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Treasury Releases Renewable Energy Guidance
Regarding the Election of the Investment Tax
Credit in Lieu of the Production Tax Credit
BY MICHAEL D. HAUN AND SEAN C. HONEYWILL
On June 5, 2009, the Treasury Department
released much anticipated guidance in the form
of Notice 2009-52 describing the procedures that
taxpayers will be required to follow to make the
irrevocable election to take the investment tax
credit (¡°ITC¡±) determined under Section 48 of
the Internal Revenue Code (the ¡°Code¡±) in lieu of
the production tax credit (¡°PTC¡±) under Code
Section 45. The election was created by the
American Recovery and Reinvestment Tax Act of
2009 (the ¡°Act¡±), which was enacted on
February 17, 2009.
While it was hoped that this notice would also
provide greater detail about Section 1603 of the
Act, which authorizes the Treasury to provide
cash grants in lieu of both the PTC and ITC, the
notice simply states that a taxpayer cannot claim
any PTC or ITC with respect to any property for
which a cash grant has been made. Further
guidance on the details and operation of the
cash grant program is anticipated to be released
later this summer.
Background
Code Section 48(a)(5), enacted as part of the
Act, allows taxpayers to make an irrevocable
election to have qualified investment credit
facilities placed in service during the duration of
the PTC extension period (generally through
2013; through 2012 for wind facilities) be
treated as energy property eligible for the
30 percent ITC. For this purpose, qualified
investment credit facilities include the following
qualified facilities described in Code Section 45 if
no PTC has been allowed with respect to such
facility:
Wind;
Closed- and open-loop biomass;
Geothermal energy;
Landfill gas;
Municipal solid waste;
Qualified hydropower; and
Marine and hydrokinetic renewable energy.
A taxpayer electing to treat a facility as energy
property under Section 48 may not claim the
Section 45 PTC. The election to take the ITC in
lieu of the PTC is available for facilities placed in
service after December 31, 2008.
Election Procedures
To make the election with respect to a qualified
investment credit facility, a taxpayer must claim
June
2009
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