principal office or place of business. Include the suite, room, or
other unit number after the street address. If the post office
doesn't deliver mail to the street address and the lessor has a
P.O. box, show the box number instead.

Line 5a

Do not use the address of the registered agent for the state in
which the lessor is incorporated. For example, if a business is
incorporated in Delaware or Nevada and the lessor's principal
place of business is located in Little Rock, AR, you should enter
the Little Rock address.

Enter the qualified investment in integrated gasification
combined cycle property placed in service during the tax year for
projects described in section 48A(d)(3)(B)(i). Eligible property is
any property that is part of a qualifying advanced coal project
using an integrated gasification combined cycle and is
necessary for the gasification of coal, including any coal
handling and gas separation equipment.

If the lessor receives its mail in care of a third party (such as
an accountant or attorney), enter on the street address line “C/O”
followed by the third party's name and street address or P.O.
box.

Integrated gasification combined cycle is an electric
generation unit that produces electricity by converting coal to
synthesis gas, which in turn is used to fuel a combined cycle
plant to produce electricity from both a combustion turbine
(including a combustion turbine/fuel cell hybrid) and a steam
turbine.

Part II—Qualifying Advanced Coal
Project Credit, Qualifying Gasification
Project Credit, Qualifying Advanced
Energy Project Credit, and Advanced
Manufacturing Investment Credit

Line 5b
Enter the qualified investment in advanced coal-based
generation technology property placed in service during the tax
year for projects described in section 48A(d)(3)(B)(ii). Eligible
property is any property that is part of a qualifying advanced coal
project (defined earlier) not using an integrated gasification
combined cycle.

Qualifying Advanced Coal Project Credit

A qualifying advanced coal project is a project that:
• Uses advanced coal-based generation technology (as
defined in section 48A(f)) to power a new electric generation
unit or to refit or repower an existing electric generation unit
(including an existing natural gas-fired combined cycle unit);
• Has fuel input that, when completed, will be at least 75%
coal;
• Has an electric generation unit or units at the site that will
generate at least 400 megawatts;
• Has a majority of the output that is reasonably expected to
be acquired or utilized;
• Is to be constructed and operated on a long-term basis
when the taxpayer provides evidence of ownership or
control of a site of sufficient size;
• Will be located in the United States; and
• Includes equipment that separates and sequesters at least
65% (70% in the case of an application for reallocated
credits) of the project's total carbon dioxide emissions for
project applications described in section 48A(d)(2)(A)(ii).

Instructions for Form 3468 (2022)

Line 5c
Enter the qualified investment in advanced coal-based
generation technology property placed in service during the tax
year for projects described in section 48A(d)(3)(B)(iii). Eligible
property is any certified property located in the United States
and that is part of a qualifying advanced coal project (defined
earlier) that has equipment that separates and sequesters at
least 65% of the project's total carbon dioxide emissions. This
percentage increases to 70% if the credits are later reallocated
by the IRS.

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The credit for 2-wheeled plug-in electric vehicles expired
on December 31, 2021. Unless new legislation is
CAUTION passed, it's no longer eligible for a qualified plug-in
electric drive motor vehicle credit.

The credit will be recaptured if a project fails to attain or
maintain the carbon dioxide separation and sequestration
requirements. For details, see section 48A(i) and Notice
2011-24, 2011-14 I.R.B. 603, available at IRS.gov/irb/
2011-14_IRB#NOT-2011-24.

!

A qualifying advanced energy project doesn't include any
portion of a project for the production of any property that is used
in the refining or blending of any transportation fuel (other than
renewable fuels).
Eligible property. Eligible property is property that is
necessary for the production of property described in section
48C(c)(1)(A)(i), for which depreciation or amortization is
available and is tangible personal property or other tangible
property (not including a building or its structural components),
but only if the property is used as an integral part of the
qualifying advanced energy project.
Transitional rule. Enter only the basis:
• Attributable to construction, reconstruction, or erection by
the taxpayer after February 17, 2009;
• Of property acquired and placed in service after February
17, 2009; and
• Only to the extent of the qualified investment (as determined
under section 46(c) and (d) as in effect on November 4,
1990) with respect to qualified progress expenditures made
after February 17, 2009.

Qualifying Gasification or Advanced Energy
Project Credits
Qualifying gasification project. A qualifying gasification
project is a project that:
• Employs gasification technology (as defined in section
48B(c)(2)),
• Is carried out by an eligible entity (as defined in section
48B(c)(7)), and
• Includes a qualified investment of which an amount not to
exceed $650 million is certified under the qualifying
gasification program as eligible for credit.
The total amount of credits that may be allocated under the
qualifying gasification project program may not exceed $600
million.
For more information on the qualifying gasification project
and the qualifying gasification program, see Notice 2009-23,
2009-16 I.R.B. 802, available at IRS.gov/irb/
2009-16_IRB#NOT-2009-23, which is amplified by Notice
2014-81, 2014-53 I.R.B. 1001, available at IRS.gov/irb/
2014-53_IRB#NOT-2014-81. Also, see Notice 2011-24,
2011-14 I.R.B. 603, available at IRS.gov/irb/
2011-14_IRS#NOT-2011-24.
Basis reduction. If property is financed in whole or in part by
subsidized energy financing or by tax-exempt private activity
bonds, figure the credit by using the basis of such property
reduced under the rules described in Basis reduction for certain
financing, earlier.

For fiscal year filers claiming the qualifying advanced
energy project after 2022, additional guidance relating to
CAUTION qualifying advanced energy project will be posted at
IRS.gov/Form3468 in the coming weeks.

!

Line 6a
If you’re claiming the qualified gasification project property
(defined in Qualifying gasification project, earlier), enter the
qualified investment in qualifying gasification project property
placed in service during the tax year for which credits were
allocated or reallocated after October 3, 2008, and that includes
equipment that separates and sequesters at least 75% of the
project's carbon dioxide emissions. Qualified investment is the
basis of eligible property placed in service during the tax year
that is part of a qualifying gasification project.

Qualifying advanced energy project. To be eligible for the
qualifying advanced energy project credit, some or all of the
qualified investment in the qualifying advanced energy project
must be certified by the IRS under section 48C(d).
For more information on certification, see Notice 2009-72,
2009-37 I.R.B. 325, available at IRS.gov/irb/
2009-37_IRB#NOT-2009-72 and Notice 2013-12, 2013-10
I.R.B. 543, available at IRS.gov/irb/2013-10_IRB#NOT-2013-12.
Qualifying advanced energy project means a project that
re-equips, expands, or establishes a manufacturing facility for
the production of:
• Property designed to be used to produce energy from the
sun, wind, geothermal deposits (within the meaning of
section 613(e)(2)), or other renewable resources;
• Fuel cells, microturbines, or an energy storage system for
use with electric or hybrid-electric motor vehicles;
• Electric grids to support the transmission of intermittent
sources of renewable energy, including storage of the
energy;
• Property designed to capture and sequester carbon dioxide
emissions;
• Property designed to refine or blend renewable fuels or to
produce energy conservation technologies (including
energy-conserving lighting technologies and smart grid
technologies);
• New qualified plug-in electric drive motor vehicles (as
defined in section 30D), or components that are designed
specifically for use with those vehicles, including electric
motors, generators, and power control units; and
• Other advanced energy property designed to reduce
greenhouse gas emissions.

For purposes of this credit, eligible property includes any
property that is part of a qualifying gasification project and
necessary for the gasification technology of such project. The
IRS is required to recapture the benefit of any allocated credit if a
project fails to attain or maintain these carbon dioxide separation
and sequestration requirements. See section 48B(f) and
IRS.gov/irb/2011-14_IRB#NOT-2011-24.
If you’re claiming the qualifying advanced energy property
(defined in Qualifying advanced energy project, earlier), enter
the qualified investment in qualifying advanced energy project
property placed in service during the tax year. Qualified
investment is the basis of eligible property placed in service
during the tax year that is part of a qualifying advanced energy
project.
If you’re claiming both the qualifying gasification project
property and the qualifying advanced energy project property,
add the qualified investment property for both and enter that
amount on the dashed entry line before 6a.

Line 6b
Enter the qualified investment, other than line 6a, in qualifying
gasification project property (defined earlier) placed in service
during the tax year.
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Instructions for Form 3468 (2022)

Advanced Manufacturing Investment Credit

equal to the amount of the credit. See the special rule for
partnerships and S corporations, later.

Qualified investment. The qualified investment for any
advanced manufacturing facility is the basis of any qualified
property placed in service by the taxpayer during the tax year
and after 2022 that is part of an advanced manufacturing facility.

Requesting the deemed payment. A deemed payment
election will be made no later than the due date of the tax return
(including extensions of time to file) for the tax year for which the
election is made. The election can’t be made earlier than May 8,
2023. The deemed payment election is irrevocable.
Payment application date. The deemed payment will be
treated as made on the later of either the due date of the tax
return (determined without regard to extensions) or the date the
return is filed.

The advanced manufacturing investment credit is equal to 25%
of the qualified investment in any advanced manufacturing
facility for an eligible taxpayer for the tax year.

Advanced manufacturing facility. Advanced manufacturing
facility means a facility whose primary purpose is the
manufacturing of semiconductors or semiconductor
manufacturing equipment.

Additional information. If you choose to elect to treat the
advanced manufacturing investment credit as a payment under
section 48D(d)(1) or 48D(d)(2)(A), guidance regarding the
election, including a detailed list of all required information, will
be provided at a later date. Please consult this guidance when
completing Form 3468 and making the deemed payment
election.
For the latest guidance related to electing the deemed
payment, go to IRS.gov/Form3468.
Attachment. Attach a statement to your return with
information regarding the deemed payment election. The
attached information statement should be named
“CHIPS22DPE.” For example, if you attach a PDF, the name of
the PDF should be “CHIPS22DPE.”

Eligible taxpayer. An eligible taxpayer is a taxpayer who isn't a
foreign entity of concern (as defined in section 9901(6) of P. L.
116-283), and hasn't made an applicable transaction (as defined
in section 50(a)) during the tax year.
Qualified property. Qualified property includes any building or
its structural components and all of the following.
• Property that is tangible property.
• Property that is allowed depreciation or amortization.
• Property that is constructed, reconstructed, or erected by
the taxpayer or acquired by the taxpayer if the original use of
the property commences with the taxpayer.
• Property that is integral to the operation of the advanced
manufacturing facility.

Excessive payment. With respect to the property for the tax
year for which the deemed payment is made, an excess
payment is the following.
• The amount treated as a payment by section 48D(d)(1) or
the amount of payment made by section 48D(d)(2)(A), over
• The amount of the credit that would be allowed per section
48D(a).

Exception. Qualified property doesn't include a building or a
portion of a building used for offices, administrative services, or
other functions unrelated to manufacturing.
Coordination with rehabilitation credit. The qualified
investment with respect to any advanced manufacturing facility
for any tax year shall not include the portion of the basis of any
property that is attributable to qualified rehabilitation
expenditures (as defined in section 47(c)(2)).

Addition to tax. If any amount treated as a payment is
determined to be an excessive payment, the tax imposed for the
tax year that the determination is made will be increased by the
following.
• The amount of the excessive payment, plus
• 20% of the excessive payment.

Certain progress expenditure rules made applicable. Rules
similar to the rules of section 46(c)(4) and 46(d) (as in effect on
the day before the date of the enactment of P.L. 101-158) shall
apply for purposes of the advanced manufacturing investment
credit.

The 20% addition to tax will not apply if the taxpayer
demonstrates that the excessive payment resulted from
reasonable cause.

Line 7

Basis reduction and recapture. Rules similar to the rules of
sections 50(a) and 50(c) will apply with respect to the amount
treated as a payment made by the taxpayer under section
48D(d)(1), and any payment made under section 48D(d)(2)(A).
See Recapture of Credit, earlier, for more information.
You must reduce the basis by the amount of the credit
determined.

Enter the qualifying investment in advanced manufacturing
facility (defined above) placed in service after 2022, and for any
property the construction began prior to 2023, to the extent the
basis attributable to the construction, reconstruction, or erection
began after August 9, 2022.

Credit From Cooperatives
Line 9

Application to partnerships and S corporations. If a
partnership or S corporation makes an election under section
48D(d)(1):
• The Secretary will make a payment to the partnership or S
corporation equal to the amount of the credit. For more
information, see Treatment of payments to partnerships and
S corporations below.
• The credit will be reduced to zero for all purposes of the
Internal Revenue Code. No double benefit will be allowed.
• Any payment will be treated as tax exempt income for
purposes of sections 705 and 1366.
• A partner's distributive share of the tax exempt income will
be based on the partner's distributive share of the otherwise
applicable credit for the tax year.

Patrons, including cooperatives that are patrons in other
cooperatives, enter the unused investment credit from the
qualifying advanced coal project credit, qualifying gasification
project credit, qualifying advanced energy project credit, or
advanced manufacturing investment credit allocated from
cooperatives. If you are a cooperative, see the instructions for
Form 3800, Part III, line 1a, for allocating the investment credit to
your patrons.

Deemed Payment

A taxpayer can make an election with respect to an Advanced
Manufacturing Investment Credit to treat the credit as a deemed
payment. The deemed payment will be applied against the tax
imposed for the tax year for which the credit was determined,
Instructions for Form 3468 (2022)

Application at partner and shareholder level. In the case
of any property held directly by a partnership or S corporation,
no election by any partner or shareholder will be allowed with
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rehabilitation expenditures during a self-selected 24-month
period that ends with or within your tax year are more than
the greater of $5,000 or your adjusted basis in the building
and its structural components. Figure adjusted basis on the
first day of the 24-month period or the first day of your
holding period, whichever is later. If you are rehabilitating
the building in phases under a written architectural plan and
specifications that were completed before the rehabilitation
began, substitute “60-month period” for “24-month period.”

respect to any credit determined under section 48D(a) with
respect to such property.
Treatment of payments to partnerships and S
corporations. Deemed payments will be treated in the same
manner as a refund due from a credit provision.

Line 10
Add lines 5d, 6c, 7, and 9. Enter this amount on line 10 and on
Form 3800, Part III, line 1a. However, if you elected to treat the
amount of credit on line 7 as a deemed payment per section
48D(d)(1), enter the total less the amount treated as a deemed
payment on Form 3800, Part III, line 1a. As a result, Form 3468,
line 10, and Form 3800, Part III, line 1a, may not match
depending on your election.

3. Depreciation must be allowable with respect to the building.
Depreciation isn't allowable if the building is permanently
retired from service. If the building is damaged, it isn't
considered permanently retired from service where the
taxpayer repairs and restores the building and returns it to
actual service within a reasonable period of time.
4. The building must have been placed in service before the
beginning of rehabilitation. This requirement is met if the
building was placed in service by any person at any time
before the rehabilitation began.

Use the table below to see what line on your tax return you
enter the deemed payment amount per section 48D(d)(1). On
the dotted line next to the line on the tax return write
“CHIPS22DPE.” If there is not a dotted line after the entry space
to make this entry, put an asterisk next to the line number and
put a footnote at the bottom of the page indicating the line
number and write “CHIPS22DPE.”
Form

Line Number

1065

Line 28

1120

Schedule J, line 20d

1120-F

Line 5j

1120-REIT

Line 25f(1)

1120-RIC

Line 29f

1120-S

Line 23d

5. For a building under the transition rule, (a) at least 75% of
the external walls must be retained with 50% or more kept
in place as external walls, and (b) at least 75% of the
existing internal structural framework of the building must be
retained in place.
Qualified rehabilitation expenditures. To be qualified
rehabilitation expenditures, your expenditures must meet all six
of the following requirements.
1. The expenditures must be for (a) nonresidential real
property, (b) residential rental property (but only if a certified
historic structure; see Regulations section 1.48-1(h)), or (c)
real property that has a class life of more than 12.5 years.
2. The expenditures must be incurred in connection with the
rehabilitation of a qualified rehabilitated building.

Part III—Rehabilitation Credit and
Energy Credit

3. The expenditures must be capitalized and depreciated
using the straight line method.

Rehabilitation Credit

4. The expenditures can't include the costs of acquiring or
enlarging any building.

If the adjusted basis of the building is determined in whole or
in part by reference to the adjusted basis of a person other than
the taxpayer, see Regulations section 1.48-12(b)(2)(viii) for
additional information that must be attached.

5. If the expenditures are in connection with the rehabilitation
of a certified historic structure or a building in a registered
historic district, the rehabilitation must be certified by the
Secretary of the Interior as being consistent with the historic
character of the property or district in which the property is
located. This requirement doesn't apply to a building in a
registered historic district if (a) the building isn't a certified
historic structure; (b) the Secretary of the Interior certifies
that the building isn't of historic significance to the district;
and (c) if the certification in (b) occurs after the rehabilitation
began, the taxpayer certifies in good faith that the taxpayer
wasn't aware of that certification requirement at the time the
rehabilitation began.

You are allowed a credit for qualified rehabilitation expenditures
made for any qualified rehabilitated building. You must reduce
your basis by the amount of the credit determined for the tax
year. See Regulations section 1.47-7.

Qualified rehabilitated building. To be a qualified
rehabilitated building, your building must meet all five of the
following requirements.
1. The building must be a certified historic structure. A certified
historic structure is any building (a) listed in the National
Register of Historic Places, or (b) located in a registered
historic district (as defined in section 47(c)(3)(B)) and
certified by the Secretary of the Interior as being of historic
significance to the district. Certification requests are made
through your State Historic Preservation Officer on National
Park Service (NPS) Form 10-168, Historic Preservation
Certification Application. The request for certification should
be made prior to physical work beginning on the building.
For pre-1936 buildings under the transition rule, see
Transitional rule for amounts paid or incurred after 2017,
later.

6. The expenditures can't include any costs allocable to the
part of the property that is (or may reasonably be expected
to be) tax-exempt use property (as defined in section 168(h)
except that “50%” shall be substituted for “35%” in
paragraph (1)(B)(iii)). This exclusion doesn't apply for
line 11d.

Line 11
For credit purposes, the expenditures are generally taken into
account for the tax year in which the qualified rehabilitated
building is placed in service. However, with certain exceptions,
you may elect to take the expenditures into account for the tax
year in which they were paid (or, for a self-rehabilitated building,

2. The building must be substantially rehabilitated. A building
is considered substantially rehabilitated if your qualified
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Instructions for Form 3468 (2022)

If you fail to receive final certification of completed work prior
to the date that is 30 months after the date that you filed the tax
return on which the credit was claimed, you must submit a
written statement to the IRS stating that fact before the last day
of the 30th month. You will be asked to consent to an agreement
under section 6501(c)(4) extending the period of assessment for
any tax relating to the time for which the credit was claimed.

when capitalized) if (a) the normal rehabilitation period for the
building is at least 2 years, and (b) it is reasonable to expect that
the building will be a qualified rehabilitated building when placed
in service. For details, see section 47(d). To make this election,
check the box on line 11a. The credit, as a percent of
expenditures paid or incurred during the tax year for any
qualified rehabilitated building, depends on the type of structure
and its location.

Mail to:

Transitional rule for amounts paid or incurred after 2017.
The 10% credit for pre-1936 buildings no longer applies and the
20% credit for a certified historic structure is generally modified
to allow 100% of qualified rehabilitation expenditures ratably
over a 5-year period for amounts paid or incurred after 2017. For
qualified rehabilitation expenditures paid or incurred during the
transitional period stated below, the taxpayer can claim the 10%
credit for pre-1936 buildings and the 20% credit for a certified
historic structure (under section 47(a), as in effect before
December 22, 2017). The transitional rule applies to amounts
paid or incurred as follows.
In the case of qualified rehabilitation expenditures with
respect to any building (a) owned or leased by the taxpayer
during the entirety of the period after 2017; and (b) with respect
to the 24-month period selected by the taxpayer under section
47(c)(1)(B)(i) (as in effect after December 21, 2017) (or the
60-month period applicable under section 47(c)(1)(B)(ii)), which
begins no later than 180 days after December 22, 2017, the
transitional rule applies to expenditures paid or incurred after the
end of the tax year in which the 24-month period (or the
60-month period) ends.
If you have more than one property that qualifies for the
rehabilitation credit, attach a schedule showing the type of
property (pre-1936 building or certified historic structure), NPS
number, date of final certification, and the partnership employer
identification number (EIN), if applicable. Also, indicate if the
transitional rule applies.

Internal Revenue Service
Technical Services
31 Hopkins Plaza, Room 1108
Baltimore, MD 21201
You must retain a copy of the final certification of completed
work as long as its contents may be needed for the
administration of any provision of the Internal Revenue Code.
If the final certification is denied by the Department of the
Interior, the credit is disallowed for any tax year in which it was
claimed, and you must file an amended return if necessary. See
Regulations section 1.48-12(d)(7)(ii) for details.

Energy Credit

The energy credit for the tax year is the energy percentage of the
basis of each energy property placed in service during the tax
year. The energy properties include the following.
• Geothermal energy property.
• Solar energy property to generate electricity, or solar energy
property to illuminate.
• Qualified fuel cell property.
• Qualified microturbine property.
• Combined heat and power system property.
• Qualified small wind energy property.
• Waste energy recovery property.
• Geothermal heat pump system property.
• Energy storage technology property.
• Qualified biogas property.
• Microgrid controllers property.

Line 11h
If you are claiming a credit for a certified historic structure on
line 11f or 11g, enter the assigned NPS project number on
line 11h. If the qualified rehabilitation expenditures are from an S
corporation, partnership, estate, or trust, enter on line 11h the
EIN of the pass-through entity instead of the assigned NPS
project number, and skip line 11i.

IRA 2022 added to the energy properties under section
48 the items energy storage technology, qualified biogas
CAUTION property, and microgrid controllers. Fiscal year filers
may be eligible to claim these credits for qualified energy
property placed in service after 2022.

!

The lessor will provide the lessee with the NPS project
number to enter on line 11h.

To qualify as energy property, property must:
1. Meet the performance and quality standards, if any, that
have been prescribed by regulations and are in effect at the
time the property is acquired;

Line 11i
Enter the date of the final certification of completed work
received from the Secretary of the Interior on line 11i. If the final
certification hasn't been received by the time the tax return is
filed for a year in which the credit is claimed, attach a copy of the
first page of NPS Form 10-168, Historic Preservation
Certification Application (Part 2—Description of Rehabilitation),
with an indication that it was received by the Department of the
Interior or the State Historic Preservation Officer, together with
proof that the building is a certified historic structure (or that such
status has been requested). After the final certification of
completed work has been received, file Form 3468 with the first
income tax return filed after receipt of the certification and enter
the assigned NPS project number and the date of the final
certification of completed work on the appropriate lines on the
form. Also, attach an explanation and indicate the amount of
credit claimed in prior years.

Instructions for Form 3468 (2022)

2. Be property for which depreciation (or amortization in lieu of
depreciation) is allowable; and
3. Be property either:
a. The construction, reconstruction, or erection of which is
completed by the taxpayer; or
b. Acquired by the taxpayer if the original use of such
property commences with the taxpayer.
Property will not include any property that is part of a
production credit under section 45 for the tax year or any prior
tax year.
Energy property doesn't include any property acquired before
February 14, 2008, or to the extent of basis attributable to
construction, reconstruction, or erection before February 14,
2008, that is public utility property, as defined by section 46(f)(5)
(as in effect on November 4, 1990), and related regulations.
-7-

Qualified interconnection property. Qualified
interconnection property is, with respect to an energy project
that isn't a microgrid controller, any tangible property that:
• Is part of an addition, modification, or upgrade to a
transmission or distribution system that is required at or
beyond the point at which the energy project interconnects
to such transmission or distribution system in order to
accommodate such interconnection;
• Is either constructed, reconstructed, or erected by the
taxpayer, or that the cost with respect to the construction,
reconstruction, or erection of such property is paid or
incurred by the taxpayer; and
• The original use, pursuant to an interconnection agreement,
commences with a utility.

You must reduce the basis of energy property by 50% of the
energy credit determined.
You must reduce the basis of energy property used for
figuring the credit by any amount attributable to qualified
rehabilitation expenditures.
Basis reduction. If energy property (acquired before 2009, or
to the extent of its basis attributable to construction,
reconstruction, or erection before 2009) is financed in whole or
in part by subsidized energy financing or by tax-exempt private
activity bonds, reduce the basis of such property under the rules
described in Basis reduction for certain financing, earlier. For
property acquired after 2008, and for basis attributable to
construction, reconstruction, or erection after 2008, there is no
basis reduction for property financed by subsidized energy
financing or by tax-exempt private activity bonds.

Interconnection agreement. Interconnection agreement
means an agreement with a utility for the purposes of
interconnecting the energy property owned by the taxpayer to
the transmission or distribution system of the utility.
Utility. For the purposes of section 48(a)(8)(D), utility means
the owner or operator of an electrical transmission or distribution
system that is subject to the regulatory authority of any the
following.
• A state or political subdivision thereof.
• Any agency or instrumentality of the United States.
• A public service or public utility commission or other similar
body of any state or political subdivision thereof.
• The governing or ratemaking body of an electric
cooperative.

Credit reduced for tax-exempt bonds. The amount of the
credit with respect to any facility for any tax year will be reduced
by the amount that is the product of the amount so determined
for such year and the lesser of one of the following.
• 15%, or
• A fraction, which the numerator is the sum for the tax year
and all prior tax years, of proceeds of an issue of any
obligations the interest on which is exempt from tax under
section 103 and that is used to provide financing for the
qualified facility over the denominator, which is the
aggregate amount of additions to the capital account for the
qualified facility for the tax year and all prior tax years as of
the close of the tax year.

Special rule for interconnection property. In the case of
expenses paid or incurred for interconnection property, amounts
otherwise chargeable to capital account with respect to such
expenses will be reduced under rules similar to the rules of
section 50(c)(3).

The credit reduced for tax-exempt bonds, above,
applies to construction, reconstruction, or erection of an
CAUTION energy property, the construction of which begins after
August 16, 2022.

!

Increased credit amount for energy projects. In the case of
any energy project that satisfies the requirements of Project
requirements below, the amount of the credit determined will be
equal to an amount multiplied by 5. For purposes of the previous
statement, the form has already been adjusted to show 30% or
10%, as applicable for tax year 2022. See Notice 2022-61 for
more information.
Energy project. Energy project means a project consisting of
one or more energy properties that are part of a single project.
Project requirements. A project meets the project
requirements if it is one of the following.
• A project with a maximum net output of less than 1
megawatt of electrical (as measured in alternating current)
or thermal energy.
• A project the construction of which begins before January
29, 2023, with respect to prevailing wage and
apprenticeship requirements.
• A project that satisfies the prevailing wage and
apprenticeship requirements.

Coordination with Department of Treasury grants. In the
case of any property where the Secretary makes a grant under
section 1603 of the American Recovery and Reinvestment Tax
Act of 2009, no credit will be determined under section 48 or
section 45 with respect to the property for the tax year in which
the grant is made or any subsequent tax year.
Recapture. If a credit was determined with respect to a
property for any tax year ending before the grant is made:
• The tax imposed on the taxpayer for the tax year in which
the grant is made will be increased by the credit amount
allowed under section 38,
• The general business carryforwards under section 39 will be
adjusted to recapture the portion of the credit that was not
allowed, and
• The amount of the grant will be determined without regard to
any reduction in the basis of the property by the credit.
Treatment of grants. Any grant will not be included in the
gross income or alternative minimum taxable income of the
taxpayer, but will be taken into account in determining the basis
of the property to which the grant relates, except that the basis of
such property will be reduced under section 50(c) in the same
manner as a credit allowed.

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, the credit amounts
CAUTION are 6% or 2% respectively, unless the prevailing wage
and apprenticeship requirements are satisfied or the project has
a maximum net output of less than 1 megawatt of electrical or
thermal energy.

!

Interconnection property. In general, energy property shall
include amounts paid or incurred by the taxpayer for qualified
interconnection property in connection with the installation of
energy property placed in service after 2022 (as defined in
section 48(a)(3)) that:
• Has a maximum net output of not greater than 5 megawatts
(as measured in alternating current), to provide for the
transmission or distribution of the electricity produced or
stored by such property; and
• Are properly chargeable to the capital account of the
taxpayer.

Prevailing wage requirements. In general, the taxpayer shall
ensure, with respect to any energy project, that any laborers and
mechanics employed by the taxpayer or any contractor or
subcontractor shall be paid wages at rates not less than the
prevailing rates for construction, alteration, or repair of a similar
character in the locality in which the project is located as most
recently determined by the Secretary of Labor, in accordance
with subchapter IV of chapter 31 of title 40, United States Code.
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Instructions for Form 3468 (2022)

and percentage of such recapture shall be determined under
rules similar to the rules of section 50(a).

Questions regarding the applicability of a wage determination
or its listed classifications and wage rates should be directed to
the Department of Labor, Wage, and Hour Division via email at
[email protected].
Laborers, mechanics, contractors, or subcontractors.
Any laborers and mechanics employed by the taxpayer or any
contractor or subcontractor in the construction of such energy
project, and for the 5-year period beginning on the date such
project is originally placed in service, the alteration or repair of
such project, shall be paid prevailing wages.
Subject to recapture, for purposes of any determination in the
construction of such energy credit for the tax year in which the
energy project is placed in service, the taxpayer shall be
deemed to satisfy the requirement for the alteration or repair of
such project, at the time such project is placed in service.
Correction and penalty for failure to satisfy wage
requirements. In the case of any taxpayer that fails to satisfy
the prevailing wage requirements mentioned above, the
taxpayer shall be deemed to have satisfied the requirement with
respect to any laborer or mechanic who was paid at a rate below
the prevailing wage rate, if the following are completed.

Apprenticeship requirements. Regarding the construction of
any qualified facility, apprenticeship requirements are as follows.
• Taxpayers shall ensure that the applicable percentage of
the total labor hours of the construction, alteration, or repair
work (including such work performed by any contractor or
subcontractor), subject to apprentice to journeyworker ratio,
be performed by qualified apprentices. For construction that
begins before 2023, the ratio is 10%; and for construction
that begins in 2023, the ratio is 12.5%.
• Apprenticeship requirements for
apprentice-to-journeyworker ratios shall be subject to any
applicable requirements for apprentice-to-journeyworker
ratios of the Department of Labor or the applicable state
apprenticeship agency.
• With regard to participation, each taxpayer, contractor, or
subcontractor who employs four or more individuals to
perform construction, alteration, or repair work shall employ
one or more qualified apprentices to perform such work.
Registered apprenticeship programs can be located using the
Office of Apprenticeship’s partner finder tool, available at https://
www.apprenticeship.gov/partner-finder and through the
applicable State Apprenticeship Agency, https://
www.apprenticeship.gov/about-us/state-offices.
Exception. A taxpayer will not be treated as failing to satisfy
the requirements described above, if the taxpayer:

1. The taxpayer makes payment to such laborer or mechanic
in an amount equal to the sum of the following.
a. An amount equal to the difference between (i) the
amount of wages paid to such laborer or mechanic
during such period, and (ii) the amount of wages
required to be paid to such laborer or mechanic during
such period, plus

1. Satisfies a good faith effort; or
2. In the case of any failure by the taxpayer to satisfy the
percentage of total labor hours and participation above, with
respect to the construction, alteration, or repair work on any
qualified facility where construction began in 2023, makes
payment to the Secretary of a penalty in an amount equal to
the product of:

b. Interest on the amount determined under item (i) at the
underpayment rate established under section 6621(a)
(2) (determined by substituting “6%” for “3%”) for the
period described in item (i), and
2. Makes payment to the Secretary of a penalty in an amount
equal to the product of the following.

a. $50, multiplied by

a. $5,000, multiplied by

b. The total labor hours for which the requirement
described in such subparagraph was not satisfied with
respect to the construction, alteration, or repair work on
such qualified facility.

b. The total number of laborers and mechanics who were
paid wages at a rate below the prevailing wage
requirement rate for any period during such year.
Deficiency procedures don't apply. Subchapter B of
chapter 63 (relating to deficiency procedures for income, estate,
gift, and certain excise taxes) will not apply with respect to the
assessment or collection of any penalty imposed.
Intentional disregard. If the Secretary determines that any
failure described in Correction and penalty for failure to satisfy
wage requirements, earlier, was due to intentional disregard of
the prevailing wage requirements, then the following changes
will occur.
• In number 1 above, "the sum" with “three times the sum,”
and
• In number 2a above, "$5,000" with “$10,000.”

Good faith effort. For purposes of the exception above, a
taxpayer will be deemed to have satisfied the requirements
under this paragraph with respect to a qualified facility if the
taxpayer has requested qualified apprentices from a registered
apprenticeship program, as defined in section 3131(e)(3)(B),
and either of the following apply.
• The request has been denied, provided that such denial is
not the result of a refusal by the taxpayer or any contractors
or subcontractors engaged in the performance of
construction, alteration, or repair work with respect to such
qualified facility to comply with the established standards
and requirements of the registered apprenticeship program;
or
• The registered apprenticeship program fails to respond to
such request within 5 business days after the date on which
such registered apprenticeship program received such
request.

Limitation on period for payment. Pursuant to rules issued
by the Secretary, in the case of a final determination by the
Secretary with respect to any failure by the taxpayer to satisfy
the prevailing wage requirements, the Correction and penalty for
failure to satisfy wage requirements, described above, will not
apply unless the payments are made by the taxpayer on or
before 180 days after the date of such determination.
Recapture. The Secretary shall provide guidance for
recapturing the benefit of any increase in the credit allowed with
respect to any project that doesn't satisfy the prevailing wage
requirements (after Correction and penalty for failure to satisfy
wage requirements is applied) for the 5-year period beginning on
the date the project was originally placed in service, the
alteration or repair (but which doesn’t cease to be investment
credit property within the meaning of section 50(a)). The period
Instructions for Form 3468 (2022)

Intentional disregard. If the Secretary determines that any
failure described in good faith effort is due to intentional
disregard to satisfy the requirements for the percentage of total
labor hours and participation, earlier, Exception 2 shall be
applied by substituting “$500” for “$50” in 2a, earlier.
Labor hours. Labor hours means the total number of hours
devoted to the performance of construction, alteration, or repair
work by any individual employed by the taxpayer or by any
contractor or subcontractor; however, it excludes any hours
worked by foremen, superintendents, owners, or persons
-9-

Fuel cell power plant. Fuel cell power plant means an
integrated system comprised of a fuel cell stack assembly or
linear generator assembly, and associated balance of plant
components that converts a fuel into electricity using
electrochemical or electromechanical means.
Linear generator assembly. Linear generator assembly
doesn’t include any assembly that contains rotating parts.

employed in a bona fide executive, administrative, or
professional capacity (within the meaning of those terms in part
541 of title 29, Code of Federal Regulations).
Qualified apprentice. A qualified apprentice is an individual
who is employed by the taxpayer or by any contractor or
subcontractor and who is participating in a registered
apprenticeship program, as defined in section 3131(e)(3)(B).

Qualified fuel cell property that uses electromechanical
process or a fuel cell power plant that is comprised of a
CAUTION linear generator assembly are for property placed in
service after 2022.

Line 12a

!

Geothermal energy. Geothermal energy property is equipment
that uses geothermal energy to produce, distribute, or use
energy derived from a geothermal deposit (within the meaning of
section 613(e)(2)). For electricity produced by geothermal
power, equipment qualifies only up to, but not including, the
electrical transmission stage.
Enter the basis of any property placed in service during the
tax year that uses geothermal energy.

Enter the basis, attributable to periods after 2005 and before
October 4, 2008, of any qualified fuel cell property placed in
service during the tax year, if the property was acquired after
2005 and before October 4, 2008, or to the extent of basis
attributable to construction, reconstruction, or erection by the
taxpayer after 2005 and before October 4, 2008.

Line 12b

Line 12f

Solar energy. Solar energy property is property that has the
following.

Enter the applicable number of kilowatts of capacity attributable
to the basis on line 12e. This entry must be a whole number.

1. Equipment that uses solar energy to illuminate the inside of
a structure using fiber-optic distributed sunlight.

Line 12h

2. Electrochromic glass that uses electricity to change its light
transmittance properties in order to heat or cool a structure,
if placed in service after 2022.
a. Generate electricity,

Enter the basis, attributable to periods after October 3, 2008,
and the construction of which began before 2020 or after 2021,
of any qualified fuel cell property placed in service during the tax
year.

b. Heat or cool (or provide hot water for use in) a structure,
or

For a definition of qualified fuel cell property, see Line 12e,
earlier. Also, see When construction begins, later.

3. Equipment that uses solar energy to:

c. Provide solar process heat (but not to heat a swimming
pool).

Basis is attributable to periods after October 3, 2008, if the
property was acquired after October 3, 2008, or to the extent of
basis attributable to construction, reconstruction, or erection by
the taxpayer after October 3, 2008.

Enter the basis, attributable to periods after 2005 and the
construction of which began before 2020 or after 2021, if the
property was acquired by the taxpayer or the basis is attributable
to construction, reconstruction, or erection by the taxpayer. See
When construction begins, later.

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regarding project requirements.

!

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regarding project requirements.

!

Line 12i
Enter the applicable number of kilowatts of capacity attributable
to the basis on line 12h. This entry must be a whole number.

Line 12c

Line 12k

Enter the basis of property using solar illumination,
electrochromic glass, or solar energy placed in service during
the tax year and the construction of which began in 2020 or
2021.

Enter the basis of property using qualified fuel cell energy placed
in service during the tax year and the construction of which
began in 2020 or 2021. See When construction begins, later.

For the definition of solar illumination, electrochromic glass,
or solar energy property, see the instructions to Line 12b, earlier.

Line 12l

Line 12e

Enter the applicable number of kilowatts of capacity attributable
to the basis on line 12k. This entry must be a whole number.

Qualified fuel cell property. Qualified fuel cell property is a
fuel cell power plant that has a nameplate capacity of at least 0.5
kilowatts (1 kilowatt in the case of fuel cell plant with a linear
generator assembly) of electricity using an electrochemical or
electromechanical process and has electricity-only generation
efficiency greater than 30%. See section 48(c)(1) for further
details.

Line 12q
Qualified microturbine property. Qualified microturbine
property is a stationary microturbine power plant that has a
nameplate capacity of less than 2,000 kilowatts and has an
electricity-only generation efficiency of not less than 26% at
-10-

Instructions for Form 3468 (2022)

International Standard Organization conditions. See section
48(c)(2) for further details.
Stationary microturbine power plant. Stationary
microturbine power plant means an integrated system
comprised of a gas turbine engine, a combustor, a recuperator
or regenerator, a generator or alternator, and associated
balance of plant components that converts a fuel into electricity
and thermal energy. It also includes all secondary components
located between the existing infrastructure for fuel delivery and
the existing infrastructure for power distribution, including
equipment and controls for meeting relevant power standards,
such as voltage, frequency, and power factors.

Energy efficiency percentage. The energy efficiency
percentage of a combined heat and power system property is
the fraction—where the numerator is the total useful electrical,
thermal, and mechanical power produced by the system at
normal operating rates, and expected to be consumed in its
normal application, and the denominator is the lower heating
value of the fuel sources for the system. The energy efficiency
percentage is determined on a Btu basis.
Combined heat and power system property doesn't include
property used to transport the energy source to the facility or to
distribute energy produced by the facility.
Biomass systems. Systems designed to use biomass for at
least 90% of the energy source are eligible for a credit that is
reduced in proportion to the degree to which the system fails to
meet the efficiency standard. For more information, see section
48(c)(3)(D).

Enter the basis, attributable to periods after 2005, of any
qualified microturbine property placed in service during the tax
year, if the property was acquired after 2005, or to the extent of
basis attributable to construction, reconstruction, or erection by
the taxpayer after 2005.

Enter the basis, attributable to periods after October 3, 2008,
of any qualified combined heat and power system property
placed in service during the tax year, if the property was
acquired after October 3, 2008, or to the extent of basis
attributable to construction, reconstruction, or erection by the
taxpayer after October 3, 2008. For property placed in service
after 2022, multiply the basis by 30% (0.30) instead of 10%
(0.10).

Line 12t
Combined heat and power system property. Combined heat
and power system property means property comprising a
system that:
1. Uses the same energy source for the simultaneous or
sequential generation of electrical power, mechanical shaft
power, or both; in combination with the generation of steam
or other forms of useful thermal energy (including heating
and cooling applications).

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regarding project requirements.

!

2. Determines an energy efficiency percentage on a Btu basis.
3. Has energy efficiency percentage of which exceeds 60%
and it produces:

Line 12w
Qualified small wind energy property. Qualified small wind
energy property means property that uses a qualifying small
wind turbine to generate electricity. For this purpose, a qualifying
small wind turbine means a wind turbine that has a nameplate
capacity of not more than 100 kilowatts. For details, see section
48(c)(4). In addition, for small wind energy property acquired or
placed in service (in the case of property constructed,
reconstructed, or erected) after February 2, 2015, see Notice
2015-4, 2015-5 I.R.B. 407, available at IRS.gov/irb/
2015-05_IRB#NOT-2015-4, as modified by Notice 2015-51,
2015-31 I.R.B. 133, available at IRS.gov/irb/
2015-31_IRB#NOT-2015-51, for performance and quality
standards that small wind energy property must meet to qualify
for the energy credit.

a. At least 20% of its total useful energy in the form of
thermal energy that isn't used to produce electrical or
mechanical power (or a combination thereof), and
b. At least 20% of its total useful energy in the form of
electrical or mechanical power (or a combination
thereof).
For details, see section 48(c)(3).
Note. Taxpayers cannot take a credit for both combined heat
and power system property and waste energy recovery property
for the same property. Taxpayers must elect not to treat such
property as combined heat and power system property for
section 48 purposes.
Limitation. In the case of combined heat and power system
property with an electrical capacity in excess of the applicable
capacity placed in service during the tax year, the credit for that
year shall be equal to the amount that bears the same ratio to
the credit, as the applicable capacity bears to the capacity of
such property.
Applicable capacity. Applicable capacity means the
following:
• 15 megawatts;
• A mechanical energy capacity of more than 20,000
horsepower; or
• An equivalent combination of electrical and mechanical
energy capacities.

Enter the basis, attributable to periods after October 3, 2008,
and before 2009, of any qualified small wind energy property
placed in service during the tax year, if the property was
acquired after October 3, 2008, and before 2009, or to the extent
of basis attributable to construction, reconstruction, or erection
by the taxpayer after October 3, 2008, and before 2009.

Line 12x
Enter the smaller of the basis you entered on line 12w or $4,000.

Line 12y

Maximum capacity. Combined heat and power system
property shall not include any property comprising a system if:
• The system has a capacity in excess of 50 megawatts,
• A mechanical energy capacity in excess of 67,000
horsepower, or
• An equivalent combination of electrical and mechanical
energy capacities.
Instructions for Form 3468 (2022)

For the definition of qualified small wind energy property, see the
instructions for Line 12w, earlier.
Enter the basis, attributable to periods after 2008 and the
construction of which began before 2020 or after 2021, of any
qualified small wind energy property placed in service during the
tax year, if the property was acquired by the taxpayer or the
-11-

basis is attributable to construction, reconstruction, or erection
by the taxpayer. See When construction begins, later.

Line 12dd
Qualified investment credit facility property. Qualified
investment credit facility property is property that:
• Is tangible personal property or other tangible property (not
including a building or its structural components), but only if
the property is used as an integral part of the qualified
investment credit facility;
• Is constructed, reconstructed, erected, or acquired by the
taxpayer;
• Depreciation or amortization is allowable; and
• The original use begins with the taxpayer.

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regading project requirements.

!

Line 12z
For the definition of qualified small wind energy property, see the
instructions for Line 12w, earlier.

See section 48(a)(5) for details.

Enter the basis of property using qualified small wind energy
property placed in service during the tax year and the
construction of which began in 2020 or 2021. See When
construction begins, later.

Note. The transitional rules of section 48(m) (as in effect on
November 4, 1990) apply to offshore wind facilities for periods
after 2016. Under the transitional rules of section 48(m) (as in
effect on November 4, 1990), the phaseout of the section 48
credit provided for other types of qualified investment credit
facilities at section 48(a)(5)(E), does not apply to qualified
offshore wind facilities.
Qualified investment credit facility. A qualified investment
credit facility is a facility that:

Line 12bb
Waste energy recovery property. Qualified waste energy
recovery property means property that generates electricity
solely from heat from buildings or equipment if the primary
purpose of such building or equipment is not the generation of
electricity. The term “waste energy recovery property” shall not
include any property that has a capacity in excess of 50
megawatts. For details, see section 48(c)(5).

1. Is one of the following qualified facilities that is placed in
service after 2008. See When construction begins below.
a. Wind facility under section 45(d)(1).
b. Closed-loop biomass facility under section 45(d)(2).

Note. Taxpayers cannot take a credit for both combined heat
and power system property and waste energy recovery property
for the same property. Taxpayers must elect not to treat such
property as combined heat and power system property for
section 48 purposes.

c. Open-loop biomass facility under section 45(d)(3).
d. Geothermal or solar energy facility under section 45(d)
(4).
e. Landfill gas facility under section 45(d)(6).

Note. The transitional rules of section 48(m) (as in effect on
November 4, 1990) apply to waste energy recovery property for
periods after 2020.

f. Trash facility under section 45(d)(7).
g. Qualified hydropower facility under section 45(d)(9).
h. Marine and hydrokinetic renewable energy facility under
section 45(d)(11);

Enter the basis of waste energy recovery property placed in
service during the tax year and multiply the basis of property that
uses waste energy recovery property by 30%.

i. Is a qualified offshore wind facility. See Notice 2021-5,
2021-03 I.R.B. 479, available at IRS.gov/irb/
2021-03_IRB#NOT-2021-5, for more information on
beginning of construction requirements applied to
offshore and federal land projects.

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regarding project requirements.

!

2. No credit has been allowed under section 45 for that facility
(see Note below); and

Line 12cc

3. An irrevocable election was made to treat the facility as
energy property.

Geothermal heat pump systems. Geothermal heat pump
systems constitute equipment that uses the ground or ground
water as a thermal energy source to heat a structure or as a
thermal energy sink to cool a structure. For details, see section
48(a)(3)(A)(vii).

Note. If a taxpayer retrofits an energy property that previously
received a credit under section 45 by satisfying the 80/20 Rule
provided in section 7.05 of Notice 2018-59, 2018-28 I.R.B. 196,
available at IRS.gov/irb/2018-28_IRB#NOT-2018-59, the
taxpayer may claim an investment tax credit based on its
investment. However, if the energy property is within the
recapture period for the section 45 credit, the taxpayer may have
to recapture all or part of such section 45 credit accordingly.
Qualified offshore wind facility. For purposes of section
48(a)(5), qualified offshore wind facility means a qualified facility
(within the meaning of section 45(d)(1)) that is located in the
inland navigable waters of the United States or in the coastal
waters of the United States.

Enter the basis, attributable to periods after October 3, 2008,
of any geothermal heat pump system placed in service during
the tax year, if the property was acquired after October 3, 2008,
or to the extent of basis attributable to construction,
reconstruction, or erection by the taxpayer after October 3,
2008. If any property was placed in service during 2022, multiply
the basis of the property that uses geothermal heat pump
systems by 10%. If any property was placed in service after
2022, multiply the basis of property that uses geothermal heat
pump systems by 30%.

When construction begins. Two methods can be used to
establish that construction of a qualified facility has begun.

For fiscal year filers, the project of which construction
begins on January 29, 2023, or later, see Increased
CAUTION credit amount for energy projects, earlier, for information
regarding project requirements.

!

1. Physical Work Test is satisfied when physical work of a
significant nature begins and other requirements provided
-12-

Instructions for Form 3468 (2022)

in section 4 of IRS.gov/irb/2018-28_IRB#NOT-2018-59 are
met.

Line 12hh—Other Energy Credits and Special
Adjustments

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 other requirements
provided in section 5 of IRS.gov/irb/
2018-28_IRB#NOT-2018-59.

Energy storage technology. Energy storage technology is:
• Property (other than property primarily used in the
transportation of goods or individuals and not for the
production of electricity) that receives, stores, and delivers
energy for conversion to electricity (or, in the case of
hydrogen that stores energy), and has a nameplate capacity
of not less than 5 kilowatt hours; and
• Thermal energy storage property.

Although both methods can be used, only one method is
needed to establish that construction of a qualified facility has
begun. For energy property the construction of which begins
after 2018, as determined under the Physical Work Test or the
Five Percent Safe Harbor, 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, 2019-31 I.R.B.
487, available at IRS.gov/irb/2019-31_IRB#NOT-2019-43, for
details. Also, see Notice 2020-41, 2020-25 I.R.B. 954, available
at IRS.gov/irb/2020-25_IRB#NOT-2020-41, on tax relief for
delays caused by COVID-19. Additionally, see Notice 2021-05,
2021-3 I.R.B. 479 for more information on the beginning of
construction requirements applied to offshore and federal lands
projects.
Additional information. The election to treat a qualified
facility as energy property is made by claiming the energy credit
with respect to qualified investment credit facility property by
completing Form 3468 and attaching it to your timely filed
income tax return (including extensions) for the tax year that the
property is placed in service. You must make a separate election
for each qualified facility that is to be treated as a qualified
investment credit facility. You must also attach a statement to
Form 3468 that includes the following information.

Modifications of certain property. In the case of any
energy storage technology property, otherwise described above,
that was either (1) placed in service before August 16, 2022, and
that has a capacity of less than 5 kilowatt hours and is modified
to where the property (after the modification) has a nameplate
capacity of at least 5 kilowatt hours; or (2) is modified in a
manner that increases the nameplate capacity to at least 5
kilowatt hours, then the modified property will be treated as
energy storage technology, except for the treatment of the basis
of the existing property prior to the modification.
Thermal energy storage property. Thermal energy storage
property is property comprising a system that:
• Is directly connected to a heating, ventilation, or air
conditioning system;
• Removes heat from, or adds heat to, a storage medium for
subsequent use; and
• Provides energy for the heating or cooling of the interior of a
residential or commercial building.
Thermal energy storage property doesn’t include:

• A swimming pool,
• Combined heat and power system property, or
• A building or its structural components.

1. Your name, address, taxpayer identification number, and
telephone number.

Enter the basis on Line 12hh Worksheet, line 1, attributable to
periods after 2022, of any energy storage technology property
placed in service during the tax year, to the extent of basis
attributable to construction, reconstruction, or erection by the
taxpayer after August 16, 2022. Attach to your return a statement
with the description of how you calculated the credit. See
Additional information, later, for more information.

2. For each qualified investment credit facility, include the
following.
a. A detailed technical description of the facility, including
generating capacity.
b. A detailed technical description of the energy property
placed in service during the tax year as an integral part
of the facility, including a statement that the property is
an integral part of such facility.

Qualified biogas property. Qualified biogas property means
property comprising a system that:
1. Converts biomass (as defined in section 45K(c)(3), as in
effect on August 16, 2022), into a gas that:

c. The date that the energy property was placed in
service.

a. Consists of not less than 52% methane by volume, or
b. Is concentrated by such system into a gas that consists
of not less than 52% methane, and

d. An accounting of your basis in the energy property.
e. A depreciation schedule reflecting your remaining basis
in the energy property after the energy credit is claimed.

2. Captures such gas for sale or productive use, and not for
disposal via combustion.

3. A statement that you haven't and won’t claim a Section
1603 grant for new investment in the property for which you
are claiming the energy credit.

Qualified biogas property includes any property that is part of
a system that cleans or conditions gas, described above.
Enter the basis on Line 12hh Worksheet, line 2, attributable to
periods after 2022, of any qualified biogas energy property
placed in service during the tax year, to the extent of basis
attributable to construction, reconstruction, or erection by the
taxpayer after August 16, 2022. Attach to your return a statement
with the description of how you calculated the credit. See
Additional information, later, for more information.

4. A declaration, applicable to the statement and any
accompanying documents, signed by you, or signed by a
person currently authorized to bind you in such matters that
state the following: “Under penalties of perjury, I declare
that I have examined this statement, including
accompanying documents, and to the best of my
knowledge and belief, the facts presented in support of this
statement are true, correct, and complete.”

Microgrid controller. Microgrid controller means equipment
that is:
• Part of a qualified microgrid, and
• Designed and used to monitor and control the energy
resources and loads on such microgrid.

Enter the basis of any qualified investment credit facility
property, placed in service during the tax year, the construction
of which began after 2016.

Instructions for Form 3468 (2022)

-13-

1. 2%, in the case of any energy project that doesn't satisfy the
requirements of section 48(a)(9)(B).

Qualified microgrid. Qualified microgrid is an electrical
system that:
1. Includes equipment that is capable of generating not less
than 4 kilowatts and not greater than 20 megawatts of
electricity;

2. 10%, in the case of any energy project that does satisfy the
requirements of section 48(a)(9)(B).
Energy community. Energy community means the following.

2. Is capable of operating:

1. A brownfield site (as defined in subparagraphs (A), (B), and
(D)(ii)(III) of section 101(39) of the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980 (42 U.S.C. 9601(39)));

a. In connection with the electrical grid and as a single
controllable entity with respect to such grid,
b. Independently (and disconnected) from such grid, and

2. A metropolitan statistical area or non-metropolitan statistical
area that:

3. Is not part of a bulk-power system (as defined in section
215 of the Federal Power Act (16 U.S.C. 824o)).

a. Has (or, at any time during the period beginning after
2009, had) .17% or greater direct employment or 25%
or greater local tax revenues related to the extraction,
processing, transport, or storage of coal, oil, or natural
gas (as determined by the Secretary); and

Enter the basis on Line 12hh Worksheet, line 3, attributable to
periods after 2022, of any qualified microgrid controller property
placed in service during the tax year, to the extent of basis
attributable to construction, reconstruction, or erection by the
taxpayer after August 16, 2022. Attach to your return a statement
with the description of how you calculated the credit. See
Additional information, later, for more information.

b. Has an unemployment rate at or above the national
average unemployment rate for the previous year (as
determined by the Secretary); or

Domestic content bonus credit amount. In the case of any
energy project that satisfies the requirement below, the energy
percentage shall be increased by the applicable credit rate
increase.
Applicable credit rate increase. The applicable credit rate
increase shall be the one of the following.

3. A census tract, or is directly adjoining to any census tract in
which:
a. After 1999, a coal mine has closed; or
b. After 2009, a coal-fired electric generating unit has been
retired.

1. 2%, in the case of an energy project that doesn't satisfy the
requirements below.

Enter the increase in credit rate for energy communities on
Line 12hh Worksheet, line 5. Attach to your return a statement
with the description of how you calculated the credit. See
Additional information, later, for more information.

2. 10%, in the case of an energy project that does satisfy the
requirements below.
Requirement. The requirement is satisfied with respect to
any qualified facility, if the taxpayer certifies to the Secretary (at
such time and in such form and manner as the Secretary may
prescribe) that any steel, iron, or manufactured product that is a
component of the facility (upon completion of construction) was
produced in the United States.
In the case of steel or iron, the manufacturing processes must
take place in the United States, except metallurgical processes
involving refinement of steel additives. The steel and iron
requirements apply to all construction materials made primarily
of steel or iron and used in infrastructure projects such as transit
or maintenance facilities, rail lines, and bridges. These items
include, but are not limited to, structural steel or iron, steel or iron
beams and columns, or running rail and contact rail. These
requirements don't apply to steel or iron used as components or
subcomponents of other manufactured products or rolling stock,
or to bimetallic power rail incorporating steel or iron components.
In the case of manufactured products that are components of
a qualified facility, upon completion of construction the
manufactured products will be deemed to have been produced
in the United States if at least 40% of steel and iron (20% in the
case of an offshore wind facility) of the total costs of all the
manufactured products of the facility are attributable to
manufactured products (including components) that are mined,
produced, or manufactured in the United States.

Certain solar and wind facilities placed in service in connection with low-income communities. A qualified solar or
wind facility must receive an allocation of the environment justice
solar and wind capacity limitation for a taxpayer with an interest
in such qualified facility to be eligible to claim an energy
percentage increase under section 48(e) with respect to eligible
property which is part of such facility. Guidance regarding the
section 48(e) program and how the taxpayer can apply for an
allocation of the environmental justice solar and wind capacity
limitation will be provided at a later date. Please consult this
guidance when completing Form 3468.
For the latest guidance related to certain solar and wind
facilities in connection with low-income communities, go to
IRS.gov/Form3468.
Energy percentage increase with respect to eligible property
and limitation:
• 10%, in the case of a facility located in a low-income
community (as defined in section 45D(e)) or on Indian land
(as defined in section 2601(2) of the Energy Policy Act of
1992 (25 U.S.C. 3501(2))); or
• 20%, in the case of a facility that is part of a qualified
low-income residential building project or a qualified
low-income economic benefit project.
The increase in the credit will not exceed the amount that
bears the same ratio to the amount of the increase of the
following.
• The environmental justice solar and wind capacity limitation
allocated to such facility bears to
• The total megawatt nameplate capacity of such facility, as
measured in direct current.

Enter the domestic content bonus credit amount on the
Line 12hh Worksheet, line 4. Attach to your return a statement
with the description of how you calculated the credit. See
Additional information, later, for more information.
Increase in credit rate for energy communities. In the case
of any energy project that is placed in service within an energy
community (defined below), the energy percentage shall be
increased by the applicable credit rate increase.
Applicable credit rate increase. The applicable credit rate
increase shall be equal to one of the following.

Qualified solar and wind facility. Qualified solar and wind
facility with respect to low-income communities means any

-14-

Instructions for Form 3468 (2022)

produce in the Election to treat clean hydrogen production
facilities as energy property, described earlier.

facility that generates electricity solely from property described in
the following:
• Wind facility property defined in section 45(d)(1);
• Solar energy property to generate electricity defined in
section 48(a)(3)(i); or
• Qualified small wind energy property defined in section
48(a)(3)(vi).

Qualified clean hydrogen. Qualified clean hydrogen means
hydrogen that is produced through a process that results in a
lifecycle greenhouse gas emissions rate of not greater than 4
kilograms of CO2e per kilogram of hydrogen.
Additional requirements for qualified clean hydrogen.
Qualified clean hydrogen also requires the following.
• Hydrogen is produced in the United States (as defined in
section 638(1)) or a possession of the United States (as
defined in section 638(2)).
• Hydrogen is produced in the ordinary course of a trade or
business of the taxpayer.
• Hydrogen is produced for sale or use.
• The production and sale or use of such hydrogen is verified
by an unrelated party.

The property has to meet the following:

• A maximum net output of less than 5 megawatts (as
measured in alternating current); and

• Is located in a low-income community (as defined in section
45D(e)) or on Indian land (as defined in section 2601(2) of
the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or is
part of a qualified low-income residential building project or
a qualified low-income economic benefit project.

Eligible property. Eligible property means energy property
that is part of the following facilities.
• Wind facility property described in section 45(d)(1) for which
an election was made to treat qualified facilities as energy
property.
• Solar energy property to generate electricity described in
section 48(a)(3)(A)(i).
• Qualified small wind energy property described in section
48(a)(3)(A)(vi).
• Energy storage technology described in section 48(a)(3)(A)
(ix)) installed in connection with the above facility properties.

Provisional emissions rate. In the case of any hydrogen for
which a lifecycle greenhouse gas emissions rate has not been
determined for purposes of this section, a taxpayer producing
such hydrogen may file a petition with the Secretary for
determination of the lifecycle greenhouse gas emissions rate
with respect to such hydrogen.
Regulations. The Secretary shall issue guidance to carry out
the purposes of this section, including guidance to recapture any
credit allowed that exceeds the amount of the credit that would
have been allowed if the expected production were consistent
with the actual verified production (or all of the credit so allowed
in the absence of such verification).

Enter the amount attributable to certain solar and wind
facilities placed in service in connection with low-income
communities on Line 12hh Worksheet, line 6. Attach to your
return a statement with the description of how you calculated the
credit. See Additional information, later, for more information.

Enter the amount of clean hydrogen production facilities that
will be treated as energy property on Line 12hh Worksheet,
line 7. Attach to your return a statement with the description of
how you calculated the credit. See Additional information below
for more information.

Election to treat clean hydrogen production facilities as
energy property. In the case of any qualified property (as
defined in section 48(a)(5)(D)) that is part of a specified clean
hydrogen production facility, such property will be treated as
energy property for purposes of this section, and the energy
percentage with respect to such property is as follows.
• 1.2%, in the case of a facility that is designed and
reasonably expected to produce qualified clean hydrogen,
described in section 45V(b)(2)(A).
• 1.5%, in the case of a facility that is designed and
reasonably expected to produce qualified clean hydrogen
that is described in section 45V(b)(2)(B).
• 2%, in the case of a facility that is designed and reasonably
expected to produce qualified clean hydrogen that is
described in section 45V(b)(2)(C).
• 6%, in the case of a facility that is designed and reasonably
expected to produce qualified clean hydrogen that is
described in section 45V(b)(2)(D).

Additional information. You must attach a statement to Form
3468 that includes the following information.
1. Your name, address, taxpayer identification number, and
telephone number.
2. For each qualified investment credit facility property, include
the following.
a. A detailed technical description of the facility, including
generating capacity.
b. A detailed technical description of the energy property
placed in service during the tax year as an integral part
of the facility, including a statement that the property is
an integral part of such facility.
c. The date that the energy property was placed in
service.

Denial of production credit. No credit will be allowed under
section 45V or section 45Q for any tax year with respect to any
specified clean hydrogen production facility or any carbon
capture equipment included at such facility.
Specified clean hydrogen production facility. Specified
clean hydrogen production facility means any qualified clean
hydrogen production facility to include the following.
• Owned by the taxpayer.
• Produces qualified clean hydrogen.
• The construction of which began before 2033.
• Is placed in service after 2022.
• No credit has been allowed under section 45V or 45Q.
• The taxpayer makes an irrevocable election.
• An unrelated third party has verified (in such form or manner
as the Secretary may prescribe) that such facility produces
hydrogen through a process that results in lifecycle
greenhouse gas emissions that are consistent with the
hydrogen that the facility was designed and expected to
Instructions for Form 3468 (2022)

d. An accounting of your basis in the energy property.
e. A depreciation schedule reflecting your remaining basis
in the energy property after the energy credit is claimed.
3. A statement that you haven't and won’t claim a Section
1603 grant for new investment in the property for which you
are claiming the energy credit.
4. A declaration, applicable to the statement and any
accompanying documents, signed by you, or signed by a
person currently authorized to bind you in such matters that
state the following: “Under penalties of perjury, I declare
that I have examined this statement, including
accompanying documents, and to the best of my
knowledge and belief, the facts presented in support of this
statement are true, correct, and complete.”

-15-

Line 12hh Worksheet
Use the following worksheet to calculate the amount to be entered on Form 3468, line 12hh. This worksheet is generally applicable for
property placed in service after 2022.
1. Energy storage technology property basis * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

× 30% (0.30)

1.

2. Qualified biogas property basis * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

× 30% (0.30)

2.

3. Microgrid controller basis * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

× 30% (0.30)

3.

× 2% (0.02)

4a.

× 10% (0.10)

4b.

× 2% (0.02)

5a.

× 10% (0.10)

5b.

× 10% (0.10)

6a.

× 10% (0.10)

6b.

× 20% (0.20)

6c.

× 20% (0.20)

6d.

4. Domestic content bonus credit **
4a. Doesn't satisfy requirements in section 45(b)(9)(B). List the line numbers from the
Form 3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 4a of the
worksheet. Enter the total basis amount and multiply by the applicable credit rate
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4b.

Satisfies requirements in section 45(b)(9)(B). List the line numbers from the Form
3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 4b of the
worksheet. Enter the basis amount and multiply by the applicable credit rate
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Energy communities **
5a. Doesn't satisfy requirements in section 48(a)(9)(B). List the line numbers from the
Form 3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 5a of the
worksheet. Enter the total basis amount and multiply by the applicable credit rate
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5b.

Satisfies requirements in section 48(a)(9)(B). List the line numbers from the Form
3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 5b of the
worksheet. Enter the total basis and multiply by the applicable credit rate
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Certain solar and wind facilities in connection with low-income communities **
6a. Facility located in a low-income community per section 45D(e). List the line numbers
from the Form 3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 6a of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6b.

Facility located in a low-income community on Indian land per section 2601(2) of the
Energy Policy Act of 1992 (25 U.S.C. 3501(2)). List the line numbers from the Form
3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 6b of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6c.

Qualified low-income residential building project facility. List the line numbers from
the Form 3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 6c of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6d.

Qualified low-income economic benefit project. List the line numbers from the Form
3468 used for this calculation.
Add the basis in property for the line numbers you entered on line 6d of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

* For fiscal year filers, the project of which construction begins on January 29, 2023, or later, the credit amounts are 6% and 2% respectively, unless the prevailing wage
and apprenticeship requirements are satisfied or the project has a maximum net output of less than 1 megawatt of electrical or thermal energy. See Increased credit
amount for energy projects, earlier, for information regarding project requirements.
** Each percent applies to a unique property. One property cannot have the different percent added on within a line.

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Instructions for Form 3468 (2022)

Line 12hh Worksheet, continued
7. Clean hydrogen production facilities as energy property **
7a.

Facility that is designed and reasonably expected to produce qualified clean
hydrogen per section 45V(b)(2)(A). List the line numbers from the Form 3468 used
for this calculation.
Add the basis in property for the line numbers you entered on line 7a of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7b.

Facility that is designed and reasonably expected to produce qualified clean
hydrogen per section 45V(b)(2)(B). List the line numbers from the Form 3468 used
for this calculation.
Add the basis in property for the line numbers you entered on line 7b of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7c.

× 1.5% (0.015) 7b.

Facility that is designed and reasonably expected to produce qualified clean
hydrogen per section 45V(b)(2)(C). List the line numbers from the Form 3468 used
for this calculation.
Add the basis in property for the line numbers you entered on line 7c of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7d.

× 1.2% (0.012) 7a.

× 2% (0.02)

7c.

× 6% (0.06)

7d.

Facility that is designed and reasonably expected to produce qualified clean
hydrogen per section 45V(b)(2)(D). List the line numbers from the Form 3468 used
for this calculation.
Add the basis in property for the line numbers you entered on line 7d of the
worksheet. Enter the total basis amount and multiply by the energy percentage
increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Total. Combine lines 1 through 7. Enter this amount on Form 3468, line 12hh . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . 8.

* For fiscal year filers, the project of which construction begins on January 29, 2023, or later, the credit amounts are 6% and 2% respectively, unless the prevailing wage
and apprenticeship requirements are satisfied or the project has a maximum net output of less than 1 megawatt of electrical or thermal energy. See Increased credit
amount for energy projects, earlier, for information regarding project requirements.
** Each percent applies to a unique property. One property cannot have the different percent added on within a line.

Instructions for Form 3468 (2022)

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rehabilitation credit or energy credit allocated from cooperatives.
If you are a cooperative, see the instructions for Form 3800, Part
III, line 1a, for allocating the investment credit to your patrons.

Line 13
Patrons, including cooperatives that are patrons in other
cooperatives, enter the unused investment credit from the

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

18 hr., 39 min.

Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 hr., 21 min.

Preparing and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 hr., 55 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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Instructions for Form 3468 (2022)