Basis Adjustment on Recapture
For property subject to investment credit or qualifying therapeutic discovery project grant recapture, increase the property’s basis as follows.
- For rehabilitation credit property, qualifying advanced coal project property, qualifying gasification project property, qualifying advanced energy project property, or depreciable qualifying therapeutic discovery project property, increase the basis by 100% of the amount, attributable to each such property, of the recapture tax, adjustments to carrybacks and carryforwards under section 39, or adjustments to disallowed passive activity credits.
- For energy property, increase the basis by 50% of the amount, attributable to each such property, of the recapture tax, adjustments to carrybacks and carryforwards under section 39, or adjustments to disallowed passive activity credits. If the reason for recapture is due to receipt of a payment under section 1603 of the American Recovery and Reinvestment Act of 2009, the basis of the energy property is reduced by 50% of the payment received.
If you are a partner or S corporation shareholder, the adjusted basis of your interest in the partnership or stock in the S corporation is adjusted to take into account the adjustment made to the basis of property held by the partnership or S corporation.
Form 4255 Instructions