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

Form 8896

© Attach to your tax return. Attachment

Sequence No. 142 Department of the TreasuryInternal Revenue Service

Name(s) shown on return Identifying number

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 (Rev. 12-2006)

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 instructions.

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

5 Subtract line 4 from line 3

8 Add lines 6 and 7. Cooperatives go to line 9; partnerships and S corporations, report this amount 

on Schedule K; all others, report this amount on the applicable line of Form 3800 (e.g., line 1q

of the 2006 Form 3800) 8

3

4

7 Low sulfur diesel fuel production credit from partnerships, S corporations, and cooperatives 7

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 refiner’s

qualified capital costs limitation on line

3. This credit is part of the general

business credit.

Definitions

This is diesel fuel with a sulfur content of

15 parts per million or less.

Low Sulfur Diesel Fuel

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.

(Rev. December 2006)

9 Amount allocated to the patrons of the cooperative 9

10 Subtract line 9 from line 8. Report this amount on the applicable line of Form 3800 (e.g., line 1q 

of the 2006 Form 3800) 10

What’s New

● The tax liability limit is no longer

figured on this form; instead, it must be

figured on Form 3800, General Business

Credit.

● The IRS will revise this December

2006 version of the form only when

necessary. Continue to use this version

for tax years beginning after 2005 until a

new revision is issued.

● Taxpayers that are not partnerships,

S corporations, or cooperatives, and

whose only source of this credit is from

those pass-through entities, are not

required to complete or file this form.

Instead, they can report this credit

directly on line 1q of Form 3800.

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

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.

Specific Instructions

Use lines 1 through 6 to figure any low

sulfur diesel fuel production credit from

your own trade or business.

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. To make the election,

attach a statement to the effect that the

cooperative elects to allocate the credit

among the patrons eligible to share in

patronage dividends on the basis of the

quantity or value of business done with

or for the patrons for the tax year.

If you timely file your return without

making an election, you can still make

the election by filing an amended return

with the statement within 6 months of

the due date of the return (excluding

The election is not effective unless:

● Made on a timely filed return

(including extensions). However, if the

cooperative made an election on a tax

return for a tax year ending after

December 31, 2002, and filed before

June 15, 2006, but failed to attach the

required statement, the cooperative may

attach that statement to the first federal

income tax return it files after June 14,

2006.

● The cooperative designates the

apportionment in a written notice mailed

to its patrons during the payment period

described in section 1382(d).
Form 8896 (Rev. 12-2006) Page 2

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.

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

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

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

Enter the total low sulfur diesel fuel

production credits allowed for all prior

tax years (as determined for line 6).

Line 4

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.

Once made, the election cannot be

revoked.

Enter the number of gallons of diesel

fuel produced with a sulfur content of 15

parts per million or less.

Line 1

extensions). Enter “Filed pursuant to

section 301.9100-2” on the amended

return.

excess over 155,000 barrels) by

50,000to 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.

may become material in the

administration of any Internal Revenue

law. Generally, tax returns and return

information are confidential, as required

by section 6103.