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IRS Issues Guidance on Investment Tax Credit For Alternative Energy Projects

On Friday, June 22, 2018, the Internal Revenue Service issued guidance to update the federal tax treatment of certain alternative energy property eligible for the Investment Tax Credit (ITC) allowed under 25 U.S.C. § 48. 

The new guidance is important because, under the original enabling statute, there was uncertainty regarding what actions constituted 'beginning construction' on a project. The new guidance also extends the deadline by which construction of eligible energy property must begin. Under the new guidance, for instance, if a solar energy project developer invests at least 5 percent of the total expected installation cost of solar property by the end of 2019, the property can qualify for a 30 percent federal ITC. The IRS's new guidance also outlines requirements relevant to several types of alternative energy projects, including deadlines and qualifications for fiber-optic solar, qualified fuel cell, qualified microturbine, combined heat and power system (CHP), qualified small wind and geothermal heat pump property.

© 2020 Varnum LLPNational Law Review, Volume VIII, Number 184


About this Author

Erin Haney, Tax attorney, Varnum

Erin is a member of Varnum's Tax Practice Team. As a former senior auditor for the Michigan Department of Treasury, she is experienced in Michigan tax compliance and controversy matters. Erin is also a certified public accountant, and she worked as a tax consultant for a major accounting firm prior to pursuing a career in law. During law school she served as a research assistant reviewing updates for the Guidebook to Michigan Taxes and completed an internship with the United States District Court for the Western District of Michigan.

Wayne D. Roberts, Corporate tax attorney, Varnum

Wayne is a member of Varnum’s Tax Team. His practice includes all aspects of federal and state tax planning and tax litigation. He represents both closely-held and Fortune 100 companies in tax disputes with the IRS, the Michigan Department of Treasury, and revenue departments in Pennsylvania, Indiana, Tennessee, New York, California and numerous other state and local taxing jurisdictions.