General Instructions

Generally, you are not required to complete the source credit form or attach it to Form 3800 if you are a taxpayer that is not a partnership or S corporation, and your only source for a credit listed in Form 3800, Part III, is from a partnership, S corporation, estate, trust, or cooperative. The following exceptions apply:

  • You are claiming the investment credit (Form 3468) or the biodiesel and renewable diesel fuels credit (Form 8864) in Part III with box A or B checked.

  • The taxpayer is an estate or trust and the source credit can be allocated to beneficiaries. For more details, see the Instructions for Form 1041, U.S. Income Tax Return for Estates and Trusts, Schedule K-1, box 13.

  • The taxpayer is a cooperative and the source credit can or must be allocated to patrons. For more details, see the Instructions for Form 1120-C, U.S. Income Tax Return for Cooperative Associations, Schedule J, line 5c.

Who Must File

You must file Form 3800 to claim any of the general business credits.

Carryback and Carryforward of Unused Credit

The carryforward may have to be reduced in the event of any recapture event (change in ownership, change in use of property, etc.). If a section 1603 grant is received, the carryforward must be reduced to zero. For further information, see Form 4255, Recapture of Investment Credit.

If you cannot use part or all of your general business credit because of the tax liability limit (line 38 is less than the sum of Part I, line 6, and Part II, lines 25 and 36), carry the unused credit back one year. To carry back an unused credit, file an amended return (Form 1040X, Amended U.S. Individual Income Tax Return, Form 1120X, Amended U.S. Corporation Income Tax Return, or other amended return) for the prior tax year or an application for tentative refund (Form 1045, Application for Tentative Refund, or Form 1139, Corporation Application for Tentative Refund). Generally, if you file an application for a tentative refund, it must be filed by the end of the tax year following the tax year in which the credit arose.

Note.

No part of the unused credit for any year attributable to any credit can be carried back to any tax year before the first tax year for which that credit was first allowable. See Credit Ordering Rule, later, to determine which credits are allowed first.

If you have an unused credit after carrying it back 1 year, carry it forward to each of the 20 tax years after the year of the credit. Any qualified business credits (as defined in section 196(c)) that are unused after the last tax year of the 20-year carryforward period (or at the time an individual taxpayer dies or other taxpayer, such as a corporation or partnership, ceases to exist) may be taken as a deduction in the earlier of:

  • The tax year following the last tax year of the 20-year carryforward period, or

  • The tax year in which the individual taxpayer dies or other taxpayer ceases to exist.

Carryforward of the energy credit and the renewable electricity credit.   The energy credit must be recaptured in full if a grant is paid under Public Law 111-5, section 1603, for investment in energy property that an energy credit was previously claimed or for investment in renewable energy property that an election was made to treat the property as energy property. Recapture is applicable to those amounts previously constituting the qualified basis for an energy credit, including progress expenditures, that are also the basis for the 1603 grant. Recapture is accomplished as follows:
  1. Any portion of the energy credit related to that property that was used to offset tax in a prior tax year must be added to tax in the tax year the 1603 grant is received. Recaptured tax is calculated on Form 4255.

  2. Any carryforward of the energy credit related to that property is reduced to zero to recapture the unused portion of the credit.

  See Form 4255 for any other recapture event (change in ownership or change in use of property, etc.).

Change in Filing or Marital Status

Your general business credit is limited to your tax liability. Therefore, if you filed a joint return in a carryback or carryforward year and your marital status or filing status has changed, you may need to figure your separate tax liability in that carryback or carryforward year. This would apply if:

  • You filed as single in the credit year, but filed a joint return in the carryback or carryforward year;

  • You filed a joint return in the credit year, but filed a joint return with a different spouse in the carryback or carryforward year; or

  • You were married and filed a separate return in the credit year, but filed a joint return with the same or a different spouse in the carryback or carryforward year.

Determine your separate tax liability in the carryback or carryforward year as follows.

  1. Figure your tax for the carryback or carryforward year as though you were married filing a separate return.

  2. Figure your spouse's tax in that year as though he or she was married filing a separate return.

  3. Add the amounts in steps (1)  
    and (2).

  4. Divide the amount in step (1) by the amount in step (3). The result should be rounded to at least three decimal places.

  5. Multiply the decimal in step (4) by the total tax shown on your joint return for the carryback or carryforward year. The result is your separate tax liability and a carryback or carryforward credit is applied against this amount only.

Although your carryback or carryforward of the credit is limited to your separate tax liability, the amount of your refund resulting from the carryback or carryforward is further limited to your share of the joint overpayment. This is found by subtracting your separate tax liability (as determined above) from your contribution toward the payment.

Unless you have an agreement or clear evidence of each spouse's contribution toward the payment of the joint liability, your contribution includes the tax withheld on your wages and your share of the joint estimated tax or tax paid with the return. Your share of these payments is found by using the same formula used in determining your separate tax liability. Substitute the joint estimated tax, or tax paid with the return, for the tax in step (5). If the original return for the carryback year resulted in an overpayment, reduce your contribution by your share of the refund.

Attach a copy of the computation to your amended return or application for tentative refund.

Credit Ordering Rule

General business credits reported on Form 3800 are treated as used on a first-in, first-out basis by offsetting the earliest-earned credits first. Therefore, the order in which the credits are used in any tax year is:

  • Carryforwards to that year, the earliest ones first;

  • The general business credit earned in that year; and

  • The carryback to that year.

If your general business credits exceed your tax liability limit, the credits are used in the following order and based on the order shown under Order in which credits are used next.

  • Credits reported on line 2 of all Parts III with boxes A, B, C, and D checked.

  • Credits reported on Part II, line 25.

  • Non-ESBC credits reported on line 5 of all Parts III with boxes A, B, C, and D checked.

  • ESBC credits reported on line 6 of all Parts III with box G checked.

Order in which credits are used.   When relevant, the components of the general business credit reported on Form 3800 arising in a single tax year are used in the following order.

  
  • Investment credit (in the following order—rehabilitation credit, energy credit, qualifying advanced coal project credit, qualifying gasification project credit, and qualifying advanced energy project credit) (Form 3468).

  • Qualifying therapeutic discovery project credit (carryforward only).

  • Work opportunity credit (Form 5884).

  • Biofuel producer credit (Form 6478).

  • Credit for increasing research activities (Form 6765).

  • Low-income housing credit  
    (Form 8586, Part I only).

  • Disabled access credit (Form 8826).

  • Renewable electricity, refined coal, and Indian coal production credit (Form 8835).

  • Empowerment zone employment credit (Form 8844).

  • Renewal community employment credit (carryforward only).

  • Indian employment credit (Form 8845).

  • Employer social security and Medicare taxes paid on certain employee tips  
    (Form 8846).

  • Orphan drug credit (Form 8820).

  • New markets credit (Form 8874).

  • Credit for small employer pension plan startup costs (Form 8881).

  • Credit for employer-provided child care facilities and services (Form 8882).

  • Qualified railroad track maintenance credit (Form 8900).

  • Biodiesel and renewable diesel fuels credit (Form 8864).

  • Low sulfur diesel fuel production credit (Form 8896).

  • Distilled spirits credit (Form 8906).

  • Nonconventional source fuel credit (Form 8907).

  • Energy efficient home credit  
    (Form 8908).

  • Energy efficient appliance credit  
    (Form 8909).

  • Alternative motor vehicle credit  
    (Form 8910).

  • Alternative fuel vehicle refueling property credit (Form 8911).

  • Mine rescue team training credit  
    (Form 8923).

  • Agricultural chemicals security credit (Form 8931).

  • Credit for employer differential wage payments (Form 8932).

  • Carbon dioxide sequestration credit (Form 8933).

  • Qualified plug-in electric drive motor vehicle credit (Form 8936).

  • Qualified plug-in electric vehicle credit (carryforward only).

  • Credit for small employer health insurance premiums (Form 8941).

  • New hire retention credit  
    (carryforward only).

  • General credits from an electing large partnership (Schedule K-1 (Form 1065-B)).

Although these credits are aggregated on Form 3800, keep a separate record of each credit, including whether the credit was an eligible small business credit, to ensure proper accounting of the credits.


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