TO BE ATTACHED TO YOUR TAX RETURN
U.S. Treasury Department For calendar year 1967 or other taxable year beginning
Internal Revenue Service .., 1967, ending

rom 0408 | Computation of Investment Credit
346 1967

119.

Name and address

1 Investment in new and used property including investment in suspension period property
NOTE: Include your share of investment in property by a partnership, estate, trust, small business corporation, or lessor.

@
Type of 2) ®

property Line Lite Fears Cost basis Applicable percentage (Coturan'2 x column 3)

(a) 4 or more but less than 6 33%
NEW b

PROPERTY (b)__|__6 or more but less than 8 66%
(©) 8 or more 100
PROSERTY (d) 4 or more but less than 6 33%
(See instructions for | _(2) 6 or more but less than 8 _ | 66%
dollar limitation) ® 8 or more 100

2 Total investment—Add lines 1(a) through (f). . .

3 (a) Amount of investment on line 2 which is attributable to suspension period property . . . ~
(b) Amount of exemption from suspension period property (cost of suspen:

in column 2, line 1, which is selected to be treated as qualified propert jot to exceed
$20,000 less any amount selected in pror year). ss. Pee

(c) Enter in column 2 below the amount of investment on line 3(b) according to life years:

(1) Q) 3) (4)
Life years Cost or basis Applicable percentage (Column 2x column 3)
4 or more but less than 6 33 V5
6 or more but less than 8 66%
8 or more 100
(d) Totalofcolumn4. . . . . ee ee ee ee Le rs
4 Line 3(a) less line3(4). 2 ee ee
5 Total qualified investment—Line 2lessline4 . . . ed
6 Tentative investment credit—7% of line 5 (3% for public utility property) . toe ee
7 Carryback and carryover of unused credit(s) (attach computation) eee ee ee
8 TOTAL—Addlines6and7 . a
LIMITATION
9 (a) Individuals—Enter amount from line 12, page 1,Form1040. . 2. 1. we we ee
(b) Estates and trusts—Enter amount from line 25 or 26, pagel, Form1041 . . .
(c) Corporations—Enter amount from line 7, Tax Computation Schedule, Form 1120
10 Individuals, estates and trusts: (a) Foreign taxcredit. . . . . . ss -
(b) Retirement income credit . . . . . -
11 Total—Add lines 10(a)and(b) . 1 6 we ew ee ee ee ee
12 LineQlessline1l . ©... ee ee ee . oa oa
(Married persons filing separately, affiliated groups, estates and trusts, see instruction 13)
13 (a) Enter amount on line 12 or $25,000, whichever islesser . . . - oo soe eee
(b) If line 12 exceeds $25,000, multiply the excess by the applicable percentage d determined in ac-
cordance with instruction13, © 2. 1 1 kw ee ee ee
14 Total—Add lines 13(a) and (b) ©. - ew ee ee ee ee

15 Less 7% of line 4 (3% for Public uti Property) 2. 6 6 ew ee ee
16 Line 14 lessline15_. oe Cr ee ee
17 Investment credit—Enter amount on vine Fy or Tne 16, whichever is is Tesser ee ee

SCHEDULE A
If any part of your investment in 1 above was made by a partnership, estate, trust, small business corporation, or lessor complete the following:

Property
Address —

Name
(Partnership, estate, trust, etc.) New Used Life years

1679724


GENERAL INSTRUCTIONS

A. Who Must File.—Any individual, estate, trust, or corporation
claiming an investment credit must attach this form to its income tax
return. Partnerships must complete the information set forth in
Schedule K of Form 1065. Small business corporations must attach
a statement to their returns showing the allocation of investment (in:
cluding investment in suspension period property) to the shareholders
by amount, type and life of property as shown in item 1 of this form.
Estates and trusts which apportion the investment between the es-
tate or trust and the beneficiaries should in addition to filing this
form attach a statement showing the allocation of the investment
(including investment in suspension period property) among the
beneficiaries.

B. When Allowed.—A credit is allowed against your tax for
investment in certain depreciable property having an estimated useful
life of 4 years or more for the first year such property is placed in
service.

C. Property Defined.—The investment credit is applicable to
(a) tangible personal property, (b) real property (except for build-
ings and their structural components) if used as an integral part of
manufacturing, production or extraction, etc., or used as a research
or storage facility in connection with these activities, and (c) eleva-
tors and escalators.

The investment credit is not applicable to (1) suspension period
property; (2) cettain property which is used predominantly outside
the United States; (3) property used for lodging or in connection
with furnishing lodging, except (a) property used in certain com-
mercial facilities located therein (such as a restaurant) or (b) prop-
erty used by a hotel or motel; (4) property used by a tax-exempt
organization (except where the unrelated business income tax ap-
plies); (5) ptoperty used by governmental units; (6) livestock (in-
cluding racehorses).

D. Election for Leased Property.—A lessor may elect to treat
an investment in new property as if made by the lessee instead of
the lessor. See section 48(d).

E. Replacement Property.—Where insured property is damaged
or destroyed as a result of a casualty or is stolen, reinvestment of the
insurance proceeds in replacement property may not be eligible for
the investment credit.

F. Recomputed Tax on Early Disposition of Property.—Where
property is disposed of prior to the life used in computing the invest-
ment credit, the tax for the year in which the property is so disposed
of must be increased by the difference between the credit taken on
such property and the credit which would have been allowed had the
actual life been used. Such increase should be reported on the line
provided on your tax return.

G. Carryback and Carryover of Unused Credits.—If the in-
vestment credit exceeds the limitation, the excess shall be an invest-
ment credit carryback to each of the 3 preceding taxable years and a
carryover to each of the 7 succeeding taxable years. A claim for re-
fund based upon the carryback of an unused investment credit may be
made on Form 843 or by filing an amended return for the year to
which the unused credit is carried. ‘Taxpayers who desire a tentative
(quick) refund may file Form 1045 (individuals) or Form 1139
(corporations).

H. Basis and Cost.—The credit for new property applies to the
basis of the property. The credit for used property applies to the
cost of the property. The cost of used property does not include
the basis of any property traded in unless the trade-in resulted in the
recapture of all or any portion of an investment credit previously
allowed or in a reduction of an investment credit carryback or carry-
over. No adjustment for additional first-year depreciation or salvage
value is required.

I. Suspension Period Property.—The suspension period is the
period beginning on October 10, 1966, and ending on March 9, 1967.

Suspension period property is property which would otherwise
qualify for the investment credit but does not qualify for the credit
because it is property—

(1) whose construction, etc., began during the suspension period
or began, pursuant to an order placed during such period, before May
24, 1967, or

(2) which was acquired by the taxpayer during the suspension
period or acquired by the taxpayer, pursuant to an order placed during
such period, before May 24, 1967.

Property referred to in (1) above will be suspension period prop-
erty only to the extent of that portion of the cost attributable to con-
struction, etc., before May 24, 1967.

J. Exemption from Suspension of $20,000 of Investment.—
A taxpayer may select to exempt from suspension of the investment
credit up to $20,000 of the cost of investment in suspension period
property purchased for use in his trade or business. Thus, up to
$20,000 of the cost of such investments which would otherwise be
ineligible for the credit may be selected to be treated as qualified prop-
erty. This exemption applies to property used in a trade or business
but not to property used for the production of income.

‘The $20,000 exemption trom suspension is not an annual exemption
but is the total amount of suspension period property which may
be selected to be treated as qualified property for all taxable years.

In determining the amount selected to be exempt from suspension
petiod property, the following rules apply:

(1) The cost of used property is determined under the same rules
set forth in instruction H. Property inherited, received as a gift, or
acquited from certain related parties does not qualify.

(2) Affiliated groups must apportion the $20,000 exemption
among all members.

(3) The $20,000 limitation applies to a partnership and to each

rtner.

(4) If a husband and wife file separate returns and if each placed
suspension petiod property in service during the taxable year, the
exemption for each may not exceed $10,000.

K. Exceptions to Suspension Period Property.—Section 48(h)
(3) through (13) provides exceptions to the definition of suspension
period property. In general, if the following type of property is
otherwise qualified it will continue to be eligible for the investment
credit: (1) Certain water and air pollution control facilities; (2)
certain replacement property; (3) property received in certain trans-
fers; (4) property acquired or constructed, etc., pursuant to a binding
contract in existence on and after October 9, 1966; (5) property con-
structed, etc., if such construction, etc., was begun before October 10,
1966; and (6) property acquired, or constructed, etc., pursuant to cer-
tain other legal and economic commitments of the taxpayer.

SPECIFIC INSTRUCTIONS

Line 1. Suspension Period Property.—Although suspension period
property is not eligible for the investment credit, the basis of invest-
ment in such property placed in service during the taxable year
must be entered in line 1 since it must be taken into account in
lines 3, 4, and 15 in determining the credit allowable with respect
to investment in qualified property.

New Property.—Enter the basis of property as described in in-
structions C and H placed in service during the taxable year.

Used Property.—Enter the cost (subject to dollar limitation
below) of used property placed in service during the taxable year.
Property inherited, teceived ast gift, or acquired from certain related
parties does not qualify for the investment credit. See instruction H.

Dollar Limitation on Used Property.—In general, the amount of
used property (whether or not suspension period property) taken
into account may not exceed $50,000. In the case of a husband and
wife filing separate returns, and each has used property taken into
account, the amount may not exceed $25,000. In the case of a part-
nership the $50,000 limitation applies to the partnership and to each
partner. In the case of a corporation electing not to Be taxed, the
$50,000 limitation applies to the corporation and to each shareholder.
In the case of affiliated groups, the $50,000 limitation shall be re-
duced for each member of the group by apportioning $50,000 among
the members of such group in accordance with their respective
amounts of used property which may be taken into account.

Estates and Trusts.—In case of an estate or trust the amount of
investment is apportioned between the estate or trust and the benefi-
ciaries on the basis of income of the estate or trust allocable to each.

Line 9.—Individuals and corporations filing forms other than
Forms 1040 and 1120, enter the amount of tax liability shown on
your return which is comparable to the amount to be used by a tax-
Payer using Form 1040 or 1120. For nonresident aliens and foreign
corporations, such amount does not include the flat tax of 30 percent
imposed by sections 871(a) and 881.

Line 13.’ Limitation.—The investment credit may not exceed the
amount of the tax liability if the tax liability is $25,000 or less.

For calendar years and other taxable years beginning before
March 10, 1967, if the tax liability (line 12) exceeds $25,000, the
applicable percentage to be used in line 13(b) is computed as follows:
Number of days in the taxable year after March 9, 1967, divided by
total number of days in the taxable year, multiplied by 25%, plus

lays
25% o (= x 259) + 25% = applicable percentage.

For taxable years beginning after March 9, 1967, if the tax
liability (line 12) exceeds $25,000, enter 50 percent of the excess on
line 13(b).

In the case of a husband and wife filing separate returns and both
have qualified investments, the amount specified on lines 13(a) and
(b) shall be $12,500 instead of $25,000. In the case of affiliated
groups, the $25,000 specified on lines 13(a) and (b) shall be reduced
for each member of the group by apportioning the $25,000 among all
members. In the case of an estate or trust, the $25,000 limitation
specified on lines 13(a) and (b) shall be reduced to an amount
which bears the same ratio to $25,000 as the amount of qualified
investment allocated to the estate or trust bears to the entire qualified
investment. “¥¢ GPO : 1957—-0-260-108 10—T972-1