OMB No. 1545-1914 Low Sulfur Diesel Fuel Production Credit

Form 8896

 Attach to your tax return. Attachment

Sequence No. 142 Department of the Treasury

Internal Revenue Service

Name(s) shown on return Identifying number

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

Form 8896 (2005)

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 Form 3800.)

● Individuals. Enter the amount from Form 1040, line 44

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 48 through 54 12b

Foreign tax credit

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

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 55; 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

tax year. However, the total credits allowed

for all tax years cannot be more than the

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

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

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

7

7

b Partner

c Patron

Schedule K-1 (Form 1065), box 15, code F, G, 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

Definitions

This is diesel fuel with a sulfur content of

15 parts per million or less.

Low Sulfur Diesel Fuel

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

Small Business Refiner

2005

Other specified credits (see instructions)

Nonconventional source fuel credit (Form 8907, line 23)
Form 8896 (2005) Page 2

Specific Instructions

Line 19

Who must file Form 3800. You must file

Form 3800 if you have: 

Part I

Line 16

Line 15

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form simpler,

we would be happy to hear from you. See

the instructions for the tax return with

which this form is filed.

The time needed to complete and file

this form will vary depending on individual

circumstances. The estimated burden for

individual taxpayers filing this form is

approved under OMB control number

1545-0074 and is included in the estimates

shown in the instructions for their individual

income tax return. The estimated burden

for all other taxpayers who file this form is

shown below.

Paperwork Reduction Act Notice. 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.

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 for Form 3800 to

find out which credits are included in the

general business credit.

Part II

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB

control number. Books or records relating

to a form or its instructions must be

retained as long as their contents may

become material in the administration of

any Internal Revenue law. Generally, tax

returns and return information are

confidential, as required by section 6103.

Although you may not owe alternative

minimum tax (AMT), you generally must

still compute the tentative minimum tax

(TMT) to figure your credit. For a small

corporation exempt from the AMT under

section 55(e), enter -0-. Otherwise,

complete and attach the AMT form or

schedule and enter the TMT on line 16.

If you cannot use all of your credit because

of the tax liability limit (line 18 is smaller

than line 8), carry the unused credit back 1

year and then forward up to 20 years. See

the instructions for Form 3800 for details.

See section 38(c)(5) for special rules that

apply to married couples filing separate

returns, controlled corporate groups,

regulated investment companies, real

estate investment trusts, and estates and

trusts.

● More than one credit included in the

general business credit (other than a credit

from Form 8844, Form 6478, or Section B

of Form 8835), or

● A carryback or carryforward of any of

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).

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.

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 1 minus 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

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.

Example. Your average daily domestic

refinery runs were 165,000 barrels for the

1-year period ending on December 31,

2002. First divide 10,000 (your excess over

155,000 barrels) by 50,000 to get .2. Next

subtract .2 from 1 to get .8. Then multiply

25% by .8 to get 20%. On line 3, enter

20% of the qualified capital costs for the

facility that produced the fuel reported on

line 1.

● A low sulfur diesel fuel production credit

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

Line 12e 

Include on line 12e any amounts claimed

on:

● Form 8834, Qualified Electric Vehicle

Credit, line 20;

● Form 8910, Alternative Motor Vehicle

Credit, line 18; and

● Form 8911, Alternative Fuel Vehicle

Refueling Property Credit, line 19.

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.

Recordkeeping, 6 hr., 13 min.; Learning

about the law or the form, 45 min.;

Preparing and sending the form to the

IRS, 2 hr., 5 min.

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.