You can apply for recapture of investment credit using IRS Form 4255. The form should be completed and submitted in order to claim the tax credit. You should be aware that the recapture percentage is at 100% for the first full year of the investment credit, and it decreases by 20% each year thereafter. After five full years, the recapture rate becomes zero, and you do not have to file a recapture tax return.
The recapture tax is due if you dispose of the investment credit property before it has a useful life. The useful life is the same as the depreciation period for federal tax purposes. The amount of the recapture tax depends on the amount of the credit taken and the actual use. However, this tax is not applicable if the property has been used for more than twelve years.
The recapture form will allow you to determine the amount of tax due if you reclaim a tax credit. If you have invested in a qualifying therapeutic discovery project, you may be able to claim the tax credit on that amount. The recapture form should be completed and filed for each qualifying therapeutic discovery project.
An investment tax credit is a federal tax incentive for businesses to make capital investments. It allows individuals to deduct a certain percent of their investment expenses as a deduction, in addition to the normal depreciation allowance. This is different than accelerated depreciation, which only allows a percentage deduction at the time of purchase.
