Drake Tax - 3468: Investment Credit
Article #: 11531
Last Updated: November 06, 2024
Form 3468 does not calculate the actual credit in partnership and S corp returns as it is a pass-through credit. Form 3468 generates so that information can be passed through to each partner/shareholder so that the taxpayer can calculate the allowable credit on Form 1040. The Form 3468 Instructions require that the basis amounts for the various types of property be carried to the Schedule K on the Form 1065 and Form 1120-S. These amounts are then allocated to each shareholder or partner based on ownership/allocation percentages (you can make special allocations to partners if needed (see Drake Tax - 1065 - Partner Special Allocations for details)).
Use screen 3468 to enter details for the Investment Credit. Complete all applicable tabs. If the taxpayer is claiming an investment credit with respect to a facility or property, use the information below to enter data in the corresponding credit location:
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If you are completing... |
Then complete Part I... |
|---|---|
| Part II | Lines 1-5 and 14 |
| Part III | Lines 1-5 and 8 |
| Part IV | Lines 1-5 and 14 |
| Part VI | Lines 1-14 |
| Part VI, Section M | Line A |
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Part VII |
Lines 1-5 and 14 |
In View/Print mode of the 1065 or 1120-S return, K-1 Form 3468 produces for each partner/shareholder with a statement that shows the relevant Form 3468 line and allocated amounts for use by the partner/shareholder. Codes may vary depending on the type of property.
If you have entered the property on screen 4562, for assets acquired in 2023 or later, use the Basis ONLY if different from cost field for investment credit property basis adjustments. If an investment credit was taken on an item in a year prior to 2023 and the basis reduction method was used, the investment credit code must be entered each succeeding year so that the proper basis can be figured.
Form 1040
If you are working on the individual 1040 return for a partner/shareholder, enter the amounts reported by the entity on the applicable lines of screen 3468. Any eligible credit flows from Form 3468 to Form 3800 and then to Form 1040.
For more information, review: