Generating Form 4255 in Lacerte

Below, you'll find information about Form 4255, Recapture of Investment Credit, in Lacerte.

Refer to the IRS Instructions for Form 4255 for more information.

What's new for tax year 2024: The IRS has made some changes for tax year 2024. See more here. These include Notification of recapture when a transfer election is made, emission tier recapture for clean hydrogen production facility and instruction changes for Part I.

How do I generate Form 4255 in the program?

This asset can be entered on either Screen 17.1, Dispositions (Schedule D, 4797, etc.) or Screen 22, Depreciation.

To generate Form 4255 on the Dispositions screen:

1. Go to Screen 17.1, Dispositions (Schedule D, 4797, etc.).
2. Select the applicable asset from the left Disposition box.
3. Make sure that any basis and sale details are already entered.
4. Scroll down to the ITC Recapture (4255) section.
5. Enter the Original cost or basis from Form 3468 field.
6. Enter the Original credit from Form 3468 field.

To generate Form 4255 on the Depreciation screen:

1. Go to Screen 22, Depreciation.
2. Select the applicable Asset from the left of the screen.
3. Make sure that the basis and placed in service details are already entered.
4. Scroll down to the Asset Information section.
5. Enter the original credit amount in Basis reduction (amortizable costs expensed, ITC, etc.).
6. From the Sections list select General Disposition Information.
7. Enter the Date sold, disposed, or retired (MANDATORY).
8. Scroll down to the Sale of Asset (4797/6252) section.
9. Enter the Sales price (-1=none).
10. Scroll down to the ITC Recapture (4255) section.
11. Mark the checkbox labeled Recapture ITC.

Lacerte will only generate Form 4255 when the Date sold is less than five years after the date the asset was acquired or placed in service. See the IRS Instructions for Form 4255 for more details about the recapture period.