Business & farm

For Forms 1065 and 1120-S you are not required to complete Form 3468 for energy property credits as the business entity itself is not eligible for the credit.  You are required to report the basis of the property on Schedule K for either 1065 or 1120-S and this is how the information is apportioned to partners, shareholders, or members.

Per IRS instructions for Form 3468:

Generally, (a) an estate or trust whose entire qualified rehabilitation expenditures or bases in energy property are allocated to beneficiaries, (b) an S corporation, or (c) a partnership does not have to complete and attach Form 3468 to its tax return. However, if the estate or trust, S corporation, or partnership is the owner of or passing through qualified rehabilitation expenditures for a certified historic structure, the entity must complete lines 11h and 11i of the form and attach it to its tax return even if the credit is not being claimed by the entity.

To eliminate your Form 3468 and enter the basis correctly to Schedule K please follow these steps for either Form 1065 or 1120-S:

1. Within your return click on the Forms icon in the upper right of your screen
2. Click on Form 3468
3. In the form preview at the bottom of the screen click Delete Form
4. Click on Form 1065 p4-5 (or Form 1120-S p3-5)
5. Scroll down to line 20 (or line 17) and find Items reported in Box 20 of Schedule K-1 (or Items reported in Box 17 of Schedule K-1)
6. In the dropdown box on the left field, choose E-Basis of energy property (or D-Basis of energy property)
7. The middle field will self-populate
8. In the right-hand field enter the total dollar amount of the basis of the property
9. Review your Schedule K-1 for each partner, shareholder, or member and see code E for Line 20 (or code D for Line 17) on each
   • You will need to complete a separate schedule to include with each K-1 sent out describing the property and listing the dollar value of the apportioned basis per the allocation on the K-1

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