Part II—Qualifying Advanced Coal — 2025 Inst 3468 (PDF)

existing electric generation unit (including an existing natural-gas-fired combined cycle unit);

Has fuel input that, when completed, will be at least 75% coal;
Has an electric generation unit or units at the site that will generate at least 400 MW;
Has a majority of the output that is reasonably expected to be acquired or utilized;
Is to be constructed and operated on a long-term basis when the taxpayer provides evidence of ownership or control of a site of sufficient size;
Will be located in the United States; and
Includes equipment that separates and sequesters at least 65% (70% in the case of an application for reallocated credits) of the project’s total carbon dioxide emissions for project applications described in section 48A(d)(2)(A)(ii).

For more information on the third allocation round for section 48A credits, see Notice 2020-88, 2020-53 I.R.B. 1795 available at IRS.gov/irb/2020-53_IRB#NOT-2020-88 .

Basis. The qualified investment for any tax year is the basis of eligible property placed in service by the taxpayer during the tax year that is part of a qualifying advanced coal project. Eligible property is limited to property that can be depreciated or amortized and that was constructed, reconstructed, or erected and completed by the taxpayer or that is acquired by the taxpayer if the original use of such property commences with the taxpayer.

Basis reduction for certain financing. If property is financed in whole or in part by subsidized energy financing or by tax-exempt private activity bonds, the amount that you can claim as basis is the basis that would otherwise be allowed multiplied by a fraction that is 1 reduced by a second fraction, the numerator of which is that portion of the basis allocable to such financing or bonds, and the denominator of which is the basis of the property.

Subsidized energy financing means financing provided under a federal, state, or local program, a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.

Line 1a

Enter the qualified investment in integrated gasification combined cycle property placed in service during the tax year for projects described in section 48A(d)(3)(B)(i). Eligible property is any property that is part of a qualifying advanced coal project using an integrated gasification combined cycle and is necessary for the gasification of coal, including any coal handling and gas separation equipment.

Integrated gasification combined cycle is an electric generation unit that produces electricity by converting coal to synthesis gas, which, in turn, is used to fuel a combined cycle plant to produce electricity from both a combustion

For example, if the basis of the property is $100,000 and the portion allocable to such financing or bonds is $20,000, the fraction of the basis that you may claim the credit on is ⁴ /5 (that is, 1 minus $20,000/$100,000).

Section A—Qualifying Advanced Coal Project Credit Under Section 48A A qualifying advanced coal project is a project that:

Uses advanced coal-based generation technology (as defined in section 48A(f)) to power a new electric generation unit or to refit or repower an

Instructions for Form 3468 (2025) 11

turbine (including a combustion turbine/fuel cell hybrid) and a steam turbine.

Line 2a

Line 3a

Enter the qualified investment in advanced coal-based generation technology property placed in service during the tax year for projects described in section 48A(d)(3)(B) (iii). Eligible property is any certified property located in the United States and that is part of a qualifying advanced coal project (defined earlier) that has equipment that separates and sequesters at least 65% of the project’s total carbon dioxide emissions. This percentage increases to 70% if the credits are later reallocated by the IRS.

The credit will be recaptured if a project fails to attain or maintain the carbon dioxide separation and sequestration requirements. For details, see section 48A(i) and Notice 2011-24, 2011-14 I.R.B. 603 available at IRS.gov/irb/ 2011-14_IRB#NOT-2011-24 .

Section B—Qualifying Gasification Project Credit Under Section 48B A qualifying gasification project is a project that:

Employs gasification technology (as defined in section 48B(c)(2)),
Is carried out by an eligible entity (as defined in section 48B(c)(7)), and
Includes a qualified investment of which an amount not to exceed $650 million is certified under the qualifying gasification program as eligible for credit.

The total amount of credits that may be allocated under the qualifying gasification project program may not exceed $600 million.

For more information on the qualifying gasification project and the qualifying gasification program, see Notice 2009-23, 2009-16 I.R.B. 802 available at IRS.gov/irb/2009-16_irb#NOT-2009-23 , which is amplified by Notice 2014-81, 2014-53 I.R.B. 1001 available at IRS.gov/irb/2014-53_IRB#NOT-2014-81 . Also, see Notice 2011-24, 2011-14 I.R.B. 603 available at IRS.gov/irb/ 2011-14_IRB#NOT-2011-24 . Basis reduction. If property is financed in whole or in part by subsidized energy financing or by tax-exempt private activity bonds, figure the credit by using the basis of such property reduced under the rules described in Basis reduction for certain financing, earlier.

Line 4a

Enter the qualified investment in qualifying gasification project property placed in service during the tax year for which credits were allocated or reallocated after October

3, 2008, and that includes equipment that separates and sequesters at least 75% of the project’s carbon dioxide emissions. Qualified investment is the basis of eligible property placed in service during the tax year that is part of a qualifying gasification project.

For purposes of this credit, eligible property includes any property that is part of a qualifying gasification project and necessary for the gasification technology of such project. The IRS is required to recapture the benefit of any allocated credit if a project fails to attain or maintain these carbon dioxide separation and sequestration requirements. See section 48B(f) and Notice 2011-14, 2011-11 I.R.B. 554 available at IRS.gov/irb/2011-14_IRB#NOT-2011-24 .

Line 5a

Enter the qualified investment, other than any amount included in line 4a, in qualifying gasification project property (defined earlier) placed in service during the tax year.

Line 6

Patrons, including cooperatives that are patrons in other cooperatives, enter the unused investment credit from the qualifying advanced coal project credit or qualifying gasification project credit allocated from cooperatives. If you are a cooperative, see the Instructions for Form 3800, Part III, line 1a, for allocating the investment credit to your patrons.

Tip: See Cooperatives , earlier, for filing Form 3468 to report any unused credits from cooperatives.