4255

Certain Credit Recapture, Excessive Payments, and Penalties

Agency
IRS
Revision
Rev. December 2025
Fillable fields
646
Pages
5
Official source
IRS form page
Checked
October 21, 2026
Fill 4255 online
Page 1 of form 4255

Form 4255: Certain Credit Recapture, Excessive Payments, and Penalties

Form 4255, Certain Credit Recapture, Excessive Payments, and Penalties, is attached to a tax return. The instructions say it is used to figure the increase in the amount due for certain credit recaptures, excessive payments, excessive credit transfers, and penalty amounts for failure to satisfy the prevailing wage and apprenticeship (PWA) requirements.

Part I is a summary with a line for each credit form it covers, such as Form 7207, the parts of Form 3468, Form 8835, Form 8933 and Form 8911. Part II refigures the investment credit for properties A through D and figures recapture from an increase in nonqualified nonrecourse financing or from a disposition or cessation of use. Part III figures emissions tier recapture for property that is part of a specified clean hydrogen production facility.

This page hosts the December 2025 revision. You can fill it out free in your browser on this page and download it without an account.

What's on Form 4255

Part I, columns (a) to (f)

Amounts from prior year returns for each credit line: the credit or deduction claimed, the gross and net elective payment election (EPE) amounts, the non-EPE credit applied against regular tax, and the carryover.

Part I, columns (g) to (l)

Recapture: the recapture percentage, the amount recaptured including reduction of carryover, and how that amount splits across the carryover, non-EPE credit, gross EPE and net EPE amounts.

Part I, columns (m) to (t)

Excessive credit transfers, excessive payments, prevailing wage and apprenticeship penalty amounts, then totals: amounts that can and cannot be reduced by nonrefundable credits, and two summing columns.

Part II: Recapture Calculation

Section A describes properties A through D, Section B refigures the original credit, Section C covers an increase in nonqualified nonrecourse financing, and Section D covers disposition, cessation of use or certain advanced manufacturing expansions.

Part III: Emissions Tier Recapture

Nine lines for property that is part of a specified clean hydrogen production facility. Line 9 multiplies line 8 by 20% (0.20) and is entered in Part I, line 1j, column (h).

How to fill out Form 4255

  1. 1

    Complete Parts II and III first

    Part I says to complete the rest of Form 4255 as applicable before completing it, and the instructions repeat that Parts II and III come first.

  2. 2

    Part II, Sections A and B

    Describe each property and credit on lines A through D, then enter the original rate of credit, the credit base, any net change in nonqualified nonrecourse financing and the refigured credit. The instructions say to attach additional Forms 4255 for more properties.

  3. 3

    Part II, Section D

    Enter the date placed in service, using the first day of that month, and the date the property ceased to be qualified credit property. Lines 12 to 16 count full years, apply the recapture percentage from the instructions' table and figure the recapture tax.

  4. 4

    Part I lines and columns

    Enter credit or deduction information from each credit form and Form 3800, then the recapture in column (h) and any excessive payments, transfers and PWA penalties. The instructions give ratios for splitting PWA penalties among net EPE, non-net EPE and non-EPE amounts.

  5. 5

    Line 3 totals

    Carry line 3, columns (q) and (r), to the tax return. The instructions use Form 1120, Schedule J, lines 1g and 9a as the example, and Form 1065, line 27, or Form 1120-S, line 23c, for certain partnership and S corporation amounts.

Why fill Form 4255 on indox

You get the real form, filled in a browser tab, with nothing standing between you and the finished PDF.

  • Fill the form right in your browser, no software to install
  • Free to fill and free to download, with no account
  • The official blank straight from the IRS, not a copy someone retyped
  • Works on a phone, tablet or computer

Where it goes and the rules behind it

Where it goes

The form says 'Attach to your tax return.'

Recapture period

The instructions say the recapture period runs until the end of 5 full years after the property was placed in service.

Exceptions to recapture

The instructions list a transfer because of the taxpayer's death, a transfer between spouses or incident to divorce, a transaction to which section 381(a) applies, and a mere change in the form of conducting a trade or business.

Carryover and basis

The instructions say remaining carryforwards and carrybacks are reduced by the recapture percentage, and the property's basis is increased by 100% or 50% of the recapture tax and related adjustments, depending on the type of property.

No elective payment election

If there is no EPE, the instructions say to enter the full PWA penalty amounts in columns (o)(3) and/or (p)(3).

Related forms

Who files Form 4255?

  • Investment credit recapture

    The instructions list events that call for refiguring the investment credit, such as disposing of investment credit property before the end of 5 full years after it was placed in service, or changing its use so it no longer qualifies.

  • Partners, shareholders and beneficiaries

    The instructions say a partner, shareholder or beneficiary whose Schedule K-1 shows recapture of investment credit claimed in an earlier year will need a copy of the original Form 3468 to complete this form.

  • Elective payments and credit transfers

    Columns (m) and (n) cover excessive credit transfers and credit transfer recapture under section 6418 and excessive payments under section 6417, including the 20% amounts the instructions describe when there is no reasonable cause.

  • PWA penalty amounts

    Columns (o) and (p) report penalty amounts for failure to satisfy the prevailing wage and apprenticeship requirements, carried from Form 7220, Part IV, column (f) and Part III, column (i).

  • Partnerships and S corporations

    The instructions say certain amounts from Form 4255 are reported directly on Form 1065, line 27, or Form 1120-S, line 23c, and not through the Schedules K-1.

The form is attached to the filer's own tax return. The instructions describe the situations below.

Official sources and the blank

Do it all with indox

View all 123 tools

Questions about Form 4255

Is Form 4255 filed on its own?

No. The form says to attach it to your tax return.

In what order are the parts completed?

Part I says to complete the rest of Form 4255 as applicable first, so Parts II and III come before the Part I summary.

Where do the PWA penalty amounts come from?

The instructions say columns (o)(1) to (o)(3) come from Form 7220, Part IV, column (f), and columns (p)(1) to (p)(3) from Form 7220, Part III, column (i).

What if there are more than four properties?

The instructions say to complete and attach additional Forms 4255 to list all the properties for which the credit is refigured.

What is new in this revision?

The instructions say the excessive payments, excessive credit transfers and penalties section was renamed, and columns (m), (n), (o) and (p) were expanded to allow more detailed reporting.

What does a partner with recapture on Schedule K-1 need?

The instructions say a partner, shareholder or beneficiary will need a copy of the original Form 3468 to complete this form.