You must file Form 3800 if any of the following apply.

A special tax liability limit applies to the empowerment zone and renewal community employment credit. The credit therefore is figured separately on Form 8844 and is not carried to Form 3800. For more information, see the instructions for Form 8844.

The New York Liberty Zone business employee credit is an expansion of the work opportunity credit to include a new targeted group of employees in the New York Liberty Zone. A special tax liability limit applies to the credit, so it is figured separately on Form 8884 and is not carried to Form 3800. For more information, see the instructions for Form 8884.

Your general business credit is limited to your net income tax minus the greater of the following amounts.

Your net income tax is your net regular tax liability (discussed below) plus any alternative minimum tax.

You must figure your tentative minimum tax before you figure your general business credit. Use Form 6251 (Form 4626 for a corporation) to figure your tentative minimum tax.

Your net regular tax liability is your regular tax liability minus certain credits. For more information, see the instructions for Form 3800 or any of the credit forms listed in the introduction.

If you are married and file a separate return, you and your spouse must each figure your credit limit separately. In figuring your separate limit, use $12,500 instead of $25,000 (see Credit limit, earlier). However, if one spouse has no credit for the tax year and no carryforwards or carrybacks of any credit to that year, the other spouse can use the full $25,000 in figuring the limit based on the separate tax.

In general, you can carry the unused part of your credit back one tax year and then forward up to 20 tax years after the year of the credit.

There are limits on the carryback of certain credits to periods before the enactment of the credit. See the instructions for Form 3800 for more information on these limits.

In any tax year, credits must be used as follows.

If you have any unused credit carryforward in the year following the end of the 20-year (15 years for pre-1998 credits) carryforward period, you can generally deduct the unused amount in that year. If an individual dies or a corporation, trust, or estate ceases to exist, the deduction is generally allowed for the tax year in which the death or cessation occurs. The deduction may not be allowed to certain corporations whose assets are acquired by another corporation.

Use Form 3800 to claim a carryforward of an unused credit from a previous tax year. The carryforward becomes part of your general business credit for the tax year to which it is carried.

You can claim a refund based on your general business credit carryback to the prior tax year by filing an amended return for the prior tax year. Use Form 1040X if your original return was a Form 1040, U.S. Individual Income Tax Return. Use Form 1120X if your original return was a Form 1120, U.S. Corporation Income Tax Return, or 1120–A, U.S. Corporation Short-Form Income Tax Return. Attach Form 3800 to your amended return.

Generally, you must file the amended return for the carryback year within 3 years after the due date, including extensions, for filing the return for the year that resulted in the credit carryback.

You can apply for a quick refund of taxes for the prior year by filing Form 1045 (Form 1139 for a corporation) to claim a tentative refund from a general business credit carryback. Generally, the application must be filed within 12 months after the end of the tax year in which the credit arose.

The 10% reforestation credit applies to up to $10,000 ($5,000 if you are married filing a separate return) of the amortizable costs 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. You can take the credit for reforestation costs whether you choose to amortize them or add them to the basis of your property. There is no carryforward or carryback of costs that are more than the dollar limit. For more information, see Amortization in chapter 8.

The rehabilitation credit applies to costs you incur for rehabilitation and reconstruction of certain buildings. Rehabilitation includes renovation, restoration, and reconstruction. It does not include enlargement or new construction. Generally, the percentage of costs you can take as a credit is 10% for buildings placed in service before 1936 and 20% for certified historic structures. See the instructions for Form 3468 for more information.

The 10% energy credit applies to certain costs for solar or geothermal energy property you placed in service during your tax year. See the instructions for Form 3468 for more information.

You generally must reduce the basis of assets on which you take an investment credit. The reduction is 100% of the rehabilitation credit and 50% of the reforestation and energy credits. See the instructions for Form 3468.

Use Form 3468 to figure your credit. You may also need to file Form 3800. See How To Claim the Credit, earlier.

The recapture period is the length of time the property must be used to avoid recapture. The recapture period for investment credit property is 5 full years from the date it was placed in service.

The amount you must recapture depends on when during the recapture period you dispose of, or change the use of, the property. If you dispose of the property during the first full year of service, you must recapture the full amount of the credit that was used to reduce your tax. The recapture amount decreases for each year the property remains in qualified service.

Use Form 4255 to figure the recapture amount. The credit recapture is figured by multiplying the original investment credit taken by the recapture percentage from the tables shown on Form 4255. The result is the recapture amount. See Form 4255 for more information.

If the refigured credit is less than the credit you originally took, you must add the difference to your tax.

Instead of using Form 4255 to figure the recapture tax, you can attach a detailed statement to your return for the year you dispose of the asset showing the computation of the recapture tax and the decrease in any investment credit carryover.

If you have a net operating loss carryback from the recapture year or a later year that reduces your tax for the recapture year or an earlier year, you may have to refigure your recapture. See section 1.47-(b)(3) of the regulations.

If your investment credit property is subject to the at-risk limits, you may have to recapture part of the credit if the amount at risk decreases. See the instructions for Form 3468 for more information.

There is no disposition if title to property is transferred as security for a loan. However, a disposition does occur if there is a transfer of property by foreclosure.

The leasing of investment credit property by the lessor who took the credit is generally not a disposition. However, if the lease is treated as a sale for income tax purposes, it is a disposition. A disposition also occurs if property ceases to be investment credit property in the hands of the lessor, the lessee, or any sublessee.

If the basis of investment credit property decreases, the decrease is considered to be a disposition of part of the property. This occurs, for example, if you buy property and later receive a refund of part of the original purchase price. You must then refigure the credit as if the decrease in basis was never part of the original basis. If your refigured credit is less than the credit you originally took, you must add the difference to your tax.

You dispose of property if you abandon or otherwise retire it from use. Normal retirements are also dispositions.

There is no disposition of investment credit property if the property is transferred because the owner-taxpayer died.

You are considered to have disposed of property you transferred by gift.

If you transfer investment credit property to your spouse, or you transfer the property to your former spouse incident to a divorce, you generally are not considered to have disposed of the property. This also applies if the transfer is made in trust for the benefit of your spouse or former spouse. However, if your spouse or former spouse later transfers the property, your spouse or former spouse will receive the same tax treatment that would have applied to you if you had made the transfer.

You are considered to have disposed of property that was destroyed by casualty or lost by theft or other involuntary conversion.

If you are a shareholder of an S corporation that disposes of assets on which you figured the investment credit, you are treated as having disposed of the share of the investment on which you figured your credit. This same rule applies if you are a member of a partnership or a beneficiary of an estate or trust.

A disposition does not occur because of a change in the form of doing business if certain conditions are met. For more information, see section 1.47-3(f) of the regulations.

The choice by a corporation to become an S corporation generally will not cause the recapture of investment credit previously claimed by the corporation. The choice is treated as a change in the form of doing business and not as a disposition of property. No disposition occurs when an S corporation terminates or revokes its choice not to be taxed as a corporation.

There is no disposition when investment credit property is sold by the taxpayer who claimed the credit and it is then leased back to that taxpayer as part of the same transaction.