Legislation to give renewable energy projects the ability to use master limited partnerships (MLPs) was reintroduced in the House of Representatives. The Financing Our Energy Future Act would expand MLPs–a structure currently only available for oil, gas and coal projects–to clean energy. MLPs are structured as a partnership, but the ownership interest can be traded. Solar, wind, fuel cells, energy storage and wide swath of other green energy sources would be eligible under the legislation. That would give those projects access to larger and more liquid sources of capital. Text of the bill was not immediately released, but similar legislation was introduced in 2021.
The Internal Revenue Service (IRS) today released Notice 2023-38, which details information on the domestic content bonus under the Inflation Reduction Act (IRA) of 2022 for clean energy projects and facilities that meeting American manufacturing and sourcing requirements. The bonus applies to domestically built facilities built using steel, iron and manufactured products. All steel and iron manufacturing processes must take place in the United States to receive the bonus. Developers can receive up to a 10% bonus on the production tax credit (PTC) and an additional 10 percentage points on top of the investment tax credit (ITC).
The Internal Revenue Service (IRS) today released Notice 2023-29, detailing information on the bonus credit under the Inflation Reduction Act (IRA) for clean energy projects and facilities located in communities that have historically been at the forefront of energy production. Developers can receive up to an additional 10 percentage points on top of the renewable energy investment tax credit (ITC) and production tax credit (PTC). The bonus is also available in:areas with significant employment or local tax revenue from fossil fuel industries as long as such areas have unemployment rates at or above the national average rate over the previous 12 months, as defined by the guidance,census tracts (including adjoining tracts) in which a coal mine has closed after 1999 or in which a coal-fired electric generating plant has been retired after 2009, andBrownfields as defined in the guidance.
The Financial Accounting Standards Board (FASB) today published Accounting Standards Update (ASU) 2023-02, which expands the proportional amortization method to account for investments in all tax credit structures. That accounting method was previously allowed only for low-income housing tax credit (LIHTC) investments, but now is available, by election, to all community development tax credit investment reporting that meets five conditions. Under the new guidance, reporting entities can make accounting policy elections on a tax-credit-program-by-tax-credit-program basis, rather than for individual investments or at the reporting entity level. For public business entities, the new amendments are effective for fiscal years beginning after Dec. 15, 2023. For all other entities, the amendments are effective for fiscal years beginning after Dec. 15, 2024. Early adoption is permitted for all entities in any interim period. For calendar-year-end entities, this would include the first quarter ending March 31, 2023.
Sens. Sheldon Whitehouse, D-Rhode Island, and Bill Cassidy, R-Louisiana, today introduced legislation to create parity between the credit value in the Internal Revenue Code (IRC) Section 45Q for use and sequestration of the carbon capture tax credit. S. 542, The Carbon Capture Utilization Parity Act, would increase the value for direct air capture use of carbon to $180 per metric ton and increase the value for power and industrial sector use to $85 per metric ton. Those amounts would equal the incentives for carbon capture and sequestration. The bill was also introduced in the House of Representatives as H.R. 1262. The text of the legislation was not yet available, but Whitehouse’s office released a summary of the legislation.
The Internal Revenue Service (IRS) today published initial guidance on how it will allocate 1.8 gigawatts of capacity in bonus renewable energy investment tax credits (ITCs) to low-income communities as provided in the Inflation Reduction Act (IRA) as well as guidance on the qualifying advanced energy project credit program.
Technical and administrative guidance released today by the Organization for Economic Co-Operation and Development (OECD)/Group of Twenty (G20) provides clarification on the treatment of key community development tax incentives concerning a global minimum tax (GMT) on multinational corporations. More than 140 nations agreed with the guidance, which will form a common approach for countries to implement the rules concerning the GMT.
The U.S. Department of the Treasury today announced plans to provide key guidance before the end of the year on specific clean energy tax provisions included in the Inflation Reduction Act of 2022.
The Internal Revenue Service (IRS) will publish a notice in Wednesday’s Federal Register providing guidance on the prevailing wage and apprenticeship requirements that allow bonus credit percentages for certain renewable energy provisions of the Inflation Reduction Act (IRA). The notice also provides guidance for determining the beginning of construction date for certain credits. Under the IRA, properties that meet prevailing wage and apprenticeship requirements qualify for the 30% renewable energy investment tax credit (ITC) and the $26 per megawatt-hour production tax credit (PTC).
Taxpayers must have profit as a primary objective of a venture to receive tax benefits that include renewable energy investment tax credits (ITCs), according to a decision issued this month by the U.S. Circuit Court of Appeals for the Tenth Circuit. The court upheld a lower court’s ruling that denied ITCs and depreciation deductions to a taxpayer, ruling that those benefits require a profit motive. The taxpayer entered a sale-and-leaseback transaction for solar lenses in a system that was never finished, yet the taxpayer claimed depreciation deductions and ITCs on the full price of the lenses, rather than the 30% that the taxpayer paid. The IRS ruled that the taxpayer lacked a profit motive and denied the depreciation deductions and ITCs.
The Internal Revenue Service (IRS) today issued an announcement with updated credit amounts for the renewable energy production tax credit (PTC) for facilities placed in service after Dec. 31, 2021. The changes are due to the Inflation Reduction Act. Announcement 2022-23 replaces the amounts published in Notice 2022-20 for those facilities. The total for such facilities is 2.75 cents per kilowatt hour for qualified energy resources of wind, closed-loop biomass, geothermal energy and solar energy. It is 1.25 cents per kilowatt hour on the sale of electricity produced by a qualified open-loop biomass, landfill gas, trash, qualified hydropower or marine and hydrokinetic renewable energy facilities.
The U.S. Department of the Treasury today issued three notices requesting public input on climate and clean energy incentives included in the Inflation Reduction Act, following six notices issued in October. Notice 2022-56 requests comments related to commercial clean vehicles and alternative fuel vehicle refueling property, Notice 2022-57 requests comments related to the credit for carbon capture and Notice 2022-58 requests comments related to clean hydrogen and clean fuel production. Those interested in providing feedback should follow instructions in the notices and send responses by Dec. 3.
The U.S. Department of the Treasury today issued six notices seeking public input on climate and clean energy incentives including renewable energy tax credits (RETCs) such as the production tax credit (PTC) and investment tax credit (ITC) related to the Inflation Reduction Act (IRA) passed in August. The notices, which cover energy generation incentives, credit enhancements, incentives for homes/buildings, consumer vehicle credits, manufacturing credits and credit monetization, request input on specific questions as well as solicit general comments. Further opportunities for public input will come at later dates. Today’s release also includes a fact sheet with additional information about the notices and the Internal Revenue Service’s plan for implementation. Treasury requested responses for the six proposals released today by Nov. 4.
Novogradac has resources available for private companies and nonprofits affected by Accounting Standards Codification (ASC) 842, which changed lease accounting standards. The change–which took effect Jan. 1 for fiscal years beginning after Dec. 15, 2021–affects the way certain contracts are accounted for under generally accepted accounting principles, particularly entities that are lessees. Rather than disclosing operating leases in notes to financial statements, but not on balance sheets, the new guidance requires lessees to record a right-of-use asset for the leased asset and a corresponding lease liability equal to the financial obligation over the lease term, as well as new disclosure requirements.
Internal Revenue Service (IRS)-published inflation adjustment rates for Internal Revenue Code Section 45Q carbon oxide sequestration for calendar year 2022 are a slight increase over 2021. Notice 2022-38 provides a 1.2534 adjustment multiplier, putting the credit for calendar year 2022 at $25.07 per metric ton of qualified carbon oxide under Section 45Q(a)(1) and $12.53 per metric ton of qualified carbon oxide under Section 45Q(a)(2). Those totals are $1.06 per ton and 48 cents per ton more than the 2021 figures.
The Financial Accounting Standards Board (FASB) today released an exposure draft of a proposed accounting standards update that would allow the expanded use of the proportional amortization method to account for investments in tax credit structures.
Massachusetts Gov. Charlie Baker signed into law a broad clean energy bill that creates a 50% investment tax credit (ITC) for large offshore wind facilities. H. 5060 allows the offshore wind tax credit to be taken ratably over five years and applies to properties where the owner or tenant has a total capital investment of at least $35 million and employs at least 200 new full-time employees by the fifth year. For tenants to take the credit, they must occupy at least 25% of the owner’s capital investment in the facility. The credit has a $35 million annual statewide cap.
President Joe Biden today signed into law the Inflation Reduction Act (IRA), a $750 billion budget reconciliation bill that includes $369 billion in clean and renewable energy provisions that feature extensions of the renewable energy production tax credit (PTC) and investment tax credit (ITC).
The U.S. House of Representatives today approved a $740 billion budget reconciliation bill that includes $369 billion in clean and renewable energy provisions as well as a 15% corporate minimum tax on book income. President Joe Biden is expected to sign the bill into law today. The legislation extends the renewable energy production tax credit (PTC) and investment tax credit (ITC), and expands the 30% ITC for stand-alone energy storage and interconnection property. The House approved the bill along party lines after the Senate approved it 51-50, with Vice President Kamala Harris providing the tie-breaking vote.
In a party-line vote, the U.S. Senate advanced sweeping $700 billion-plus legislation Sunday that includes $369 billion in clean and renewable energy provisions, including extensions of the production tax credit (PTC) and investment tax credit (ITC) for facilities that start construction after Jan. 1, 2022, and before Jan. 1, 2025. Under the reconciliation bill, the PTC is extended at $26 per megawatt-hour, adjusted by inflation annually, while the ITC is extended at 30% for projects that adhere to labor requirements on prevailing wages and apprenticeship programs. The legislation includes many other green energy provisions, including the expansion of the 30% ITC for stand-alone energy storage and interconnection property. The bill now goes to the House of Representatives, which will take up debate Friday.
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