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Form 8904: Credit for Oil and Gas Production From Marginal Wells
IRS Form 8904 is used to claim the section 45I credit for oil and gas production from marginal wells; partnerships and S corporations must file this form, and the general credit amount is $3 per barrel of qualified crude oil production.
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IRS Form 8904 - Credit for Oil and Gas Production From Marginal Wells
IRS Form 8904 is used to claim the section 45I credit for oil and gas production from marginal wells; partnerships and S corporations must file this form, and the general credit amount is $3 per barrel of qualified crude oil production.
Risk Radar
Scan points- 1Ensure you apply the inflation adjustment factor (IAF) to the base amounts ($3/$0.50) as required by IRB guidance.
- 2Failing to use Line 2 for tax years beginning in 2025 instead of other lines.
- 3Not reporting the credit on line 7 if deriving it from Schedule K-1 (Form 1065) or Form 1120-S.
- 4Omitting the inflation adjustment factor (IAF) reduction when calculating the base credit amounts.
- 5Claiming production that exceeds the maximum threshold of 1,095 barrels or barrel-of-oil equivalents.
Plain English
This form allows taxpayers to claim a tax credit based on the amount of oil or natural gas produced from specific 'marginal' wells. For 2025, the credit is generally calculated at $3 per barrel for oil and $0.50 per 1,000 cubic feet for natural gas. Partnerships and S corporations must use this form to claim their portion of the credit.
Submission Date
- Filing date: 2025-12-04 14:35:47
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when you are claiming the section 45I credit for oil and gas production from marginal wells, especially if your company is a partnership or S corporation.
- Do not use Form 8904 when you are an individual taxpayer whose only source of the credit is another entity (like a partnership or S corporation).
- Check Form 3800 instead when you wish to report the general business credit directly on that form.
Form selector
Use this form or another form?
You are filing as an individual, but your credit comes from a partnership or S corporation
You can report the credit directly there instead of filling out Form 8904.
✓ Check Part III, line 1bb of Form 3800.
You are filing as an individual and want to calculate your credit separately from other lines on Form 8904
This ensures the separate calculation is included with the total reported credit.
✓ Check line 7 of Form 8904.
You are filing as a corporation (not an S corp) and want to report the general business credit directly
The instructions state this is an alternative when not using earlier lines on Form 8904.
✓ Check Purpose of Form section in instructions.
Deadline or filing window
The credit can be claimed any time within 3 years from the due date of the return, provided the filing is on an original or amended return. The form itself does not list a specific annual deadline, but this three-year window governs when the claim must be submitted.
Checklist
What you need before filling it out
Credit amount (Crude Oil)
$3 per barrel of qualified crude oil production · Instructions p.1
Credit amount (Natural Gas, 2025)
$0.79 per thousand cubic feet of qualified natural gas production · Instructions p.1 / Line 2 on Form p.1
Filer Requirement
Partnerships and S corporations must file Form 8904 · Instructions p.1
Credit Claim Period
Any time within 3 years from the due date (excluding extensions) of your return · Instructions p.1
Line 7 Entry Source
Schedule K-1 (Form 1065), box 15 (code P) OR Schedule K-1 (Form 1120-S), box 13 (code P) · Instructions p.2
Before you submit
- 1Confirm you entered your qualified natural gas production on Line 1 of Form 8904.
- 2Verify that $0.79 was entered on Line 2 of Form 8904 (for tax years beginning in 2025).
- 3Check that the value on Line 3 is the result of multiplying Line 1 by Line 2.
- 4If applicable, confirm you are reporting the total credit amount on Line 7 based on your K-1s.
- 5Confirm that if you did not use earlier lines to figure a separate credit, you report it directly on Form 3800 (as per instructions).
- 6Ensure the form is attached to your main tax return.
- 7Verify the revision date of the instruction booklet matches the current filing year requirements.
How to file this form
- 1Enter your qualified natural gas production in thousands of cubic feet on Line 1 of Form 8904.
- 2Enter the applicable credit amount for qualified natural gas production on Line 2 (use $0.79 for tax years beginning in 2025).
- 3Calculate and enter the total credit amount on Line 3 by multiplying Line 1 by Line 2.
- 4If reporting from a K-1, ensure you enter that total credit onto Line 7 of Form 8904.
- 5Attach the completed IRS Form 8904 to your relevant tax return.
- 6Retain a copy of Form 8904 for your records as required by Internal Revenue law.
Known limitations
- 1The section 45I credit for oil and gas production from marginal wells is applicable for tax years beginning in 2025 for qualified natural gas production; the credit remains phased out for crude oil production.
- 2All other taxpayers are not required to complete or file Form 8904 if their only source of the credit is a partnership or S corporation.
- 3Partnerships and S corporations that do not use earlier lines to figure a separate credit must report the credit directly on Form 3800, General Business Credit.
- 4The general credit amounts of $3 per barrel of qualified crude oil production and $0.50 per 1,000 cubic feet of qualified natural gas production are subject to a statutory reduction and inflation adjustment factor (IAF) for the calendar year.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is dated October 2024, but instructions reference a revision date of November 2025; the official source directs users to IRS.gov/Form8904 for the latest information.
What changed or needs a fresh check
- Edition date — confirm the form revision reads October 2024.
- Latest Instructions date — confirm the instruction booklet references November 2025.
- OMB Number — confirm the attached document bears OMB No. 1545-2278.
- Filer requirement — confirm your entity is a Partnership or S corporation if you must file Form 8904.
Quick Facts
Downloads
After you file
- 1Retain books or records relating to Form 8904 as long as their contents may become material in the administration of any Internal Revenue law.
- 2The estimated burden for individual and business taxpayers filing Form 8904 is approved under OMB control number 1545-0074 and 1545-0123.
- 3If a filer needs to report the credit from a Schedule K-1 (Form 1065), they must ensure it appears in box 15 (code P) of that schedule.
- 4The form should be attached to the taxpayer's main tax return.
Sources
- SRCInstructions p.1 — The section 45I credit for oil and gas production from marginal wells applies to tax years beginning in 2025 for qualified natural gas production.
- SRCInstructions p.1 — Partnerships and S corporations must file Form 8904 to claim the credit.
- SRCInstructions p.1 — The general credit amount is $3 per barrel of qualified crude oil production and $0.50 per 1,000 cubic feet of qualified natural gas production.
- SRCInstructions p.1 — For tax years beginning in 2025, the specific credit amount for natural gas production used on Line 2 is $0.79 per thousand cubic feet.
- SRCForm p.1 — The form must be attached to your tax return.
- SRCInstructions p.2 — Line 7 requires entering total credit from Schedule K-1 (Form 1065), box 15 (code P) or Schedule K-1 (Form 1120-S), box 13 (code P).
- SRCInstructions p.1 — For tax years beginning in 2025, Line 2 must enter the credit amount of $0.79.
- SRCInstructions p.2 — The estimated burden for all other taxpayers filing Form 8904 is not specified but included in OMB control number 1545-0123.
Common confusion points
Who needs to file Form 8904?
Partnerships and S corporations must file this form to claim the credit.
→ Check if your entity is a Partnership or an S corporation.
What should I enter on Line 2 for tax years beginning in 2025?
Enter the specific credit amount of $0.79 on line 2 for qualified natural gas production.
→ Confirm you are using the 2025 Form 3800, Part III, line 1bb if reporting elsewhere.
Do all filers have to report the credit on Line 7?
Partnerships and S corporations must report it on line 7; all other filers figuring a separate credit on earlier lines must also report it on line 7.
→ If you are not using earlier lines, check if you can report directly on Form 3800.
What is the standard rate for crude oil production?
The general credit amount is $3 per barrel of qualified crude oil production.
→ Note that this amount may be adjusted by the inflation adjustment factor (IAF).
Where does the natural gas credit come from?
It is generally $0.50 per 1,000 cubic feet of qualified natural gas production, but for tax years beginning in 2025, the specific amount used on Line 2 is $0.79.
→ Verify this rate against Notice 2025-34.
What happens if I don't use earlier lines to calculate the credit?
The filer can report the credit directly on Form 3800, General Business Credit, as explained in the Purpose section of the instructions.
→ Confirm that reporting directly on Form 3800 is acceptable for your filing situation.
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Questions about IRS Form 8904
What is IRS Form 8904 used for?
This form allows taxpayers to claim a tax credit based on the amount of oil or natural gas produced from specific 'marginal' wells. For 2025, the credit is generally calculated at $3 per barrel for oil and $0.50 per 1,000 cubic feet for natural gas. Partnerships and S corporations must use this form to claim their portion of the credit.
Who must file IRS Form 8904?
Partnerships and S corporations must file Form 8904 if they are claiming the section 45I credit for oil and gas production from marginal wells. All other taxpayers are not required to complete or file this form only if the sole source of the credit is a partnership or S corporation.
What information does IRS Form 8904 require?
The form collects details on the amount of credit, which can be found by adding lines 3 and 7; Line 2 specifically requires entering the $0.79 credit amount for tax years beginning in 2025.
When is IRS Form 8904 due?
An owner of a marginal well may claim the credit any time within 3 years from the due date (excluding extensions) of its return on either an original or amended return.
Where do I file IRS Form 8904?
The form is filed with the Internal Revenue Service. The instructions do not specify a single service center, but filing must be done according to standard IRS procedures for Form 8904.
How do I complete IRS Form 8904?
First, calculate the total credit and enter it on Line 2 (for tax years beginning in 2025), or use earlier lines. If reporting from K-1s, ensure the credit is listed on Line 7. The final amount must be reported on line 8 of Form 8904.
What happens if IRS Form 8904 is filed incorrectly?
Failure to file correctly means the taxpayer may not receive the proper credit amount; if other lines are used to figure a separate credit, that credit must also be reported on line 7 of Form 8904.
Who needs to file Form 8904?
Partnerships and S corporations must file this form to claim the credit. Check if your entity is a Partnership or an S corporation.
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