In addition to the credits for fuel mixtures, you may also be able to take a credit if you sell or use alcohol or biodiesel directly as fuels and not in mixtures.
Alcohol Fuel Credit
You can claim a credit for straight alcohol used as a fuel if you either used it in your trade or business or you sold it at retail and you placed it in the tank of the buyer’s vehicle, ensuring its use as a fuel. You cannot claim the credit if you bought the alcohol at retail, even if the alcohol was used as a fuel in your trade or business.
The straight alcohol credit is calculated on Form 6478, Credit for Alcohol Used As Fuel, and the amount you can claim depends on whether the alcohol is 190 proof or greater, or from 150 proof to 190 proof.
Small Ethanol Producer
There is an additional alcohol fuel credit of 10 cents a gallon available to small ethanol producers. You qualify for this credit if your annual production capacity is no more than 30 million gallons of any type of alcohol. If you qualify, you can claim the credit on up to 15 million gallons of ethanol per tax year.
The small ethanol producer credit is also claimed on Form 6478. This is the only form for claiming this credit, and all taxpayers, including individuals, corporations, partnerships and S corporations, all use this same form to claim the credit. Partnerships and S corporations would then divide up the credit and pass it on to their partners or shareholders.
Biodiesel Fuel Credit
Just as in the case of the alcohol fuel credit, you can claim a credit for straight biodiesel used as a fuel if you either used it in your trade or business or sold it at retail and placed it in the buyer’s vehicle. You cannot claim a credit if you bought the biodiesel, or agri-biodiesel at retail price.
The straight biodiesel fuel credit is taken on Form 8864, Biodiesel Fuel Credits. This is the only form for claiming the credit, and all taxpayers including individuals, partnerships, corporations, and S corporations, must use it.
General Business Credit
Both the alcohol fuel credit and the biodiesel fuel credit are combined with other credits and taken as the General Business Credit on Form 3800.