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Use Form 4255 to figure the increase in tax for the recapture of investment credit claimed and for the recapture of a qualifying therapeutic discovery project grant.
Recapture is triggered by the sale of property on which the ITC was claimed, as well as a transfer of the property by foreclosure of a mortgage or other security interest on the property.
Investment tax credits are basically a federal tax incentive for business investment. They let individuals or businesses deduct a certain percentage of investment costs from their taxes. These credits are in addition to normal allowances for depreciation.
If you're in the situation where you have to file IRS Form 4255, you might have to pay back a tax credit you've earned in prior years. This process, known as recapture, occurs if you claim a credit\u2014in this case, a credit for a specific type of business investment\u2014and then no longer qualify for that credit.