OMB No. 1545-0166

Expires 4-30-97 Form 4255 Recapture of Investment Credit (Rev. April 1994) Attachment

Sequence No. 65 Department of the Treasury

Internal Revenue Service © Attach to your income tax return.

Name(s) as shown on return Identifying number

Type of property—State whether rehabilitation, energy, reforestation, or transition property. (See the Instructions for Form 3468 for the year the

investment credit property was placed in service for definitions.) If rehabilitation property, also show type of building. If energy property, show type. Properties

A

B

C

D

Computation Steps: Properties

(See Specific Instructions) A B C D

1 Original rate of credit

2 Date property was placed in service

3 Cost or other basis

4 Original estimated useful life or class of property

5 Applicable percentage

Original qualified investment (Multiply line 3 by the

percentage on line 5.)

6

Original Investment Credit

7 Original credit (Multiply line 6 by the percentage on line 1.)

Date property ceased to be qualified investment

credit property

8

Number of full years between the date on line 2 and

the date on line 8

9

10 Recapture percentage (from instructions)

Tentative recapture tax (Multiply line 7 by the

percentage on line 10.)

11

12 Add line 11, columns A through D

13 Enter the recapture tax from property ceasing to be at risk, or for which there was an increase in

nonqualified-nonrecourse financing (Attach separate computation.)

14 Add lines 12 and 13

15 Portion of original credit (line 7) not used to offset tax in any year, plus any carryback and carryforward

of credits you can now apply to the original credit year because you have freed up tax liability in the

amount of the tax recaptured (Do not enter more than line 14—see instructions.)

Computation of Recapture Tax

16 Total increase in tax. Subtract line 15 from line 14. Enter here and on the appropriate line of your tax return

Purpose of Form

General Instructions

Section references are to the Internal

Revenue Code before amendment by the

Revenue Reconciliation Act of 1990 (RRA

of 1990), unless otherwise noted.

You must refigure the credit if you

claimed it in an earlier year, but disposed

of the property before the end of the

recapture period or the useful life you used

to figure the original credit, whichever

applies. Refigure the credit for all property

(except nonrecovery placed in service

before 1991) when the property ceases to

be investment credit property before the

end of 5 full years after the property is

placed in service (recapture period). For

nonrecovery property placed in service

before 1991, refigure the credit when the

property ceases to be investment credit

property before the end of the useful life

used to figure the credit. See the line 10

instructions for details.

Paperwork Reduction Act

Notice

Form 4255 (Rev. 4-94)

The time needed to complete and file

this form will vary depending on individual

circumstances. The estimated average time

is:

Recordkeeping 7 hr., 53 min.

Learning about the

law or the form 2 hr., 23 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form more

simple, we would be happy to hear from

you. You can write to both the IRS and the

Office of Management and Budget at the

addresses listed in the instructions for the

tax return with which this form is filed.

Preparing, copying,

assembling, and sending

the form to the IRS 2 hr., 37 min.

Cat. No. 41488C

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.

Use Form 4255 to figure the increase in

tax for the recapture of investment credit

claimed.

You must also refigure the credit if you

returned leased property (on which you

had taken a credit) to the lessor before the

end of the recapture period or useful life.
Form 4255 (Rev. 4-94) Page 2

Complete lines 1 through 11 for each

property on which you are refiguring the

credit. Use a separate column for each

item. If you must recapture both the

energy investment credit and the regular

investment credit for the same item, use a

separate column for each credit. If you

need more columns, use additional Forms

4255, or other schedules that include all

the information shown on Form 4255.

Enter the total from the separate sheets on

line 12.

Line 1.—Enter the rate you used to figure

the original credit from the Form 3468 that

you filed.

The recapture percentage is:

If number of full

years on line 9 of

Form 4255 is:

0 100

1 80

If you are an S corporation, a

partnership, or an estate or trust that

allocated any or all of the investment credit

to your shareholders, partners, or

beneficiaries, you must provide the

information they need to refigure the credit.

See Regulations sections 1.47-4, 1.47-5,

and 1.47-6.

2 60

3 40

4 20

See section 46(b)(4) for the rates for

qualified rehabilitation expenditures made

after 1981.

Partners, shareholders, and

beneficiaries.—If your Schedule K-1

shows recapture of investment credit

claimed in an earlier year, you will need

your copy of the original Form 3468 to

complete lines 1 through 9 of this Form

4255.

Line 2.—Enter the day, month, and year

that the property was available for service.

Special rules.—If you claimed a credit on

the following kinds of property, see the

sections listed below before you complete

Form 4255:

Line 12.—If you have used more than one

Form 4255, or separate sheets to list

additional items on which you figured an

increase in tax, write to the left of the entry

space “Tax from attached, $ .”

Include the amount in the total for line 12.

Property Section

Line 3.—Enter the cost or other basis that

you used to figure the original credit.

Motion picture films and video tapes 47(a)(8)

Line 13.—For certain taxpayers, the basis

or cost of property is limited to the amount

the taxpayer is at risk for the property at

yearend. The basis or cost must be

reduced by the amount of any

“nonqualified-nonrecourse financing”

related to the property at yearend. If

property ceases to be at risk in a later

year, or if there is an increase in

nonqualified-nonrecourse financing,

recapture may be required. See section

49(b), as amended by the RRA of 1990, for

details. Attach a separate computation

schedule to figure the recapture tax and

enter the total tax on line 13.

Line 4.—Enter the estimated useful life

that you used to figure the original credit

for the property.

Ships 46(g)(4)

If you took any nonconventional source

fuel credit, see section 29(b)(4).

Line 5.—Enter the applicable percentage

that you used to figure the original

qualified investment from the Form 3468

that you filed.

Line 15.—If you did not use all the credit

you originally figured, either in the year you

figured it or in a carryback or carryforward

year, you do not have to recapture the

amount of the credit you did not use. In

refiguring the credit for the original credit

year, be sure to include any carryforwards

from previous years, plus any carrybacks

arising within the 3 taxable years after the

original credit year that are now allowed

because the recapture and recomputation

of the original credit made available some

additional tax liability in that year. See

Regulations section 1.47-1(d) and Rev. Rul.

72-221 1972-1 C.B. 15, for details.

Specific Instructions

Note: Do not figure the recapture tax on

lines 1 through 12 for property ceasing to

be at risk, or if there is an increase in

nonqualified-nonrecourse financing related

to certain at-risk property. Figure the

recapture tax for these properties on

separate schedules and enter the recapture

tax on line 13. Include any unused credit

for these properties on line 15.

Note: You must also take into account any

applicable 35% reduction in credit under

section 49(c)(2) when computing the

amount to enter on line 15.

Line 8.—Generally, this will be the date

you disposed of the property. See

Regulations section 1.47-1(c) for more

information.

Figure the unused portion on a separate

sheet and enter it on this line. Do not enter

more than the recapture tax on line 14.

Line 9.—Do not enter partial years. If the

property was held less than 12 months,

enter zero.

Lines A through D.—Describe the

property for which you must refigure the

credit.

Note: Be sure to adjust your current

unused credit to reflect any unused portion

of the original credit that was entered on

line 15 of this form.

Line 10.—Enter the recapture percentage

from the following tables:

Note: The RRA of 1990 changed the rules

for property eligible for the rehabilitation

credit under section 47, as amended by

the RRA of 1990. Increase the basis of this

property by 100% of the recapture amount.

For details, see sections 50(c)(2) and

50(c)(3), as amended by the RRA of 1990.

Generally, the applicable percentage will

be 100% for property eligible for the

investment credit under section 46, as

amended by the RRA of 1990.

Printed on recycled paper

An election to be treated as an

S corporation does not automatically

trigger recapture of investment credit taken

before the election was effective. However,

the S corporation is liable for any recapture

of investment credit taken before the

election.

If property on which you took both

regular and energy investment credit

ceases to be energy credit property but

still qualifies as regular investment credit

property, only refigure the energy

investment credit. However, if you took

both credits, and you dispose of the

property, or the property ceases to be both

energy and regular investment credit

property, you must refigure both credits.

You must refigure the credit if you

changed the use of property so that it no

longer qualifies as investment credit

property. For example, you must refigure

the credit if you change the use of

property from business use to personal

use, or if there is any decrease in the

percentage of business use of investment

credit property. See sections 50(a)(2) (as

amended by the RRA of 1990), 47(a)(3),

47(a)(5)(C), and 49(e)(2) for information on

recapture for progress expenditure

property. Also, see the instructions for line

13 regarding recapture if property ceases

to be at risk, or if there is an increase in

nonqualified-nonrecourse financing related

to certain at-risk property.

If you claim investment credit for

property and the percentage of business

use in a later year falls below the

percentage for the year the property was

placed in service, you are treated as

having disposed of part of the property

and may have to recapture part of the

investment credit.

Property placed in service after

12/31/90 and recovery property

5 or more 0

The recapture percentage for property

with an original useful life of:

If number of full

years on line 9 of

Form 4255 is:

4 66.6

5 33.3

6 33.3

7 or more 0

Nonrecovery property placed in

service before 1991

5 or more

but less than

7 years is:

7 or more

years is:

50

0

0

0