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IRS Clarifies Effect of Sequestration on Section 1603 Recipients

Tuesday, June 10, 2014 - 7:00AM

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.  

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