Chapter 4
General Business Credit
Alcohol fuels credit (Form 6478). This credit
applies to alcohol you sold or used as fuel. Alcohol, for purposes of
this credit, includes ethanol and methanol. It does not include alcohol
produced from petroleum, natural gas, coal, or peat. Nor does it include
alcohol of less than 150 proof. For more information, see Form 6478.
Credit for contributions to selected
community development corporations (Form 8847). This credit applies
to certain contributions made to a selected community development corporation
before June 30, 1999. For more information, see Form 8847.
Credit for social security taxes
paid on certain employee tips (Form 8846). The credit is generally
equal to your (employer's) portion of social security and Medicare taxes
paid on tips received by employees of your food and beverage establishment
where tipping is customary. The credit applies regardless of whether
the food is consumed on or off your business premises. However, you
cannot get credit for your part of social security and Medicare taxes
on those tips that are used to meet the federal minimum wage rate that
applies to the employee under the Fair Labor Standards Act. For more
information, see Form 8846.
Disabled access credit (Form 8826).
The disabled access credit is a nonrefundable tax credit for an eligible
small business that pays or incurs expenses to provide access to persons
who have disabilities. You must pay or incur the expenses to enable
your business to comply with the Americans with Disabilities Act of
1990. For more information, see Form 8826.
Empowerment zone employment credit
(Form 8844). You may qualify for this credit if you have employees
and are engaged in a business in an empowerment zone for which the credit
is available. For more information, see Form 8844 and Publication
954.
Enhanced oil recovery credit (Form 8830).
This credit applies to your qualified enhanced oil recovery costs for
the tax year. For more information, see Form 8830.
Indian employment credit (Form 8845).
This credit applies to the part of the qualified wages and health insurance
costs (up to $20,000 per employee) you paid or incurred during a tax
year that is more than the sum of the comparable costs you (or your
predecessor) paid or incurred during calendar year 1993. The employee
must be an enrolled member, or the spouse of an enrolled member, of
an Indian tribe. The employee must perform substantially all of his
or her services within an Indian reservation while living on or near
the reservation. For more information, see Form 8845 and Publication
954.
Investment credit (Form 3468).
The investment credit is the total of the following three credits.
- Energy credit.
- Reforestation credit.
- Rehabilitation credit.
Energy credit. This credit applies
to certain expenses for solar or geothermal energy property you placed
in service during the tax year. For more information, see the instructions
for Form 3468.
Reforestation credit.
The reforestation credit applies to part of the expenses you incur each
year to forest or reforest property you hold for growing trees for sale
or use in the commercial production of timber products. For information
about these expenses, see chapter 9 in Publication
535, Business Expenses.
Rehabilitation credit.
This credit applies to expenses you incur to rehabilitate certain buildings.
For more information, see the instructions for Form 3468.
Low-income housing credit (Form 8586).
This credit generally applies to qualified low-income housing buildings
placed in service after 1986. For more information, see Form 8586.
Orphan drug credit (Form 8820). The
orphan drug credit applies to qualified expenses incurred in testing
certain drugs, known as "orphan drugs for rare diseases and conditions."
For more information, see Form 8820.
Renewable electricity production
credit (Form 8835). The renewable electricity production credit
is available to sellers of electricity. It is based on electricity that
was sold to unrelated persons and was produced from qualified energy
resources at a qualified facility during the 10-year period after the
facility is placed in service. For more information, see Form 8835.
Research credit (Form 6765). The
research credit is designed to encourage businesses to increase the
amounts they spend on research and experimental activities. The credit
is generally 20% of the amount by which your research expenses for the
year are more than your base amount. However, the credit does not apply
to expenses you pay or incur after June 30, 2004. For more information,
see Form 6765.
Welfare-to-work credit (Form 8861).
The welfare-to-work credit provides businesses with an incentive to
hire long-term family assistance recipients. However, the credit does
not apply to wages you pay or incur for qualified long-term family assistance
recipients who begin work for you after December 31, 2001. For more
information, see Form 8861 and Publication 954.
Work opportunity credit (Form 5884).
The work opportunity credit provides businesses with an incentive to
hire individuals from targeted groups that have a particularly high
unemployment rate or other special employment needs. However, the credit
does not apply to wages you pay or incur for qualified targeted group
members who begin work for you after December 31, 2001. For more information,
see Form 5884 and Publication 954.
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