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General Instructions

Purpose of Form

Use Form 8936 to figure your credit for qualified plug-in electric drive motor vehicles you placed in service during your tax year. Also use Form 8936 to figure your credit for certain qualified two-wheeled plug-in electric vehicles.

The credit attributable to depreciable property (vehicles used for business or investment purposes) is treated as a general business credit. Any credit not attributable to depreciable property is treated as a personal credit.

Partnerships and S corporations must file this form to claim the credit. All other taxpayers are not required to complete or file this form if their only source for this credit is a partnership or S corporation. Instead, they can report this credit directly on line 1y in Part III of Form 3800, General Business Credit.

Qualified Plug-in Electric Drive Motor Vehicle

This is a new vehicle with at least four wheels that:

  • Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and

  • Has a gross vehicle weight of less than 14,000 pounds.

Qualified Two-Wheeled Plug-in Electric Vehicle

This is a new vehicle with two wheels that:

  • Is capable of achieving a speed of 45 miles per hour or greater,

  • Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2.5 kilowatt hours and is capable of being recharged from an external source of electricity, and

  • Has a gross vehicle weight of less than 14,000 pounds.

Certification and Other Requirements

Generally, you can rely on the manufacturer’s (or, in the case of a foreign manufacturer, its domestic distributor’s) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. The manufacturer or domestic distributor should be able to provide you with a copy of the IRS letter acknowledging the certification of the vehicle.

If, however, the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement.

If you purchased a vehicle and its certification was withdrawn on or after the date of purchase, you can rely on such certification even if you had not placed the vehicle in service or claimed the credit by the date the withdrawal announcement was published by the IRS. The IRS will not attempt to collect any understatement of tax liability attributable to reliance on the certification as long as you purchased the vehicle on or before the date the IRS published the withdrawal announcement.

The following requirements must be met to qualify for the credit.

  • You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit.

  • You placed the vehicle in service during your tax year.

  • The vehicle is manufactured primarily for use on public streets, roads, and highways.

  • The original use of the vehicle began with you.

  • You acquired the vehicle for use or to lease to others, and not for resale.

  • You use the vehicle primarily in the United States.

Exception.   If you are the seller of a qualified plug-in electric drive motor vehicle or qualified two-wheeled plug-in electric vehicle to a tax-exempt organization, governmental unit, or a foreign person or entity, and the use of that vehicle is described in section 50(b)(3) or (4), you can claim the credit, but only if you clearly disclose in writing to the purchaser the amount of the tentative credit allowable for the vehicle (from line 11 of Form 8936). Treat all vehicles eligible for this exception as business/investment property. If you elect to claim the credit, you must reduce cost of goods sold by the amount you entered on line 11 for that vehicle.

More information.   For details, see the following.

Credit Phaseout

The credit for vehicles with at least four wheels is subject to a phaseout (reduction) once the vehicle manufacturer (or, for a foreign manufacturer, its U.S. distributor) sells 200,000 of these vehicles to a retailer for use in the United States after 2009. The phaseout begins in the second calendar quarter after the quarter in which the 200,000th vehicle was sold. Then the phaseout allows 50% of the full credit for 2 quarters, 25% of the full credit for 2 additional quarters, and no credit thereafter.

Basis Reduction

Unless you elect not to claim the credit, you may have to reduce the basis of each vehicle by the sum of the amounts entered on lines 11 and 18 for that vehicle.

Coordination With Other Credits

A vehicle that qualifies for the qualified plug-in electric drive motor vehicle credit on this form cannot be used to claim the alternative motor vehicle credit on Form 8910.

Recapture of Credit

If the vehicle no longer qualifies for the credit, you may have to recapture part or all of the credit. For details, see section 30D(f)(5).


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