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Wednesday, September 28, 2022

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.

Monday, September 26, 2022

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.

Monday, August 22, 2022

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.

Thursday, August 18, 2022

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.

Tuesday, August 16, 2022

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).

Friday, August 12, 2022

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.

Monday, August 8, 2022

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.

Thursday, July 28, 2022

Senate Majority Leader Chuck Schumer, D-New York, and Sen. Joe Manchin, D-West Virginia, announced a deal on sweeping reconciliation legislation that includes several major renewable energy provisions, including extensions of the production tax credit (PTC) and investment tax credit (ITC). The Inflation Reduction Act of 2022 also includes a 15% corporate minimum tax, increased tax enforcement resources, an extension of the Affordable Care Act premium tax incentives and prescription drug reform.

Friday, June 24, 2022

Legislation effective this week in South Carolina retroactively extends the state solar tax credit. S.901 reinstates the 25% state credit that expired Dec. 31, 2021, for solar energy property on specified locations and allows the credit to be taken by a partnership or limited liability company taxed as a partnership. The legislation increases the project cap from $2.5 million to $5 million and allows the credit to be taken in five equal installments beginning within three years of the year in which the property is placed in service.

Tuesday, June 14, 2022

The proposed global minimum tax and its potential effect on community development tax credit equity investments is the subject of this week’s Novogradac Tax Credit Tuesday podcast episode. Michael Novogradac, CPA, and Novogradac partner Brad Elphick, CPA, discuss the proposal and potential approaches to mitigate the damage to tax credit equity investment. They also examine next steps in the proposal and for community development tax credit stakeholders. Novogradac has also published a white paper on the subject called Pillar Two and Tax Credit Equity Investments and is seeking public comment on the paper. Comments may be sent to [email protected]

The weekly Tax Credit Tuesday podcast offers an in-depth discussion of various tax incentive topics with expert guests.

Thursday, May 5, 2022

The three major federal bank regulatory agencies today issued a joint notice of proposed rulemaking to strengthen and modernize Community Reinvestment Act (CRA) regulations. The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed) and Federal Deposit Insurance Corporation (FDIC) jointly issued the proposal, which would be the first significant interagency revision to the CRA since 1995. The proposal would adopt a metrics-based approach to CRA evaluation of retail lending and community development financing that includes public benchmarks. The rule would also clarify eligible CRA activities that are focused on low- and moderate-income, rural and underserved communities, including affordable housing. 

Friday, April 8, 2022

A bill introduced Tuesday in the U.S. House of Representatives aims to boost offshore wind construction and manufacturing through the investment tax credit (ITC) and production tax credit (PTC). H.R. 7388, The Offshore Wind American Manufacturing Act, would create a 30% ITC for qualified facilities that manufacture offshore wind components through Dec. 31, 2028, followed by a reduction of 30% for property placed in service in 2029, 65% for property placed in service in 2030 and 100% for property placed in service after Dec. 31, 2030. The bill would also create a new PTC that would range from approximately 2 to 5 cents per watt multiplied by the total rated capacity of the turbine, with components such as blades, towers, generators, gearboxes and foundations contributing to variable factors.

Wednesday, March 9, 2022

Legislation introduced in the Massachusetts House of Representatives would create a state investment tax credit (ITC) of up to 50% for capital investment in large offshore wind facilities. H.B. 4524 would create the state ITC for offshore wind facilities that cost at least $50 million and employ at least 200 new full-time employees by their fifth year. The state credit would be taken over five years and the annual statewide cap for the offshore wind credits would be $50 million.

Tuesday, March 1, 2022

The Internal Revenue Service (IRS) published a private letter ruling last week that two solar energy facilities will not be public utility properties within the meaning of former Section 46(f) and Section 168(i)(10). PLR 202208005 determined the facilities did not meet one of three requirements to be considered public utilities, which requires energy produced to be sold at rates determined on a rate-of-return basis. PLRs are directed only to the taxpayer requesting them and may not be used or cited as precedents.

Monday, February 7, 2022

The Internal Revenue Service (IRS) published a private letter ruling last week that a solar energy facility owned by a taxpayer is not a public utility property and the taxpayer is not subject to the normalization rules of Internal Revenue Code (IRC) Section 168(i)(9) or former Section 46(f). IRC Section 168(i)(9) governs the normalization method of accounting for any public utility property, and IRC Section 46(f) stipulates the amount of credits.

Wednesday, December 22, 2021

The future of the Build Back Better Act (BBBA) and related community development incentives after Sen. Joe Manchin’s announcement that he would not vote for the legislation is the subject of this week’s Tax Credit Tuesday episode. Michael Novogradac, CPA, is joined by Peter Lawrence, Novogradac director of public policy and government relations, and Tony Grappone, CPA, to discuss what’s next for potential tax extenders legislation, what tax incentive provisions could be included in a future version of the BBBA and more.

Tuesday, December 14, 2021

The Office of the Comptroller of the Currency (OCC) today issued a final rule to rescind the Community Reinvestment Act (CRA) rule it issued in June 2020. Today’s action replaces the 2020 rule with a rule based on rules adopted by the OCC, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) in 1995, as amended. The final rule applies to national banks, federal savings associations and state savings associations. The updated rule takes effect Jan. 1, 2022.

Friday, November 19, 2021

The U.S.  House of Representatives today passed the Build Back Better Act, a $1.7 trillion bill that includes an expansion of the low-income housing tax credit (LIHTC), the introduction of the neighborhood homes tax credit (NHTC), an additional tribal allocation of the new markets tax credit (NMTC) and $325 billion in renewable energy tax incentives. H.R. 5376 passed 220-213 and now goes to the Senate. The legislation includes an extension of the 12.5% increase in 9% LIHTC allocations that began in 2018 through 2024, adding a 10% increase, plus an annual inflation adjustment, to that amount. The bill also would reduce the 50% test for affordable rental housing financed with private activity bonds (PABs) to 25% for calendar years 2022-26, establish a 50% basis boost for extremely low-income housing and provides a 30% basis boost for LIHTC properties in tribal areas.

Monday, November 15, 2021

The Internal Revenue Service (IRS) published a notice today providing a 1.2049 inflation adjustment factor for Internal Revenue Code (IRC) Section 45Q carbon oxide sequestration credits. The Notice 2021-35 inflation adjustment means the credit for calendar year 2021 is $24.10 per metric ton of qualified carbon oxide under IRC Section 45Q(a)(1) and $12.05 per metric ton of qualified carbon oxide under IRC Section 45Q(a)(2).

Wednesday, November 3, 2021

Democrats in the House of Representatives today released revised text for the Build Back Better Act (H.R. 5376), which includes an expansion of the low-income housing tax credit (LIHTC), the neighborhood homes tax credit (NHTC) and a $175 million tribal allocation for the new markets tax credit (NMTC) for 2022. The revised legislation retains $555 billion in tax and spending proposals for clean energy with minor changes. The LIHTC provisions include the extension of the 12.5% increase in 9% allocations that began in 2018 as part of the baseline during 2022-2024, adding annual 10% plus inflation increases for 2022-24 to those amounts, but reverting to the 2017 baseline as adjusted for inflation in 2025. It also would reduce the 50% test for affordable rental housing financed with private activity bonds (PABs) to 25% for five years (2022-26) and establish the 50% basis boost for extremely low-income housing, with the set-aside reduced from 10% to 8%, and a 30% basis boost for LIHTC properties in tribal areas.