Thursday, July 21, 2011

IRS Is Redesigning Form 3800, General Business Credit

Draft 2011 Form 3800 and accompanying draft instructions

On its website, IRS has posted drafts of the 2011 Form 3800, General Business Credit, and its instructions. They reveal that IRS is in the process of redesigning Form 3800, General Business Credit, for the 2011 tax year.

Background. Certain business incentive credits are combined into one general business credit for purposes of determining each credit's allowance limitation for the tax year. The general business credit typically is only allowed against the income tax (excluding the tax on self-employment income) for a particular tax year and is subject to an annual limitation based on tax liabilities. However, a taxpayer may use certain specified credits to offset all or part of the alternative minimum tax (AMT). A general business credit may generally be carried back one year and forward twenty years.

A taxpayer must file Form 3800 to claim any of the general business credits. If the taxpayer's only source of credits listed on Form 3800 is from pass-through entities, the taxpayer may not be required to complete the source credit form. Instead, the taxpayer may be able to report the credit directly on Form 3800.

Changes reflected on the draft form and draft instructions. The “What's New” section of the draft 2011 instructions for Form 3800 notes that the form has been redesigned. They redesign includes the following changes:

* Part I is titled “Current Year Credit for Credits Not Allowed Against Tentative Minimum Tax (TMT).” The credits previously reported in Part I, lines 1a through 1bb, are now reported in Part III, lines 1a through 1bb.

* The passive activity limit and carryover amounts for all general business credits are now reported on Form 3800.

* A new Part III is added to reflect all the general business credits that are reported on Form 3800 and to identify the type of credit being reported. In addition, if a credit is being reported from a pass-through entity, the employer identification number (EIN) of the pass-through must be entered in Part III.

The employer housing credit is no longer applicable and is removed from Part III, line 1.

References: For the general business credit, see FTC 2d/FIN ¶L-15200; United States Tax Reporter ¶384; TaxDesk ¶380,500; TG ¶14751.

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