Form 8896

(Rev. December 2013)

Department of the Treasury 

Internal Revenue Service 

Low Sulfur Diesel Fuel Production Credit

▶ Attach to your tax return. 

▶ Information about Form 8896 and its instructions is at www.irs.gov/form8896. 

OMB No. 1545-1914

Attachment 

Sequence No. 142

Name(s) shown on return Identifying number 

1 Low sulfur diesel fuel produced (in gallons) . . . . . . . . . . . . . . . . . . 1 

2 Multiply line 1 by $.05 . . . . . . . . . . . . . . . . . . . . . . . . . 2 

3 Qualified costs limitation (see instructions) . . . . . . . . . . . . . . . . . . 3 

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

5 Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . 5 

6 Enter the smaller of line 5 or line 2 . . . . . . . . . . . . . . . . . . . . . 6 

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

8 Add lines 6 and 7. Cooperatives, go to line 9. Partnerships and S corporations, stop here and 

report this amount on Schedule K. All others, stop here and report this amount on Form 3800, 

line 1m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

9 Amount allocated to patrons of the cooperative (see instructions) . . . . . . . . . . 9 

10 Cooperatives, subtract line 9 from line 8. Report this amount on Form 3800, line 1m . . . . 10 

General Instructions 

Section references are to the Internal Revenue Code. 

Future Developments

For the latest information about developments related to Form 

8896 and its instructions, such as legislation enacted after they 

were published, go to www.irs.gov/form8896.

Purpose of Form 

Use Form 8896 to claim the low sulfur diesel fuel production 

credit. 

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 costs limitation on 

line 3. This credit is part of the general business credit. 

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 Form 3800. 

Definitions 

Low Sulfur Diesel Fuel 

This is diesel fuel with a sulfur content of 15 parts per million or 

less. 

Small Business Refiner 

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. 

Qualified Costs 

For each facility, qualified 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: 

• 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 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 costs will result in compliance with the 

applicable EPA regulations. This certification must be obtained 

not later than June 29, 2008, or, if later, the date that is 30 

months after the first day of the first tax year in which the credit 

is determined. For details, see Rev. Proc. 2007-69, 2007-49 

I.R.B. 1137, available at www.irs.gov/irb/2007-49_IRB/ar14.html.

TIP

Unless you elect not to take this credit, your 

deductions will be reduced by the amount of your 

credit. For details, see section 280C(d). 

Additional Information 

For more information, see section 45H. 

Specific Instructions 

Use lines 1 through 6 to figure any low sulfur diesel fuel 

production credit from your own trade or business. 

Line 1 

Enter the number of gallons of diesel fuel produced with a sulfur 

content of 15 parts per million or less. 

Line 3 

On line 3, enter 25% of the qualified costs (defined earlier) 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. 

For Paperwork Reduction Act Notice, see instructions. Cat. No. 37704F Form 8896 (Rev. 12-2013) 
Form 8896 (Rev. 12-2013) Page 2 

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 

costs for the facility that produced the fuel reported on line 1. 

Line 4 

Enter the total low sulfur diesel fuel production credits allowed 

for all prior tax years (as determined for line 6). 

Line 9 

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 the cooperative is subject to the passive activity rules, 

include on line 7 any low sulfur diesel fuel production credit from 

passive activities disallowed for prior years and carried forward 

to this year. Complete Form 8810, Corporate Passive Activity 

Loss and Credit Limitations, to determine the allowed credit that 

can be allocated to patrons. For details, see the Instructions for 

Form 8810.

The election is not effective unless: 

• The statement described above is attached to the timely filed 

return (including extensions) for the tax year associated with the 

election, and

• The cooperative designates the apportionment in a written 

notice or on Form 1099-PATR, Taxable Distributions Received 

From Cooperatives, mailed to its patrons during the payment 

period described in section 1382(d).

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 extensions). Enter “Filed pursuant to section 

301.9100-2” on the amended return. 

Once made, the election cannot be revoked. 

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 may become material in the 

administration of any Internal Revenue law. Generally, tax 

returns and return information are confidential, as required by 

section 6103. 

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. 

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.

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.