Form 3468
(Rev. December 2006)
Investment Credit
OMB No. 1545-0155
Department of the Treasury Attach to your tax return. See instructions. Attachment
Internal Revenue Service (99) Sequence No. 52
Name(s) shown on return Identifying number
1 Rehabilitation credit (see instructions for requirements that must be met):
a Check this box if you are electing under section 47(d)(5) to take your qualified rehabilitation
expenditures into account for the tax year in which paid (or, for self-rehabilitated property,
when capitalized). See instructions. Note: This election applies to the current tax year and to
all later tax years. You may not revoke this election without IRS consent
b Enter the date on which the 24- or
60-month measuring period begins / / and ends / /
c Enter the adjusted basis of the building as of the beginning date above
(or the first day of your holding period, if later) $
d Enter the amount of the qualified rehabilitation expenditures incurred,
or treated as incurred, during the period on line 1b above $
Enter the amount of qualified rehabilitation expenditures and multiply by the percentage shown:
e Pre-1936 buildings located in the Gulf Opportunity Zone $ × 13% (.13) 1e
f Other pre-1936 buildings $ × 10% (.10) 1f
g Certified historic structures located in the Gulf Opportunity Zone $ × 26% (.26) 1g
h Other certified historic structures $ × 20% (.20) 1h
For properties identified on lines 1g or 1h, complete lines 1i and 1j
i Enter the assigned NPS project number or the pass-through entity’s
employer identification number (see instructions)
j Enter the date that the NPS approved the Request for Certification of
Completed Work (see instructions) / /
k Rehabilitation credit from an electing large partnership (Schedule K-1 (Form 1065-B), box 9) 1k
2 Energy credit:
a Basis of property using geothermal energy placed in service during
the tax year (see instructions) $ × 10% (.10) 2a
b Basis of property using solar illumination or solar energy placed in service
during the tax year (see instructions) $ × 30% (.30) 2b
Qualified fuel cell property (see instructions):
c Basis of property installed during the tax
year $ × 30% (.30) 2c
d Kilowatt capacity of property in c
above × $1,000 2d
e Enter the lesser of line 2c or 2d 2e
Qualified microturbine property (see instructions):
f Basis of property installed during the tax
year $ × 10% (.10) 2f
g Kilowatt capacity of property in f
above × $200 2g
h Enter the lesser of line 2f or 2g 2h
i Total. Add lines 2a, 2b, 2e, and 2h 2i
3 Qualifying advanced coal project credit (see instructions):
a Basis of qualified investment in integrated gasification combined cycle property
placed in service during the tax year $ × 20% (.20) 3a
b Basis of qualified investment in property other than in a above placed
in service during the tax year $ × 15% (.15) 3b
c Total. Add lines 3a and 3b 3c
4 Qualifying gasification project credit (see instructions). Basis of qualified investment in property
placed in service during the tax year $ × 20% (.20) 4
5 Credit from cooperatives. Enter the unused investment credit from cooperatives 5
6 Add lines 1e through 1h, 1k, 2i, 3c, 4, and 5. Report this amount on the applicable line of
Form 3800 (e.g., line 1a of the 2006 Form 3800) 6
For Paperwork Reduction Act Notice, see instructions. Cat. No. 12276E Form 3468 (Rev. 12-2006)
Form 3468 (Rev. 12-2006) Page 2
General Instructions of a tax year following the year property was placed in
service, the nonqualified nonrecourse financing for any
Section references are to the Internal Revenue Code unless property has increased or decreased, then the credit base for
otherwise noted. the property changes accordingly. The changes may result in
What’s New an increased credit or a recapture of the credit in the year of
the change. See sections 49 and 465 for details.
● The tax liability limit is no longer figured on this form;
instead, it must be figured on Form 3800, General Business Recapture of Credit
Credit.
You may have to refigure the investment credit and recapture all
● The IRS will revise this December 2006 version of the form or a portion of it if:
only when necessary. Continue to use this version for tax ● You dispose of investment credit property before the end
years beginning after 2005 until a new revision is issued. of 5 full years after the property was placed in service
● Additional time is provided for buildings in the Gulf (recapture period);
Opportunity (GO) Zone, Rita GO Zone, and Wilma GO Zone ● You change the use of the property before the end of the
to meet certain tests in order to be a qualified rehabilitated recapture period so that it no longer qualifies as investment
building. For the affected areas, see Pub. 4492, Information credit property;
for Taxpayers Affected by Hurricanes Katrina, Rita, and
Wilma. For details on the relief provided, see items 2 and 3 ● The business use of the property decreases before the end
on page 3 and Notice 2006-38, 2006-16 I.R.B. 777. of the recapture period so that it no longer qualifies (in whole
or in part) as investment credit property;
Purpose of Form ● Any building to which section 47(d) applies will no longer
Use Form 3468 to claim the investment credit. The be a qualified rehabilitated building when placed in service;
investment credit consists of the rehabilitation, energy,
qualifying advanced coal project, and qualifying gasification ● Any property to which section 48(b) applies will no longer
project credits. qualify as investment credit property when placed in service;
● Before the end of the recapture period, your proportionate
Investment Credit Property interest is reduced by more than one-third in an S
Investment credit property is any depreciable or amortizable corporation, partnership (other than an electing large
property that qualifies for the rehabilitation credit, energy partnership), estate, or trust that allocated the cost or basis
credit, qualifying advanced coal project credit, or qualifying of property to you for which you claimed a credit;
gasification project credit. ● You return leased property (on which you claimed a credit)
You cannot claim a credit for property that is: to the lessor before the end of the recapture period; or
● Used mainly outside the United States (except for property ● A net increase in the amount of nonqualified nonrecourse
described in section 168(g)(4)); financing occurs for any property to which section 49(a)(1)
● Used by a governmental unit or foreign person or entity applied.
(except for a qualified rehabilitated building leased to that Exceptions to recapture. Recapture of the investment credit
unit, person, or entity; and property used under a lease with does not apply to any of the following.
a term of less than 6 months); ● A transfer due to the death of the taxpayer.
● Used by a tax-exempt organization (other than a section
● A transfer between spouses or incident to divorce under
521 farmers’ cooperative) unless the property is used mainly
section 1041. However, a later disposition by the transferee
in an unrelated trade or business or is a qualified
is subject to recapture to the same extent as if the transferor
rehabilitated building leased by the organization;
had disposed of the property at the later date.
● Used for lodging or in the furnishing of lodging (see section
50(b)(2) for exceptions); or ● A transaction to which section 381(a) applies (relating to
certain acquisitions of the assets of one corporation by
● That is energy property used in a facility that qualifies for a another corporation).
credit under section 45.
● A mere change in the form of conducting a trade or
Election for Certain Leased Property business if:
If you lease property to someone else, you may elect to treat 1. The property is retained as investment credit property in
all or part of your investment in new property as if it were that trade or business, and
made by the person who is leasing it from you. Lessors and 2. The taxpayer retains a substantial interest in that trade
lessees should see section 48(d) (as in effect on November 4, or business.
1990) and related regulations for rules on making this
election. For limitations, see sections 46(e)(3) and 48(d) (as in A mere change in the form of conducting a trade or
effect on November 4, 1990). business includes a corporation that elects to be an S
corporation and a corporation whose S election is revoked or
At-Risk Limit for Individuals and Closely Held terminated.
Corporations See section 46(g)(4) (as in effect on November 4,
1990) if you made a withdrawal from a capital
The cost or basis of property for investment credit purposes construction fund set up under the Merchant
may be limited if you borrowed against the property and are CAUTION Marine Act of 1936 to pay the principal of any debt
protected against loss, or if you borrowed money from a incurred in connection with a vessel on which you claimed
person who is related or who has other than a creditor investment credit.
interest in the business activity. The cost or basis must be
reduced by the amount of this “nonqualified nonrecourse” For details, see Form 4255, Recapture of Investment
financing related to the property as of the close of the tax Credit.
year in which the property is placed in service. If, at the close
Form 3468 (Rev. 12-2006) Page 3
States Date
Specific Instructions GO Zone Florida August 24, 2005
Note. Do not attach this form to your tax return if you are (a)
an estate or trust whose entire qualified rehabilitation GO Zone Louisiana, Mississippi, August 29, 2005
expenditures or bases in energy property are allocated to the and Alabama
beneficiaries, (b) an S corporation, or (c) a partnership (other Rita GO Zone Louisiana and Texas September 23, 2005
than an electing large partnership). However, you must
complete lines 1i and 1j of this form and attach it if you are Wilma GO Zone Florida October 23, 2005
the owner of a certified historic structure.
3. Depreciation must be allowable with respect to the
Shareholders of S Corporations, Partners building. Depreciation is not allowable if the building is
of Partnerships, and Beneficiaries of permanently retired from service. If the building is damaged,
it is not considered permanently retired from service where
Estates and Trusts the taxpayer repairs and restores the building and returns it
If you are a shareholder, partner (other than a partner in an to actual service within a reasonable period of time.
electing large partnership), or beneficiary of the designated For a building damaged in the GO Zone, Rita GO Zone, or
pass-through entity, the entity will provide to you the Wilma GO Zone, that reasonable period is deemed to be up
information necessary to complete the following: to 36 months, subject to the following qualifications.
● Lines 1b through 1h for the rehabilitation credit. ● The building must have been placed in service prior to the
● The basis of energy property for lines 2a and 2b. date as given in the table above.
● The basis for energy property for lines 2c and 2f and the ● The relevant 36-month period for that building starts on the
kilowatt capacity for lines 2d and 2g, respectively. same date as given in the table above.
● The basis of the qualifying investment in advanced coal ● Beginning no later than August 15, 2006, the taxpayer must
project property for lines 3a and 3b. be engaged in the repair or restoration of building, defined as:
● The basis of the qualifying investment in a gasification project a. Ongoing physical repairs,
property for line 4.
b. Written contracts in place for the repair or restoration to
Lines 1a Through 1k. Rehabilitation be completed within the designated 36-month period, or
Credit c. Active negotiation of contracts for the repair or
You are allowed a credit for qualified rehabilitation restoration to be completed within the designated 36-month
expenditures made for any qualified rehabilitated building. period, but only if the contracts are finalized prior to January
You must reduce your depreciable basis by the amount of 1, 2007.
the credit. 4. The building must have been placed in service before
If the adjusted basis of the building is determined in whole or the beginning of rehabilitation. This requirement is met if the
in part by reference to the adjusted basis of a person other than building was placed in service by any person at any time
the taxpayer, see Regulations section 1.48-12(b)(2)(viii) for before the rehabilitation began.
additional information that must be attached. 5. For a building other than a certified historic structure (a)
To be a qualified rehabilitated building, your building must at least 75% of the external walls must be retained with 50%
meet all five of the following requirements. or more kept in place as external walls, and (b) at least 75%
1. The building must have been placed in service (see of the existing internal structural framework of the building
requirement 4) prior to 1936 unless it is a certified historic must be retained in place.
structure. A certified historic structure is any building (a) To be qualified rehabilitation expenditures, your
listed in the National Register of Historic Places, or (b) expenditures must meet all six of the following requirements.
located in a registered historic district (as defined in section 1. The expenditures must be for (a) nonresidential rental
47(c)(3)(B)) and certified by the Secretary of the Interior as property, (b) residential rental property (but only if a certified
being of historic significance to the district. Certification historic structure—see Regulations section 1.48-1(h)), or (c)
requests are made through your State Historic Preservation real property that has a class life of more than 12 years.
Officer on National Park Service (NPS) Form 10-168a,
Historic Preservation Certification Application. The request for 2. The expenditures must be incurred in connection with
certification should be made prior to physical work beginning the rehabilitation of a qualified rehabilitated building.
on the building. 3. The expenditures must be capitalized and depreciated
2. The building must be substantially rehabilitated. A using the straight line method.
building is considered substantially rehabilitated if your
4. The expenditures cannot include the costs of acquiring or
qualified rehabilitation expenditures during a self-selected
enlarging any building.
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 5. If the expenditures are in connection with the
building and its structural components. Figure adjusted basis rehabilitation of a certified historic structure or a building in a
on the first day of the 24-month period or the first day of registered historic district, the rehabilitation must be certified
your holding period, whichever is later. If you are by the Secretary of the Interior as being consistent with the
rehabilitating the building in phases under a written historic character of the property or district in which the
architectural plan and specifications that were completed property is located. This requirement does not apply to a
before the rehabilitation began, substitute “60-month period” building in a registered historic district if (a) the building is not
for “24-month period.” a certified historic structure, (b) the Secretary of the Interior
If the building is in one of the designated counties or certifies that the building is not of historic significance to the
parishes in the GO Zone, Rita GO Zone, or Wilma GO Zone, district, and (c) if the certification in (b) occurs after the
the “24-month period” and “60-month period” is extended by rehabilitation began, the taxpayer certifies in good faith that he
12 months. However, the rehabilitation must have begun, but or she was not aware of that certification requirement at the
not been completed, and the building placed in service prior time the rehabilitation began.
to the following dates.
Form 3468 (Rev. 12-2006) Page 4
6. The expenditures cannot include any costs allocable to is 1 reduced by a second fraction, the numerator of which is
the part of the property that is (or may reasonably expect to that portion of the basis allocable to such financing or
be) tax-exempt use property (as defined in section 168(h)). proceeds, and the denominator of which is the basis of the
For credit purposes, the expenditures are generally taken property. For example, if the basis of the property is
into account for the tax year in which the qualified $100,000 and the portion allocable to such financing or
rehabilitated building is placed in service. However, with proceeds is $20,000, the fraction of the basis that you may
certain exceptions, you may elect to take the expenditures claim the credit on is 4⁄ 5 (that is, 1 minus $20,000/$100,000).
into account for the tax year in which they were paid (or, for a Subsidized energy financing means financing provided under
self-rehabilitated building, when capitalized) if (a) the normal a federal, state, or local program, a principal purpose of
rehabilitation period for the building is at least 2 years, and (b) which is to provide subsidized financing for projects
it is reasonable to expect that the building will be a qualified designed to conserve or produce energy.
rehabilitated building when placed in service. For details, see To qualify, energy property must be constructed,
section 47(d). To make this election, check the box on line reconstructed, or erected by the taxpayer. If acquired by the
1a. taxpayer, the original use of such property must begin with
the taxpayer. The property must meet the performance and
The credit, as a percent of expenditures paid or incurred quality standards, if any, that have been prescribed by
during the tax year for any qualified rehabilitated building, regulations and are in effect at the time the property is
depends on the type of structure and its location. acquired. Energy property does not include any property that
is public utility property as defined by section 46(f)(5) (as in
Line % If the structure is. . . Located. . .
effect on November 4, 1990).
1e 13 Other than a certified In the GO Zone You must reduce the depreciable basis by 50% of the
historic structure
energy credit determined.
1f 10 Other than a certified Elsewhere than in the GO You also must reduce the basis of energy property by any
historic structure Zone
amount attributable to qualified rehabilitation expenditures.
1g 26 Certified historic structure In the GO Zone
Line 2a
1h 20 Certified historic structure Elsewhere than in the GO Zone
Enter the basis of any property using geothermal energy
For the definition of the GO Zone, see section 1400M and Pub. 4492.
placed in service during the tax year. Geothermal energy
If you are claiming a credit for a certified historic structure property is equipment that uses geothermal energy to
on line 1g or 1h, enter the assigned NPS project number on produce, distribute, or use energy derived from a geothermal
line 1i. If the qualified rehabilitation expenditures are from an deposit (within the meaning of section 613(e)(2)). For
S corporation, partnership, estate, or trust, enter on line 1i electricity produced by geothermal power, equipment
the employer identification number of the pass-through entity qualifies only up to, but not including, the electrical
instead of the assigned NPS project number, and skip line 1j transmission stage.
and the instructions below. Line 2b
Enter the date of the final certification of completed work Enter the basis of any property using solar energy placed in
received from the Secretary of the Interior on line 1j. If the service during the tax year. There are two types of property.
final certification has not been received by the time the tax
1. Equipment that uses solar energy to illuminate the inside
return is filed for a year in which the credit is claimed, attach
of a structure using fiber-optic distributed sunlight.
a copy of the first page of NPS Form 10-168a, Historic
Preservation Certification Application (Part 2—Description of 2. Equipment that uses solar energy to:
Rehabilitation), with an indication that it was received by the ● Generate electricity,
Department of the Interior or the State Historic Preservation ● Heat or cool (or provide hot water for use in) a structure, or
Officer, together with proof that the building is a certified
● Provide solar process heat (but not to heat a swimming
historic structure (or that such status has been requested).
pool).
After the final certification of completed work has been
received, file Form 3468 with the first income tax return filed Line 2c
after receipt of the certification and enter the assigned NPS Enter the basis of any qualified fuel cell property placed in
project number and the date of the final certification of service during the tax year. Qualified fuel cell property is a
completed work on the appropriate lines on the form. Also fuel cell power plant that generates at least 0.5 kilowatt of
attach an explanation, and indicate the amount of credit electricity using an electrochemical process and has
claimed in prior years. electricity-only generation efficiency greater than 30 percent.
You must retain a copy of the final certification of See section 48(c)(1) for further details.
completed work as long as its contents may be needed for
the administration of any provision of the Internal Revenue Line 2f
Code. Enter the basis of any qualified microturbine property placed
in service during the tax year. Qualified microturbine property
If the final certification is denied by the Department of
is a stationary microturbine power plant which generates less
Interior, the credit is disallowed for any tax year in which it
than 2,000 kilowatts and has an electricity-only generation
was claimed, and you must file an amended return if
efficiency of not less than 26 percent at International
necessary. See Regulations section 1.48-12(d)(7)(ii) for
Standard Organization conditions. See section 48(c)(2) for
details.
further details.
Lines 2a Through 2i. Energy Credit
Lines 3a Through 3c and Line 4
If energy property is financed in whole or in part by The basis of property may have to be reduced for certain
subsidized energy financing or by tax-exempt private activity financing received under rules similar to section 48(a)(4) and
bonds, the amount that you can claim as basis is the basis described in the first paragraph under Lines 2a through 2i.
that would otherwise be allowed multiplied by a fraction that Energy Credit.
Form 3468 (Rev. 12-2006) Page 5
Qualified investment for any tax year is the basis of eligible ● Is carried out by an eligible entity (as defined in section
property placed in service by the taxpayer during the tax 48B(c)(7), and
year which is part of the qualifying project. Eligible property ● The portion of the qualified investment does not exceed
is limited to property for which depreciation or amortization is $650,000,000 and is certified under section 48B(d).
available and the construction, reconstruction, or erection of
which is completed by the taxpayer, or which is acquired by A qualifying gasification project credit is not allowed for
the taxpayer if the original use of such property commences any qualified investment for which a qualifying advanced coal
with the taxpayer. project credit is allowed.
Line 3a Line 5. Credit From Section 1381(a) Cooperatives
Patrons, including cooperatives that are patrons in other
Enter the basis of any qualifying investment in integrated cooperatives, enter the unused investment credit allocated
gasification combined cycle property placed in service during from cooperatives. If you are a cooperative, see the
the tax year. Eligible property is any property which is part of instructions for Form 3800, line 1a, for allocating the
a qualifying advanced coal project using an integrated investment credit to your patrons.
gasification combined cycle and is necessary for the
gasification of coal, including any coal handling and gas Paperwork Reduction Act Notice. We ask for the
separation equipment. information on this form to carry out the Internal Revenue
A qualifying advanced coal project is a project: laws of the United States. You are required to give us the
● Using advanced coal-based generation technology (as information. We need it to ensure that you are complying
defined in section 48A(f)), and with these laws and to allow us to figure and collect the right
amount of tax.
● Part of a certified advanced coal project program (as
defined in sections 48A(d)(2) and 48A(e)). You are not required to provide the information requested
Integrated gasification combined cycle is an electric on a form that is subject to the Paperwork Reduction Act
generation unit which produces electricity by converting coal unless the form displays a valid OMB control number. Books
to synthesis gas, which in turn is used to fuel a or records relating to a form or its instructions must be
combined-cycle plant to produce electricity from both a retained as long as their contents may become material in
combustion turbine (including a combustion turbine/fuel cell the administration of any Internal Revenue law. Generally, tax
hybrid) and a steam turbine. returns and return information are confidential, as required by
section 6103.
Line 3b The time needed to complete and file this form will vary
Enter the basis of any qualifying investment, other than in depending on individual circumstances. The estimated
line 3a, in an advanced coal project property service during burden for individual taxpayers filing this form is approved
the tax year. Eligible property is any property which is part of under OMB control number 1545-0074 and is included in the
a qualifying advanced coal project (defined above) not using estimates shown in the instructions for their individual
an integrated gasification combined cycle. income tax return. The estimated burden for all other
taxpayers who file this form is shown below:
Line 4
Recordkeeping 13 hr., 9 min.
Enter the basis of the qualified investment in qualifying Learning about the
gasification project property placed in service during the tax law or the form 3 hr., 34 min.
year. For the purposes of this credit, eligible property
includes any property that is part of a qualifying gasification Preparing and sending
project and necessary for the gasification technology of such the form to the IRS 3 hr., 57 min.
project. A qualifying gasification project is any project that: If you have comments concerning the accuracy of these
● Employs gasification technology (as defined in section time estimates or suggestions for making this form simpler,
48B(c)(2)), we would be happy to hear from you. See the instructions for
the tax return with which this form is filed.