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Form 8874 (Rev. 10-2020) Page 3
amount on a 2020 Form 1040 is reported on Schedule 2 (Form If you need more space, attach a statement showing all the
1040), line 8, box c, and the amount on a 2020 Form 1120 is information requested for each qualified equity investment. On
reported on Schedule J, line 9g (Other taxes). the last row on line 1, write “See attached” in column (a) and
You are not subject to recapture of the credit solely because enter the total of the credit amounts from the attached
you sell or otherwise dispose of your investment. However, you statement in column (f).
cannot claim the credit for any credit allowance date after the
disposition. Paperwork Reduction Act Notice. We ask for the information
on this form to carry out the Internal Revenue laws of the
Qualified CDEs must provide taxpayers holding a United States. You are required to give us the information. We
qualified equity investment with a completed Form need it to ensure that you are complying with these laws and to
TIP 8874-B when a recapture event occurs. allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on
Basis Reduction a form that is subject to the Paperwork Reduction Act unless the
You must reduce your basis in your qualified equity investment form displays a valid OMB control number. Books or records
by the amount of the new markets credits allowed (even if part relating to a form or its instructions must be retained as long as
or all of the credit is not allowed for the current year and is their contents may become material in the administration of any
carried forward). However, do not reduce your basis for Internal Revenue law. Generally, returns and return information
purposes of figuring the exclusion of gain for: are confidential, as required by section 6103.
• Qualified small business stock under section 1202, The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
• Certain DC zone assets under section 1400B (as in effect for individual and business taxpayers filing this form is approved
before its repeal on March 23, 2018), or under OMB control number 1545-0074 and 1545-0123 and is
• Certain qualified community assets under section 1400F (as in included in the estimates shown in the instructions for their
effect before its repeal on March 23, 2018). individual and business income tax return. The estimated
burden for all other taxpayers who file this form is shown below.
Additional Information Recordkeeping . . . . . . . . . . . 6 hr., 13 min.
For more details, see section 45D, Regulations section 1.45D-1, Learning about the
or www.cdfifund.gov. law or the form . . . . . . . . . . . 1 hr., 12 min.
Preparing and sending
Specific Instructions the form to the IRS . . . . . . . . . . 1 hr., 20 min.
Line 1 If you have comments concerning the accuracy of these time
Enter the information requested for each qualified equity estimates or suggestions for making this form simpler, we would
investment held directly by you on a credit allowance date in be happy to hear from you. See the instructions of the tax return
the current tax year. In column (e), enter the credit rate. For the with which this form is filed.
first, second, or third year of the 7-year credit period, enter “5.”
For any later year, enter “6.”
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