Instructions for Form 6478

Instructions for Form 6478

Department of the Treasury

Internal Revenue Service

(Rev. October 2023)

(For use with the January 2020 revision of Form 6478, Biofuel Producer Credit)

Section references are to the Internal Revenue Code

unless otherwise noted.

or

Future Developments

For the latest information about developments related to

Form 6478 and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form6478.

What’s New

The biofuel producer credit is extended for fuel sold or

used before 2025. Don't claim the credit for fuel sold or

used after 2024 unless the credit is extended again.

Reminder

Form 6478 and its instructions will no longer be updated

annually. Instead, they'll only be updated when necessary.

Use these instructions with the January 2020 revision of

Form 6478 for tax years beginning after 2017.

For previous tax years, see the applicable Form 6478 and

instructions.

General Instructions

Purpose of Form

Use Form 6478 (Rev. January 2020) to figure your section

40 biofuel producer credit for tax years beginning after

2017. You claim the credit for the tax year in which the

sale or use occurs. The credit consists of the second

generation biofuel producer credit.

You may claim or elect not to claim the biofuel producer

credit at any time within 3 years from the due date of your

return (determined without regard to extensions) on either

an original or an amended return for the tax year of the

sale or use.

Partnerships, S corporations, cooperatives, estates,

and trusts must file this form to claim the credit. All other

taxpayers aren’t required to complete or file this form if

their only source for this credit is a partnership, S

corporation, cooperative, estate, or trust. Instead, they can

report this credit directly on the appropriate line of Form

3800, General Business Credit.

Qualified Second Generation Biofuel

Production

This is second generation biofuel, which during the tax

year:

1. Is sold by the producer to another person:

a. For use by the buyer in the buyer’s trade or business

to produce a qualified second generation biofuel mixture

(other than casual off-farm production),

Oct 5, 2023

b. For use by the buyer as a fuel in a trade or business,

c. Who sells the second generation biofuel at retail to

another person and puts the second generation biofuel in

the retail buyer’s fuel tank; or

2. Is used or sold by the producer for any purpose

described in (1) above.

Qualified second generation biofuel production doesn’t

include purchasing alcohol and increasing the proof of the

alcohol through additional distillation. Nor does it include

second generation biofuel that isn’t both produced in the

United States or a U.S. territory and used as a fuel in the

United States or a U.S. territory.

A qualified second generation biofuel mixture combines

second generation biofuel with gasoline or a special fuel.

The producer of the mixture either:

• Used it as a fuel, or

• Sold it as fuel to another person.

Second Generation Biofuel

Generally, second generation biofuel, for credit purposes,

is any liquid fuel, which:

• Is derived by, or from, qualified feedstocks;

• Meets the registration requirements for fuels and fuel

additives established by the Environmental Protection

Agency under section 211 of the Clean Air Act (42 U.S.C.

7545); and

• Isn’t alcohol of less than 150 proof. In figuring the proof

of any alcohol, disregard any added denaturants

(additives that make the alcohol unfit for human

consumption).

A qualified feedstock is:

• Any lignocellulosic or hemicellulosic matter that’s

available on a renewable or recurring basis; and

• Any cultivated algae, cyanobacteria, or lemna.

However, second generation biofuel doesn’t include

any fuel if:

• More than 4% of the fuel (determined by weight) is any

combination of water and sediment,

• The ash content of the fuel is more than 1%

(determined by weight), or

• The fuel has an acid number greater than 25.

Special rules for algae. For sales described in (1) under

Qualified Second Generation Biofuel Production, earlier,

second generation biofuel also includes certain liquid fuel,

which:

• Is derived by, or from, any cultivated algae,

cyanobacteria, or lemna; and

• Isn’t alcohol of less than 150 proof (disregard any

added denaturants).

But only if this fuel is sold by the producer to another

person for refining by such other person into a liquid fuel

that will meet the registration requirements for fuels and

Cat. No. 13606U

• Schedule K-1 (Form 1041), Beneficiary’s Share of

Income, Deductions, Credits, etc., box 13 (code H); and

• Form 1099-PATR, Taxable Distributions Received From

Cooperatives, box 12, or other notice of credit allocation.

fuel additives established by the Environmental Protection

Agency under section 211 of the Clean Air Act (42 U.S.C.

7545), and not include any fuel if:

• More than 4% of the fuel (determined by weight) is any

combination of water and sediment,

• The ash content of the fuel is more than 1%

(determined by weight), or

• The fuel has an acid number greater than 25.

Also, once this fuel is sold by the producer to another

person for refining by such person into a fuel that will meet

these requirements, neither the producer nor any other

person can use such fuel (or any fuel derived from such

fuel) to figure a second credit for qualified second

generation biofuel production.

Partnerships, S corporations, cooperatives, estates,

and trusts must always report the above credits on line 3.

All other taxpayers:

• Report the above credits directly on the appropriate line

of Form 3800; and

• Don’t file Form 6478.

Line 4

Partnerships and S corporations report this amount on

Schedule K using the appropriate code. All others report

this amount on the appropriate line of Form 3800.

Registration

All producers of second generation biofuel must be

registered with the IRS. See Form 637, Application for

Registration.

Line 5

Cooperatives. A cooperative described in section

1381(a) can elect to allocate any part of the biofuel

producer credit to patrons of the cooperative. The credit is

allocated pro rata among the patrons eligible to share in

patronage dividends on the basis of the quantity or value

of business done with or for the patrons for the tax year.

If the cooperative is subject to the passive activity rules,

include on line 3 any Form 6478 credits from passive

activities disallowed for prior years and carried forward to

this year. Complete Form 8810, Corporate Passive Activity

Loss and Credit Limitations, to determine the allowed

producer credits that can be allocated to patrons. For

details, see the Instructions for Form 8810.

The cooperative is deemed to have made the election

by completing line 5. However, the election isn’t effective

unless:

• It’s made on a timely filed tax return (including

extensions), and

• The cooperative designates the apportionment in a

written notice or on Form 1099-PATR mailed to its patrons

during the payment period described in section 1382(d).

If you timely filed your return without making an

election, you can still make the election by filing an

amended return within 6 months of the due date of the

return (excluding extensions). Write “Filed pursuant to

section 301.9100-2” on the amended return.

Once made, the election can’t be revoked.

Recapture of Credit

You must pay a tax (recapture) on each gallon of second

generation biofuel at the rate you used to figure the credit

if you don’t use the fuel for the purposes described under

Qualified Second Generation Biofuel Production, earlier.

Report the tax on Form 720, Quarterly Federal Excise

Tax Return.

Specific Instructions

Line 1

Enter the number of gallons of second generation biofuel

sold or used for the tax year that meets the conditions

listed under Qualified Second Generation Biofuel

Production, earlier. Multiply by the rate of $1.01 per gallon.

Line 2

The credit shown in column (c) on line 1 must be included

in income under “other income” on the applicable line of

your income tax return, even if you can’t use all of the

credit because of the tax liability limit. However, if you’re

subject to the alternative minimum tax (AMT), this amount

isn’t income in figuring AMT and must be subtracted when

figuring your alternative minimum taxable income. Do this

by including this amount on the appropriate line of Form

6251, Alternative Minimum Tax—Individuals, or

Schedule I (Form 1041), Alternative Minimum

Tax—Estates and Trusts.

Estates and trusts. Allocate the biofuel producer credit

on line 4 between the estate or trust and the beneficiaries

in the same proportion as income was allocated and enter

the beneficiaries’ share on line 5.

If the estate or trust is subject to the passive activity

rules, include on line 3 any Form 6478 credits from

passive activities disallowed for prior years and carried

forward to this year. Complete Form 8582-CR, Passive

Activity Credit Limitations, to determine the allowed credit

that must be allocated between the estate or trust and the

beneficiaries. See the Instructions for Form 8582-CR.

Registration number. To claim a second generation

biofuel producer credit on line 1, you must be registered

with the IRS. Enter your SB registration number in the

space provided. For more information, see Form 637 and

Pub. 510, Excise Taxes.

Line 3

Enter the total biofuel producer credits from:

• Schedule K-1 (Form 1065), Partner’s Share of Income,

Deductions, Credits, etc., box 15 (code l);

• Schedule K-1 (Form 1120-S), Shareholder’s Share of

Income, Deductions, Credits, etc., box 13 (code l);

Line 6

Cooperatives, estates, and trusts report this amount on

the appropriate line of Form 3800.

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Instructions for Form 6478 (Rev. 10-2023)

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the

United States. You’re required to give us the information. We need it to ensure that you’re complying with these laws and

to allow us to figure and collect the right amount of tax.

You aren’t required to provide the information requested on a form that’s subject to the Paperwork Reduction Act

unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be

retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax

returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden

for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the

estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers

who file this form is shown below.

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preparing and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 hr., 9 min.

53 min.

58 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,

we’d be happy to hear from you. See the instructions for the tax return with which this form is filed.

Instructions for Form 6478 (Rev. 10-2023)

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