rorm 4255 Recapture of Investment Credit OMB No, 1545-0166

. ‘ Expires 11-30-85
(Rev. Nov. 1982) (Including Energy Investment Credit) pines
Department of the Treasury 4
Internal Revenue Service » Attach to your income tax return 65
Name(s) as shown on return Identifying number
rties Kind of property—State whether recovery or nonrecovery (see Form 3468 instructions for definitions). If energy
Propet property, show type. Also indicate if rehabilitation expenditure property.
A
B
c
D
E
Properties
Computation Steps: A B c D E
(see Specific Instructions)
1 Original rate of credit. . . +
2 Date property was placed in
2 sevice. . - ee ee ee
g 3 Cost or other basis. . . . -
| 4 original estimated useful life or
& class of property. . . . -
g
| 5 Applicable percentage. . . -
| 6 Original qualified investment
| (line 3timestine5). . . .
S| 7 Original credit (line 1 times line
[-) er)
8 Date property ceased to be quali-
fied investment credit property .
9 Number of full years between the
date on line 2 and the date on line
10 Recapture percentage. . . -
% 11 Tentative recapture tax—Line 7
2 timeslinel0. . 2 2 - ee
g
Zl 12 Add line 11, columns AthroughE. 6-6 6 ee ee ee
3 13 a Enter tax from disposed qualified progress expenditure property (attach separate computation). . . .
3.
§ b Enter tax from any part of property ceasing to be at risk (attach separate computation)... . . . +
= | —___————
2 14 Total—Add lines 12, 13aand13b 2 6 eee ee ee ee ee ee ee ee ee
£] 15 Portion of original credit (line 7) not used to offset tax in any year (Do not enter more than line 14—see
8 instructions) ©. 06 6 ee ee
16 Total increase in tax—Subtract line 15 from line 14. Enter here and on the proper line of your tax return. Do
not use this amount to reduce current year's investment credit figured on Form 3468, Computation of In-
vestment Credit. Any unused credit on line 15 cannot be used in any year as a carryback or carryover .

For Paperwork Reduction Act Notice, see instructions on back. Form 4255 (rev. 11-82)


General Instructions

References are to the Internal Revenue
Code.

Paperwork Reduction Act Notice.—We
ask for this information to carry out the
Internal Revenue laws of the United
States. 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 required to give us this infor-
mation.

Purpose.—Use Form 4255 to figure the
increase in tax for the recapture of invest-
ment credit for regular and energy prop-
erty. You must refigure the credit if you
took it in an earlier year, but disposed of
the property before the end of the recap-
ture period, or the useful life you used to
figure the original credit. You must also re-
figure the credit if you changed the use of
the property so that it no longer qualifies as
regular or energy investment credit prop-
erty. Also, see instructions for line 13b re-
garding recapture if property ceases to be
at risk.

For tax years beginning after December
31, 1982, election of subchapter S status
does not automatically trigger recapture of
investment credit taken before the election
was effective. However, on disposition of
the assets, the subchapter S corporation
continues to be liable for any recapture of
investment credit taken before the elec:
tion.

If property on which you took both the
regular and energy investment credit
ceases to be energy credit property, but
still qualifies as regular investment credit
property, you need only refigure the energy
investment credit. However, if you took
both credits, and you dispose of the prop-
erty, or the property ceases to be both
energy and regular investment credit prop-
erty, you must refigure both credits.

If you are a subchapter S corporation,
a partnership, or an estate or trust that al-
located any or all of the investment credit
to the beneficiaries, you must give your
shareholders, partners, or beneficiaries the
information ‘they need to refigure the
credit. See regulations sections 1.474,
1,47-5 and 1.47-6.

Special rules.—If you took the credit on
the following kinds of property, see the
sections listed below before you complete
Form 4255:

Property IRC section
Motion picture films and video tape . . 47(a)(8)
Ships... ee eee + + + 46(2)(4)
Commuter highway vehicles . « 47(a)(4)

If you dispose of property and you
had elected the basic or basic and match-
ing employee plan percentage for contribu-
tions to tax credit employee stock option
plans, see section 48(n)(4).

If you took any credit for production of
fuel from nonconventional sources, see
section 44D(b) (4).

If, before the end of the recapture pe-
riod, you dispose of recovery property
placed in service after 1982, you must in-
crease the basis of this property by 50%
of the recapture amount before computing
gain or loss on disposition. See section
48(q)(2) and (3). (This does not apply if
you originally made the section 48(q)(4)
election to take a reduced credit instead of
reducing the basis of the property.)

For more information, see Publication
572, Investment Credit.

Specific Instructions

Note: Do not figure the recapture tax for
qualified progress expenditure property or
for property ceasing to be at risk on lines
1 through 12. Figure the recapture tax for
these properties on separate schedules and
enter the recapture tax on lines 13a and
13b. include any unused credit for these
properties on line 15.

Lines A through E.—Describe the prop-
erty for which you must refigure the
regular or energy investment credit.

Fill in lines 1 through 11 for each prop-
erty on which you are refiguring the credit.
Use a separate column for each item. If
you must recapture both the energy in-
vestment credit and the regular invest-
ment credit for the same item, use a sepa-
rate column for each credit. If you need
more columns, use additional Forms 4255,
or other schedules with 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 as determined
from the tables below:

Regular Investment Property:

Property (including public utility property)
acquired or constructed and placed in service
after January 21, 1975. + + 10%

For property acquired or constructed be-
fore January 22, 1975, enter the rate used
on your original Form 3468 (7% or 4%).

Be sure to include any basic and match-
ing ESOP or other credits listed under the
special rules above.

See section 46(a)(2)(F) for the rates for
qualified rehabilitation expenditures made
after December 31, 1981.

Energy Investment Property:

Alternative energy property, specially defined
energy property, recycling equipment, shale
oil equipment, equipment for producing nat-
ural gas from geopressured brine, cogenera-
tion equipment, and intercity buses + 10%
Qualified hydroelectric generating equipment . 11%
Solar and wind equipment acquired or con-
structed before 1/1/80. . . . . . . 10%
Solar and wind equipment, ocean thermal
equipment, and geothermal equipment ac-
quired or constructed after 12/31/79. . . 15%

Line 2.—For both recovery and non-
recovery property, enter the first day of
the first month, and the year, that the
property was available for service.

Line 3.—Enter the cost or other basis
of nonrecovery property (unadjusted basis
of recovery property) that you used to fig-
ure the original credit.

Line 4.—Enter the estimated useful
life that you used to figure the original
credit for nonrecovery property. Enter the
class of property for recovery property.

Line 5.—Enter the applicable percent-
age that you used to figure the original
qualified investment from the tables below:

Nonrecovery Property

Original estimated Applicable
useful life: percentage
3 or more but less than 5 years . « 331%4%
5 or more but less than 7 years . 1» 664%
7 or more years. . . 2. ~~ + 100%
Recovery Property
Class of Applicable
property percentage
Byear . ww we ee ww we 60%
Other 2 2 ee ee eee ee + 100%

‘4x US, GOVERNMENT PRINTING OFFICE : 1983—381-108/47

Section 48(q) Election Recovery Property
(Placed in service after 12/31/82)

Class of Applicable
property percentage
Byer... we ee ew we 40%
Other |. DiI 1 30%

Line 8.—See regulations section 1.47—
1(c) for more information.

Line 9.—Do not enter partial years. If
Property was held less than 12 months,
enter zero.

Line 10.—Enter the recapture percent-
age from the following tables:

Nonrecovery Property

If number of full
years on line 9 of

The recapture percentage
for property with an origi-
fe of

Form 4255 is: nal useful

or 5 or Tor

more but more but more

Jess than less than years is

5 years is 7 years is

co) 100 100 100

1 100 100 100

2 100 100 100
3 oO 50 66.6
4 0 50 66.6
5 0 io) 33.3
6 ) i) 33.3

Recovery Property

if number of full
years on line 9 of
Form 4255 is:

The recapture percentage
for:

3-year
property is

i) 100
1 66
2 33
3 Oo
4 oO

Line 12.—If you have used more than
one Form 4255, or separate sheets
to list additional items on which you fig-
ured an increase in tax, write on the dotted
line “Tax from attached, $.. * In-
clude the amount in the total for line 12.

Line 13a.—See section 47(a)(3) for
information on recapturing investment
credit on the disposal of qualified progress
expenditure property. Attach a separate
computation schedule and enter the recap-
ture tax on line 13a.

Line 13b.—For certain taxpayers, the
basis or cost of property placed in service
after February 18, 1981, is limited to the
amount the taxpayer is at risk for the prop-

at year end. If property ceases to be at
risk ina later year, recapture may be re-
quired. See section 47(d) for details. At-
tach a separate computation schedule to
figure the recapture tax and enter the total
tax on line 13b.

Line 15.—If you did not use all the
credit you originally figured, either in the
year you figured the credit or in a carry-
back or carryover year, you do not have to
recapture the amount of the credit you did
not use. You must also take into account
the current year’s unused credit in figur-
ing the increase in tax. See regulations
section 1.47-1(d), Revenue Ruling 72-
221, and Publication 572 for more infor-
mation.

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 16.—This, is the total increase in
tax. Enter it on the proper line of your tax
return. Do not use this amount to reduce
your current year’s investment credit from
Form 3468.