Header and items A to C
Recomputation year, name, address, identifying number, type of taxpayer, and the name and EIN of any pass-through entity that depreciated the property.
8866
Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method
- Agency
- IRS
- Revision
- Rev. December 2025
- Fillable fields
- 66
- Pages
- 1
- Official source
- IRS form page
- Checked
- October 21, 2026
Form 8866: Look-Back Interest for Property Depreciated Under the Income Forecast Method
Form 8866 is used to figure the interest due or to be refunded under the look-back method of section 167(g)(2) for property placed in service after September 13, 1995, that is depreciated under the income forecast method. The instructions say the income forecast method generally is limited to motion picture films, video tapes, sound recordings, copyrights, books and patents.
The form recomputes taxable income and tax for prior years using depreciation based on actual income, then compares the result with the tax as originally reported. The difference in tax for each prior year sets an interest amount, which is either owed to the IRS or refunded. It is filed for a recomputation year, which the instructions say is generally the 3rd and 10th tax years after the year the property was placed in service.
The form lists five taxpayer types: corporation, S corporation, individual, partnership, and estate or trust. You can fill out Form 8866 free in your browser on this page and download it without an account.
What's on Form 8866
Lines 1 to 3: taxable income
Prior year taxable income as reported, the adjustment for the difference in income forecast depreciation, and adjusted taxable income for look-back purposes.
Lines 4 to 6: tax
Tax on the line 3 amount at prior year rates, tax shown on the return, and the increase or decrease in tax on which interest is due or refunded.
Lines 7 and 8: interest
Interest due on an increase and interest to be refunded on a decrease, with totals in column (c).
Lines 9 and 10: net result
Line 9a net interest to be refunded, with routing number, account type and account number on lines 9b to 9d. Line 10 net interest owed.
Signatures
Taxpayer, spouse and paid preparer signatures, completed only if the form is filed separately and not with the tax return.
How to fill out Form 8866
- 1
Recomputation year and columns
Enter the recomputation year at the top and its month and year in the recomputation year column. Head columns (a) and (b) with the ending month and year of each prior year. For more than 2 prior years, attach additional Forms 8866.
- 2
Lines 1 and 2
Enter prior year taxable income before carrybacks, except those that resulted from the look-back redetermination. On line 2 show each year's depreciation adjustment and attach a schedule listing each property, unless the filer is an owner of a pass-through interest.
- 3
Lines 3 to 6
Combine lines 1 and 2, figure tax at prior year rates on line 4 and enter tax as reported on line 5. Pass-through entities skip lines 1, 3, 4 and 5 and multiply line 2 by the applicable regular tax rate listed in the instructions.
- 4
Lines 7 and 8
Compute interest at the overpayment rate under section 6621, compounded daily, generally from the due date of the prior year return. The instructions print rate tables for non-corporate and corporate taxpayers.
- 5
Line 9 or line 10
If line 8, column (c), is greater than line 7, column (c), enter the excess on line 9a and add direct deposit details if wanted. If line 7 is greater, enter the excess on line 10.
- 6
Sign if filing separately
Complete the signature section only when filing separately. On a joint return both spouses sign, and a paid preparer also completes the section.
Why fill Form 8866 on indox
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Where to send it, timing and corrections
Interest owed
Attach Form 8866 to the income tax return. The instructions say no signature is needed then, and give where the interest goes, for example 2025 Schedule 2 (Form 1040), Part II, line 17n, or Form 1065, line 25.
Interest to be refunded
Do not attach it to the return. File it separately: individuals to Department of Treasury, Internal Revenue Service, Philadelphia, PA 19255-0001; all others to Department of Treasury, Internal Revenue Service, Cincinnati, OH 45999-0001.
When to file
The instructions say to file Form 8866 by the date the income tax return is due, including extensions, and to keep a copy with any attached schedules.
Corrected Form 8866
The instructions say a corrected form is filed only if the line 6 amount for a prior year changes because of an error, an income tax examination or an amended tax return.
Treatment of the interest
The instructions say line 9a interest is reported as interest income when received or accrued. Corporations other than S corporations may deduct line 10 interest; for individuals and other taxpayers it is not deductible.
Related forms
1040
Additional Taxes
63 fields, 2 pages
1120
U.S. Corporation Income Tax Return
481 fields, 6 pages
1120-S
U.S. Income Tax Return for an S Corporation
390 fields, 5 pages
1065
U.S. Return of Partnership Income
440 fields, 6 pages
1040
U.S. Individual Income Tax Return
199 fields, 2 pages
1041
U.S. Income Tax Return for Estates and Trusts
173 fields, 3 pages
Who files Form 8866?
The instructions say Form 8866 generally is filed for each recomputation year by a taxpayer that depreciates property placed in service after September 13, 1995, under the income forecast method.
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Questions about Form 8866
What property does Form 8866 cover?
Property placed in service after September 13, 1995, depreciated under the income forecast method. The instructions say that method generally is limited to motion picture films, video tapes, sound recordings, copyrights, books and patents.
What is a recomputation year?
The instructions say it is generally the 3rd and 10th tax years after the tax year the property was placed in service. A year is not a recomputation year if actual income in each earlier year was within 10% of the estimated income used for depreciation.
Is there a size exception?
The instructions say the look-back method does not apply to property with an unadjusted basis (total capitalized cost) of $100,000 or less at the end of the recomputation year.
Is Form 8866 attached to the tax return?
Only when interest is owed or none is to be refunded. When interest is to be refunded, the instructions say to file it separately at the address listed for individuals or for all others.
Which interest rate applies?
The instructions say the overpayment rate under section 6621 is used, compounded daily, and they include rate tables for non-corporate and corporate taxpayers.
What if there are more than two prior years?
Attach additional Forms 8866. The instructions say to enter totals only in column (c) of the first form, and to sign only the first form when filing separately.