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Tax Credits for Energy Facilities Extended in New Budget Bill

Congress recently enacted the Bipartisan Budget Act of 2018, which contained a number of extenders applicable to tax credits for energy facilities.  In the case of PTC-eligible energy facilities that were not covered by the earlier extension applicable to wind and solar, the credit was extended to facilities where construction was commenced before January 1, 2018.  This new rule applies to closed and open loop biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic facilities.  In addition, the election to claim the ITC in lieu of the PTC on these facilities was also extended to facilities where construction was commenced before January 1, 2018.

The ITC provisions were amended to extend the “commence construction” dates for 30% credits for fiber optic solar, qualified fuel cell, ground based thermal heating and cooling systems, and qualified small wind energy property to be consistent with solar facilities (terminating at the end of 2021). The Act also extended the “commence construction” dates for 10% credits relating to qualified microturbine and combined heat and power system property (also terminating at the end of 2021).  To be eligible for the extension, combined heat and power system property must be placed into service after December 31, 2016.

In addition, the credits for fiber optic solar, qualified fuel cell and qualified small wind project will step down over the next 5 years.  It also appears that any such property not placed in service by the end of 2023 will not be eligible for any ITC.

Copyright 2018 K & L Gates

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About this Author

Charles Purcell, KL Gates Law Firm, Tax Attorney
Partner

Charles Purcell works extensively in the alternative investments areas with a focus on federal and international tax issues.  He has broad experience in the formation of domestic and foreign investment funds including private equity, venture, real estate and infrastructure funds and fund-of-funds; large joint venture transactions; mergers and acquisitions; financing and banking transactions; ventures capital investments and start-up companies; and compensation of managers, executives and promoters.  Mr. Purcell represents numerous domestic and foreign institutional...

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Won-Han Cheng, KL Gates Law Firm, Tax Attorney
Partner

Won-Han Cheng is a partner in the international law firm of K&L Gates, resident in its Seattle office, where she is a member of the Tax and Corporate practices.  Ms. Cheng focuses her practice on the federal, state and international tax issues for both foreign and domestic clients including public and private corporations, partnerships and limited liability companies.  She advises clients on partnership and corporate tax issues, restructurings and reorganizations, mergers and acquisitions and other tax planning issues.  Ms. Cheng works extensively in the area of alternative investments, assisting institutional investors with investments in pooled investment funds including energy funds, private equity funds, hedge funds, venture capital funds and special situation funds. 

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Elizabeth Crouse, KL Gates Law Firm, Tax Attorney
Associate

Elizabeth Crouse is an associate in the tax group of the Seattle office. She provides business-focused solutions for U.S. federal, state, and international tax matters pertinent to mergers and acquisitions, corporate divestitures, internal reorganizations, cross-border transactions, private equity and venture capital fund creation and investments, and start-up companies.

Ms. Crouse is also experienced with U.S. federal and state alternative energy tax incentive programs (including the investment tax credit, production tax credit, and 1603 cash...

206-370-6793