O

Low Sulfur Diesel Fuel Production Credit

Form 8896

 Attach to your tax return. 

Department of the Treasury

Internal Revenue Service

Name(s) shown on return Identifyi

Current Year Credit 

1 Low sulfur diesel fuel produced (in gallons) 1

2 Multiply line 1 by $.05 2

5

6

3 Qualified capital costs limitation (see instructions)

6

Part I

Enter the smaller of line 5 or line 2

Cat. No. 37704F

Section references are to the Internal

Revenue Code.

Use Form 8896 to claim the low sulfur

diesel fuel production credit.

General Instructions

Purpose of Form

For Paperwork Reduction Act Notice, see page 2.

Allowable Credit (See Who must file Form 3800 to find out if you complete Part II or file 

● Individuals. Enter the amount from Form 1040, line 43

9

Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,

Part I, line 1; or the applicable line of your return

●

●

12a 12a

b Credits from Form 1040, lines 47 through 53 12b

Foreign tax credit

Possessions tax credit (Form 5735, line 17 or 27)

Credit for fuel from a nonconventional source

Qualified electric vehicle credit (Form 8834, line 20)

Add lines 12a through 12e 12f

13 Net income tax. Subtract line 12f from line 11. If zero, skip lines 14 through 17 and enter -0- on line 18 13

10 Alternative minimum tax:

● Individuals. Enter the amount from Form 6251, line 35

● Corporations. Enter the amount from Form 4626, line 14 10

● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56

14

Tentative minimum tax (see instructions):

● Individuals. Enter the amount from Form 6251, line 33

15

● Corporations. Enter the amount from Form 4626, line 12

● Estates and trusts. Enter the amount from Form 1041,

Schedule I, line 54

15 Enter 25% (.25) of the excess, if any, of line 14 over $25,000 (see

instructions)

17

Subtract line 17 from line 13. If zero or less, enter -0-

17

18

Credit allowed for the current year. Enter the smaller of line 8 or line 18 here and on Form

1040, line 54; Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 2; Form 1041, Schedule

G, line 2c; or the applicable line of your return. If line 18 is smaller than line 8, see instructions 19

Part II



9 Regular tax before credits:

11 Add lines 9 and 10 11

16

Enter the greater of line 15 or line 16

 16

c

d

e

12c

12d

Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a

and 1b, or the amount from the applicable line of your return

Net regular tax. Subtract line 12f from line 9. If zero or less, enter -0-

19

18



12e

f

14

4 Total low sulfur diesel fuel production credits allowed for all prior tax years

5 Subtract line 4 from line 3

refiner’s qualified capital costs limitation on

line 3. This credit is part of the general

business credit.

8 Current year credit. Add lines 6 and 7 8

3

4

Credit allowed prior to your 2004 tax

year. This credit is allowed for expenses

paid or incurred after 2002. If you have a

credit that occurs prior to your tax year

beginning in 2004, do not file Form 8896.

Instead, include the credit on line 2 of

Form 3800 for the prior tax year. Enter

“LSDFPC” and the amount of the credit on

the dotted line to the left of the entry

Note. The credit cannot 

a tax year ending before 

space for line 2. Attach a 

showing the information 

1 through 8 of this form 

file it with your original o

return for the prior tax ye

If you are a— Then enter the credit(s) from—

a Shareholder Schedule K-1 (Form 1120S), box 13, code G, H, or V

7

7

b Partner

c Patron

Schedule K-1 (Form 1065), box 15, code G, H, or U

Written statement from cooperative

Low sulfur diesel

fuel production

credits from

pass-through

entities: 

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

Definitions

This is diesel fuel with a 

15 parts per million or le

Low Sulfur Diesel Fuel
Form 8896 (2004) 

Specific Instructions

Line 19

Who must file Form 38

Form 3800 if you have: 

Part I

Line 16

Line 15

If you have comments 

accuracy of these time e

suggestions for making t

we would be happy to h

the instructions for the t

which this form is filed.

The time needed to com

form will vary depending 

circumstances. The estim

is: Recordkeeping, 6 hr

Learning about the law 

min.; Preparing and sen

the IRS, 1 hr., 5 min.

Paperwork Reduction A

ask for the information o

carry out the Internal Re

United States. You are r

the information. We need 

you are complying with t

allow us to figure and co

amount of tax.

The credit allowed for the current year may

be limited based on your tax liability. Use

Part II to figure the allowable credit unless

you must file Form 3800, General Business

Credit.

See the instructions fo

find out which credits ar

general business credit.

Part II

You are not required t

information requested on 

subject to the Paperwor

unless the form displays 

control number. Books o

to a form or its instructio

retained as long as their 

become material in the a

any Internal Revenue law

returns and return inform

confidential, as required 

Although you may not ow

minimum tax (AMT), you 

still compute the tentativ

(TMT) to figure your cred

corporation exempt from 

section 55(e), enter zero

complete and attach the 

schedule and enter the T

If you cannot use all of y

of the tax liability limit (li

than line 8), carry the un

year and then forward u

the instructions for Form 

See section 38(c)(5) for s

apply to married couples 

returns, controlled corpo

regulated investment co

estate investment trusts, 

trusts.

● More than one credit i

general business credit (

from Form 8844, Form 8

of Form 8835), or

● A carryback or carryfo

those credits.

Allowable Credit

Current Year Credit

Use lines 1 through 6 to figure any low

sulfur diesel fuel production credit from

your own trade or business.

To make an election, attach a statement

to your timely filed return (including

extensions) indicating the amounts you

would report on lines 1 through 6 of Form

8896 without an election, the amounts you

are electing to allocate to patrons, and any

amounts that will not be allocated.

Skip lines 1 through 6 if you are claiming

only a credit that was allocated to you

from a pass-through entity (that is, an

S corporation, partnership, or cooperative).

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.

Small Business Refiner

For each facility, qualified capital 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:

Qualified Capital Costs

For more details, including basis reduction,

see section 45H.

Additional Information

● 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 capital 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 capital costs will result

in compliance with the applicable EPA

regulations. This certification must be

obtained not later than the date that is 30

months after the first day of the first tax

year in which the credit is determined.

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). Enter “Filed

pursuant to section 301.9100-2” on the

amended return.

Once made, the election cannot be

revoked.

Figure the total credit on lines 1 through 6.

Then, allocate the line 6 credit to each

shareholder or partner in the same way

that income and loss are divided. Electing

large partnerships include this credit in

“general credits.”

S Corporations and Partnerships

Enter the number of gallons of diesel fuel

produced with a sulfur content of 15 parts

per million or less.

Line 1

On line 3, enter 25% of the qualified

capital costs (defined above) 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 your excess over

155,000 barrels divided by 50,000 barrels.

Line 3

Cooperative Election to Allocate Credit

to Patrons

A cooperative described in section 1381(a)

can elect to allocate any part of the low

Example. Your average daily domestic

refinery runs were 180,000 barrels for the

1-year period ending on December 31,

2002. First divide 25,000 (your excess over

155,000 barrels) by 50,000 to get .5. Then

multiply 25% by .5 to get 12.5%. On line

3, enter 12.5% of the qualified capital

costs for the facility that produced the fuel

reported on line 1.

● A low sulfur diesel fue

from a passive activity,

Enter the total low sulfur diesel fuel

production credits allowed for all prior tax

years (as determined for line 6).

Line 4

sulfur diesel fuel production credit among

the 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 such patrons for the tax year.