Form 8896

(Rev. December 2019)

Department of the Treasury 

Internal Revenue Service 

Low Sulfur Diesel Fuel Production Credit

▶ Attach to your tax return. 

▶ Go to www.irs.gov/Form8896 for the latest information.

OMB No. 1545-1914

Attachment 

Sequence No. 142

Name(s) shown on return Identifying number 

1 Low sulfur diesel fuel produced (in gallons) . . . . . . . . . . . . . . . . . . . . 1 

2 Multiply line 1 by $0.05 . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

3 Qualified costs limitation (see instructions) . . . . . . . . . . . . . . . . . . . . 3 

4 Total low sulfur diesel fuel production credits allowed for all prior tax years (see instructions) . . . 4 

5 Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . 5 

6 Enter the smaller of line 5 or line 2 . . . . . . . . . . . . . . . . . . . . . . . 6 

7 Low sulfur diesel fuel production credit from partnerships, S corporations, and cooperatives (see 

instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

8 Add lines 6 and 7. Cooperatives, go to line 9. Partnerships and S corporations, stop here and report 

this amount on Schedule K. All others, stop here and report this amount on Form 3800, Part III, 

line 1m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

9 Amount allocated to patrons of the cooperative (see instructions) . . . . . . . . . . . . 9 

10 Cooperatives, subtract line 9 from line 8. Report this amount on Form 3800, Part III, line 1m . . . 10 

General Instructions 

Section references are to the Internal Revenue Code unless 

otherwise noted. 

Future Developments

For the latest information about developments related to Form 

8896 and its instructions, such as legislation enacted after they 

were published, go to www.irs.gov/Form8896.

Purpose of Form 

Use Form 8896 to claim the low sulfur diesel fuel production 

credit. 

The credit generally is 5 cents for every gallon of low sulfur 

diesel fuel produced by a qualified small business refiner during 

the tax year. However, the total credits allowed for all tax years 

cannot be more than the refiner’s qualified costs limitation on 

line 3. This credit is part of the general business credit. 

Partnerships, S corporations, and cooperatives must file this 

form to claim the credit. All other taxpayers are not 

required to complete or file this form if their only source for this 

credit is a partnership, S corporation, or cooperative. 

Instead, they can report this credit directly on line 1m in Part III 

of Form 3800, General Business Credit.

Definitions 

Low Sulfur Diesel Fuel 

This is diesel fuel with a sulfur content of 15 parts per million or 

less. 

Small Business Refiner 

A small business refiner generally is a refiner of crude oil with an 

average daily domestic refinery run or average retained 

production for all facilities that did not exceed 205,000 barrels 

for the 1-year period ending on December 31, 2002. To figure 

the average daily domestic refinery run or retained production, 

only include refineries that were refineries of the refiner or a 

related person (within the meaning of section 613A(d)(3)) on 

April 1, 2003. However, a refiner is not a small business refiner 

for a tax year if more than 1,500 individuals are engaged in the 

refinery operations of the business on any day during the tax 

year. 

Qualified Costs 

For each facility, qualified costs are costs paid or incurred to 

comply with the highway diesel fuel sulfur control requirements 

of the Environmental Protection Agency (EPA) during the period 

beginning January 1, 2003, and ending on the earlier of: 

• The date 1 year after the date on which the refiner must 

comply with these EPA requirements with respect to such 

facility; or 

• December 31, 2009. 

Qualified costs include costs for the construction of new 

process operation units or the dismantling and reconstruction 

of existing process units to be used in the production of low 

sulfur diesel fuel, associated adjacent or offsite equipment 

(including tankage, catalyst, and power supply), engineering, 

construction period interest, and site work. 

In addition, the small business refiner must obtain certification 

from the IRS (which will consult with the EPA) that the 

taxpayer’s qualified costs will result in compliance with the 

applicable EPA regulations. This certification must be obtained 

not later than June 29, 2008, or, if later, the date that is 30 

months after the first day of the first tax year in which the credit 

is determined. For details, see Rev. Proc. 2007-69, 2007-49 

I.R.B. 1137, available at 

www.irs.gov/irb/2007-49_IRB#RP-2007-69.

TIP

Unless you elect not to take this credit, your 

deductions will be reduced by the amount of your 

credit. For details, see section 280C(d). 

Additional Information 

For more information, see section 45H. 

Specific Instructions 

Use lines 1 through 6 to figure any low sulfur diesel fuel 

production credit from your own trade or business. 

Line 1 

Enter the number of gallons of diesel fuel produced with a sulfur 

content of 15 parts per million or less. 

For Paperwork Reduction Act Notice, see instructions. Cat. No. 37704F Form 8896 (Rev. 12-2019) 
Form 8896 (Rev. 12-2019) Page 2 

Line 3 

Enter 25% of the qualified costs (defined earlier) for the facility 

that produced the fuel reported on line 1 if your average daily 

domestic refinery runs were not more than 155,000 barrels for 

the 1-year period ending on December 31, 2002. If your average 

daily domestic refinery runs were more than 155,000 barrels, the 

25% is reduced (but not below zero) by multiplying it by 1 minus 

your excess over 155,000 barrels divided by 50,000 barrels. 

Example. Your average daily domestic refinery runs were 

165,000 barrels for the 1-year period ending on December 31, 

2002. First divide 10,000 (your excess over 155,000 barrels) by 

50,000 to get 0.2. Next subtract 0.2 from 1.0 to get 0.8. Then 

multiply 25% (0.25) by 0.8 to get 20% (0.20). On line 3, enter 

20% of the qualified costs for the facility that produced the fuel 

reported on line 1. 

Line 4 

Enter the total low sulfur diesel fuel production credits allowed 

for all prior tax years (as determined for line 6). 

Line 7 

Enter total low sulfur diesel fuel production credits from:

• Schedule K-1 (Form 1065), Partner’s Share of Income, 

Deductions, Credits, etc., box 15 (code P);

• Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, 

Deductions, Credits, etc., box 13 (code P); and

• Form 1099-PATR, Taxable Distributions Received From 

Cooperatives, box 12 (box 11 for 2019; box 10 before 2019), or 

other notice of credit allocation.

Partnerships, S corporations, and cooperatives report the 

above credits on line 7. All other filers figuring a separate credit 

on earlier lines also report the above credits on line 7. All others 

not using earlier lines to figure a separate credit can report the 

above credits directly on Form 3800, Part III, line 1m.

Line 9 

Cooperative election to allocate credit to patrons. A 

cooperative described in section 1381(a) can elect to allocate 

any part of the low sulfur diesel fuel production credit to patrons 

of the cooperative. The credit is allocated among the patrons 

eligible to share in patronage dividends on the basis of the 

quantity or value of business done with or for the patrons for the 

tax year. 

If the cooperative is subject to the passive activity rules, 

include on line 7 any Form 8896 credits from passive activities 

disallowed for prior years and carried forward to this year. 

Complete Form 8810, Corporate Passive Activity Loss and 

Credit Limitations, to determine the allowed credits that can be 

allocated to patrons. For details, see the Instructions for Form 

8810.

The cooperative is deemed to have made the election by 

completing line 9. However, the election is not effective unless: 

• It is made on a timely filed return (including extensions), and

• The cooperative designates the apportionment in a written 

notice or on Form 1099-PATR mailed to its patrons during the 

payment period described in section 1382(d).

If you timely file your return without making an election, you 

can still make the election by filing an amended return within 6 

months of the due date of the return (excluding extensions). 

Write “Filed pursuant to section 301.9100-2” on the amended 

return. 

Once made, the election cannot be revoked. 

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 . . . . . . . . . . . 2 hr., 52 min.

Learning about the law or the form . . . . . . . 30 min.

Preparing and sending the form to the IRS . . . . 34 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.