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IRS Clarifies Guidance for PTC, ITC Developments

WASHINGTON – Aug. 11, 2014

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The Internal Revenue Service (IRS) recently released Notice 2014-46, clarifying Notices 2013-29 and 2013-60, regarding how to satisfy the physical work test and the ability to transfer a facility after construction has begun for purposes of the production tax credit (PTC) or investment tax credit (ITC). Notice 2014-46 states that a fully or partially developed facility may be transferred without losing its qualification under the physical work test or the safe harbor for purposes of the PTC or ITC. In addition, the notice modifies the application of safe harbor for certain facilities where a taxpayer paid or incurred less than 5 percent, but at least 3 percent, of the total cost of the facility before Jan. 1, 2014.

Tune in to the Aug. 19 Tax Credit Tuesday podcast to learn more about Notice 2014-46. 

IRS Clarifies Effect of Sequestration on Section 1603 Recipients

WASHINGTON – June 10, 2014

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The Internal Revenue Service (IRS) today released a notice clarifying the effect of sequestration on Section 1603 renewable energy cash grant recipients. Notice 2014-39 states that the Section 1603 payment resulting from sequestration during the affected time period does not affect the amount of the Section 1603 award or the basis of the specified energy property used for determining the award. As a result, taxpayers may not partition the basis of a property to claim both a Section 1603 award and either the renewable energy investment tax credit (ITC) or the production tax credit (PTC). However, under section 48(d)(3)(B), a taxpayer must reduce the basis of the specified energy property by 50 percent of the amount of the actual Section 1603 payment.  

Bill Would Expand ITC for Distributed Wind Projects

WASHINGTON – June 4, 2014

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Reps. Earl Blumenauer, D-Ore., and Tom Cole, R-Okla., last week introduced a bill that would increase the energy capacity for distributed wind projects in rural areas that qualify for the investment tax credit (ITC).  The Rural Wind Energy Expansion Act of 2014 (H.R. 4761) would increase the maximum capacity for small wind turbines that qualify for the credit from 100 kilowatts to 20 megawatts.

Tune in to next week’s Tax Credit Tuesday podcast to learn more about H.R. 4761.  

Amendments Proposed to Extend, Clarify ITC

WASHINGTON – May 19, 2014

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Sen. Tom Carper, D-Del., last week led a bipartisan group of legislators in filing two proposed amendments to the Senate tax extenders bill that would extend and clarify the renewable energy investment tax credit (ITC). The first amendment would provide a long-term extension of the30 percent renewable energy ITC for the first 3,000 megawatts of qualifying offshore wind projects. It is the same text as S. 401, the Incentivizing Offshore Wind Power Act. The second amendment would clarify previous legislation to ensure that waste heat to power technology is eligible for the ITC under Section 58 of the tax code. The amendments would apply to Senate Amendment 3060, which proposes substituting the text of H.R. 3474 with a Senate tax extenders package. 

IRS Proposes Regulations Related to REIT Rules for Renewable Energy

WASHINGTON – May 12, 2014

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The Internal Revenue Service (IRS) last week issued proposed regulations intended to clarify the treatment of renewable energy installations in real estate investment trusts (REITs). This clarification is expected to help to promote investment in the renewable energy sector. A public hearing is scheduled for Sept. 18 and the IRS will accept comments and requests to speak at the hearing until Aug. 12.

Tune in to tomorrow’s Tax Credit Tuesday podcast to hear more about the proposed regulations.

Bill Introduced to Extend ITC, PTC

WASHINGTON – April 11, 2014

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Reps. Zoe Lofgren, D-Calif., and Doris Matsui, D-Calif., today introduced legislation that extend the investment tax credit (ITC), the production tax credit (PTC) and a number of other tax credit incentives. Under H.R. 4426, the Clean Energy Victory Bond Act of 2014, the ITC would be extended until Jan. 1, 2023 and the PTC would be extended until Dec. 31, 2023. In addition, H.R. 4426 would allow U.S. citizens to invest in clean energy technologies through the issuance of bonds.

Senate Finance Committee Passes Tax Extenders Bill

WASHINGTON – April 3, 2014

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The Senate Finance Committee today passed the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act by voice vote. The bill incorporates modifications released today by Chairman Ron Wyden, D-Ore., including extensions of the renewable energy production tax credit (PTC) and of the 4 percent tax credit percentage floor for the low-income housing tax credit (LIHTC).

Senate Finance Committee to Consider Tax Extenders

WASHINGTON – April 1, 2014

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The Senate Finance Committee will markup legislation on “tax extenders” on Thursday, April 3. The bill, entitled the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, addresses a number of tax provisions that have expired or will expire at the end of this year. The committee also released a summary of the bill’s provisions and a cost estimate.

As currently written, the chairman’s mark of the EXPIRE Act extends several renewable energy provisions but it does not include an extension of the renewable energy production tax credit (PTC) for wind. It is expected that committee members will offer an amendment to extend the PTC for wind during committee consideration on Thursday.

For more information, tune in this afternoon to the Tax Credit Tuesday podcast. Additional details may also become available leading up to the hearing, so stay tuned.

Bipartisan Group of Senators Urges ITC, PTC Extension

WASHINGTON – Mar. 21, 2014

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Sens. Mark Udall, D-Colo., and Chuck Grassley, R-Iowa, sent a letter to the Senate Finance Committee asking the committee to include the extension of the investment tax credit and production tax credit for wind energy in any upcoming tax-extender legislation. The letter was also signed by 24 other senators.

Administration Budget Would Make PTC Permanent, Refundable

WASHINGTON – Mar. 4, 2014

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In its proposed budget for fiscal year (FY) 2015, the Obama administration proposes making the renewable energy production tax credit (PTC) permanent and refundable. The budget also proposes an additional $2.5 billion in tax credits for investments in advanced energy manufacturing projects, such as energy equipment and facilities for clean energy manufacturing.

Tax Reform Proposal Would Alter LIHTC, Repeal HTC, ITC and PTC

WASHINGTON – Feb. 26, 2014

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Ways and Means Chairman Dave Camp, R-Mich., today released a draft tax reform proposal that would repeal the historic rehabilitation tax credit (HTC) and the renewable energy investment tax credit (ITC) and production tax credit (PTC). The draft does not include any reference to the new markets tax credit (NMTC).

The proposal would retain the low-income housing tax credit (LIHTC) in the revised tax code but would make several changes. Under the proposal, state and local housing authorities would allocate qualified basis, rather than tax credits. The proposed annual amount of allocable basis for each state would be equal to $31.20 multiplied by the state’s population, with a minimum annual amount of $36,300,000. In addition, the draft calls for including repealing the 4 percent credit, extending the credit period to 15 years from 10, repealing the increased basis rule for high-cost and difficult development areas, revising the general-public-use requirement to provide occupancy preferences only for individuals with special needs and veterans, and repealing the requirement that states include the energy efficiency and historic nature of the development in their selection criteria.

Novogradac & Company is developing a detailed analysis of the proposal, so stay tuned.

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