rom 4255 Recapture of Investment Credit mB Ho. S45 416
pies
Teeter the roncury (Including Energy Investment Credit) m
Internal Revenue Service > Attach to your income tax return. 65
Name(s) as shown on return Identifying number
Properties Kind of property—State whether recovery or nonrecovery (see the Instructions for Form 3468 for definitions).
Pe If energy property, show type. Also indicate if rehabilitation expenditure property.
A
B
c
D
E
Computation Steps: Properties
(see Specific Instructions) A B c D E

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

6 Original qualified investment
(line 3 times line 5)

7 Original credit f (line 1 times line
6) .

8 Date property c ceased to be qualified
investment credit property . . .

9 Number of full years between the
date on line 2 and the date on line 8

10 Recapture percentage _ (from
instructions) .

Original Investment Credit

11 Tentative recapture tax (line 7
times line 10)

12 Add line 11, columns A through E

13 Enter tax from property ceasing to be at risk, or ror which there was an increase in in nonauliied nonrecourse
financing (attach separate computation) .

14 Total—Add lines 12 and 13.

15 Portion of original credit (line 7) not used to o offset ta tax in any year, plus a any canryback and carryforward of
credits you can now apply to the original credit year because you have freed up tax Vability in in the amount of
the tax recaptured (Do not enter more than line 14—-see instructions) . woe

Computation of Recapture Tax

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

General Instructions Purpose of Form.—Use Form 4255 to figure the _ must refigure the credit if you change the use of
increase in tax for the recapture of investment __ property from business use to personal use, or if
(Section references are to the Internal Revenue credit for regular and energy property. You must _there is any decrease in the percentage of
Code, unless otherwise noted.) refigure the credit if you took it in an earlier year, business use of investment credit property. See
Paperwork Reduction Act Notice.—We ask for but disposed of the property before the end of the _ sections 47(a)(3) and 47(a)(5)(C) for information
this information to carry out the Internal Revenue _recapture period or the useful life you used to on recapture for progress expenditure property.
laws of the United States. We need it to ensure that _ figure the original credit. You mustalso refigure Also, see the instructions for line 13 regarding
taxpayers are complying with these laws and to the credit if you changed the use of the property recapture if property ceases to be at risk, or if
allow us to figure and collect the right amount of so that it no longer qualifies as regular or energy _there is an increase in nonqualified, nonrecourse
tax. You are required to give us this information. investment credit property. For example, you financing related to certain at-risk property

placed in service after July 18, 1984.


Form 4255 (Rev. 9-85)

Page 2

If certain “listed property” (i.e., transportation
property, entertainment, recreation or amusement
property, or certain home computer equipment)
placed in service after June 18, 1984, ceases to be
used predominantly for business, you may have to
recapture investment credit taken on the property.
See section 280F for details.

An election to be treated as an S corporation
does not automatically tigger 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, you need 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.

If you are an § corporation, a partnership, or
an estate or trust that allocated 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 1.47-4, 1.47-5 and

Partners, shareholders and beneficiaries. —It
your Schedule K-1 shows that you must recapture
investment credit taken in an earlier year, you will
need your retained copy of the original Form 3468
to complete lines 1 through 9 of this Form 4255.
Special Rules.—f you took a credit on the
following kinds of property, see the sections listed
below before you complete Form 4255:

Property Section
Motion picture films and video tapes = 41(@)(8)
Ships. a + 46(e)(4)
Commuter highway vehicles OO)

If you took any nonconventional source fuel
credit, see section 29(b)(4)

If, before the end of the recapture period, you
dispose of recovery property placed in service
after 1982 (or the business use percentage
decreases), increase the basis of this property by
50% of the recapture amount unless 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 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
placed in service after July 18, 1984. 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.

Lines A through E.—Describe the property
for which you must refigure the credit.

Fillin 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 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 from the tables below:
Regular Investment Property
Qualifying property acquired or constructed
and placed in service + 10%
Be sure to include any ESOP credit, or other
credits listed under the special rules above.
See section 46(b)(4) for the rates for qualified
rehabilitation expenditures made after 1981.
Energy Investment Property
Alternative energy property, specially defined
energy property, recycling equipment, shale
cil equipment, equipment for producing
natural gas from geopressured brine,

cogeneration equipment, and intercity buses «10%
Qualified hydroelectric generating equipment . 1%
Solr and wind ecuipment aque o

constructed before 1980 » 10%
Solar and wind equipment, ocean thermal
equipment, and geothermal equipment

acquired or constructed after 1979. . 15%

Line 2.—For both recovery and nonrecovery
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 that
you used to figure 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 percentage
that you used to figure the original qualified
investment from the tables below:

Nontecovery Property

Original estimated Applicable
useful life percentage
3 or more but less than 5 years 33%
5 or more but less than 7 years 662%
7 of more years Se 100%
Recovery Property
Class of Applicable
property percentage
3.year » 60%
Other = 100%

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

Class of Applicable
property percentage
3.year + 40%
Other . 80%

Line 8.—Generally, this will be the date you
disposed of the property. See regulations section
1.47-1(c) for more information.

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

Line 10.—Enter the recapture percentage
from the following tables:

Nonrecovery Property

The recapture percentage for prop-

erty with an original useful life of:
If number of full 4 Sor
yearsonlineQof | feeteeat — feccgyrt foe
Form 4251s: | Syearis Tyeateis years
i) 100 100 100
1 100 100 100
2 100 100 100
3 0 50 66.6
4 0 50 66.6
5 0 0 33.3
6 co) 0 33.3

Recovery Property
The recapture percentage for:

If number of full

Other than

years on line 9 of 3year Syear

Form 4255 1s: property 1s property's
0 100 100
1 66 80
2 33 60
3 i} 40
4 0 20

Decrease in Business Use.—If you take
investment credit for property and the
percentage of business use in a later year falls
below the percentage for the year placed in
service, you are treated as having disposed of
part of the property and may have to recapture
part of the investment credit

For example, if you are a calendar-year
taxpayer who bought a $12,000 automobile in
August 1984 and used it 90% for business, your
investment credit for 1984 would have been
$900 (90% of the $1,000 limit for automobiles
placed in service from June 19, 1984, through
April 2, 1985). If business use in 1985 fell to
60%, you are treated as having disposed of one-
third ((90 ~ 60) + 90) of the automobile on
January 1, 1985 (since business use is computed
on a tax-year basis and a decrease in business
use is deemed to take place on the first day of the
tax year). Multiply the recapture percentage from
the table above (100%) by one-third and enter
the result (33.3%) on line 10 of the form.

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 on the dotted line "Tax from attached,
$ _."" Include the amount in the total for

Line 13.—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 property at year end. For property
placed in service after July 18, 1984, the basis or
cost must be reduced by the amount of any
“nonqualified, nonrecourse financing” related to
the property at year end. If property ceases to be at
risk ina later year, or if there is an increase in
nonqualified, nonrecourse financing, recapture
may be required. See section 47(d) for details.
Attach a separate computation schedule to figure
the recapture tax and enter the total tax on line 13.

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 take into account 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), Revenue Ruling 72-221, and
Publication 572 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.

REMINDER: Be sure to adjust your current
unused credit to reflect any unused portion of the
original credit that was recaptured on this form.