RAIL: Short Line Railroad Infrastructure Modernization Credit Transfer Form (2025)
Minnesota · Minnesota DOR · Used for tax years 2025
Minnesota’s 2025 Schedule RAIL documents a transfer of the Short Line Railroad Infrastructure Modernization Credit. It reports credit certificate numbers, the credit granted and already used, the amount being transferred, and information and signatures for the transferor and tran
Who files this form
Use 2025 Schedule RAIL to transfer the Short Line Railroad Infrastructure Modernization Credit only if the credit is not transferred on the credit certificate issued by the Minnesota Department of Transportation.
Only a Class II or Class III railroad can transfer the credit. Both the railroad transferring the credit and the taxpayer receiving it must file the transfer form.
Distributing the credit to partners, shareholders, or beneficiaries is not considered a transfer. Those recipients are not considered Class II or Class III railroads and cannot transfer the credit.
When it's due
For the 2025 Schedule RAIL, mail the transfer form within 30 days of reaching a written agreement between the taxpayer transferring the credit and the taxpayer receiving it.
What you'll need
Have these documents and details available to complete the form:
- Credit certificates from the Minnesota Department of Transportation, including certificate numbers and original credit amounts.
- The amount of credit already used by the taxpayer transferring it.
- The written transfer agreement.
- The names of the taxpayers transferring and receiving the credit, the tax year of the expenditures, and the amount being transferred.
- The taxpayer identification information requested on the form.
- Each party's name, SSN, ITIN, or Minnesota ID, title, telephone number, signature, and date.
If you enter an SSN or ITIN, you do not need to enter a Minnesota Tax ID number.
How to file
- Enter the Minnesota Department of Transportation certificate numbers on line 1.
- Enter the total original amount of all credit certificates being transferred on line 2.
- Enter the total amount already used by the taxpayer transferring the credit on line 3.
- Subtract line 3 from line 2. Enter the credit amount to be transferred on line 4.
- Complete the transfer form on page 2, including the transfer amount and both parties' signatures and dates.
- Mail the form to the appropriate address below within 30 days of the written agreement.
Individuals
Minnesota Department of Revenue
Tax Operations Division
c/o Policy Lead
Mail Station 4122
600 N. Robert St.
St. Paul, MN 55146-4122
Corporations, partnerships, and S corporations
Minnesota Department of Revenue
Tax Operations Division
c/o Policy Lead
Mail Station 4122
600 N. Robert St.
St. Paul, MN 55146-5122
Insurance
Minnesota Department of Revenue
Insurance Taxes
c/o Insurance Taxes
Mail Station 1780
600 N. Robert St.
St. Paul, MN 55146-1780
Common mistakes
- Missing the mailing deadline. The notice requires mailing the form within 30 days of the agreement.
- Trying to transfer the same credit again. Once a credit is transferred, it cannot be transferred again.
- Treating a certificate as proof that the credit is valid. Issuing a credit certificate does not guarantee eligibility or validate the credit calculation. The department's review also does not certify that the claimed credit is within the allowed amount.
- Overlooking the recipient's repayment responsibility. In an audit or assessment, the taxpayer receiving the credit is responsible for repaying credits claimed above the allowed amount.
- Using another group member's transferred credit. For a recipient in a unitary group filing a combined corporate franchise tax return, only the company listed on the transfer certificate may use the credit to offset its tax.
Questions people ask
How much credit can be transferred?
The amount allowed on the credit certificate may be transferred before any of it is claimed. Alternatively, the entire credit carryover in each of the five succeeding taxable years may be transferred. The transfer must be to one other taxpayer.
When will the recipient get a credit certificate?
The Department of Revenue will issue a credit certificate to the recipient within 30 days of the submitted transfer form.
What railroad expenses qualify?
Qualified expenses include maintenance, reconstruction, or replacement of Minnesota railroad infrastructure that you owned or leased as of January 1, 2021. Expenses for new construction of industrial leads, switches, spurs, and sidings, and extensions of existing sidings, also qualify.
Where do I report the transfer amount on the tax return?
The instructions list these locations:
- C corporation: Form M4T, line 22.
- S corporation: Form M8, line 11.
- Partnership: Form M3, line 10.
- Sole proprietor: Schedule M1C, line 14.
- Fiduciary: Form M2, line 20.
- Tax-exempt organization: Form M4NPI, line 4e.
For S corporations and partnerships, any remaining credit may be passed through to shareholders and partners.