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IRS Releases Latest Federal Income Tax Guidance on 1603 Treasury Grants and Energy Tax Credits


6/13/14

In a brief but official IRS Notice (Notice 2014-39), the IRS clarified that if a taxpayer received a Section 1603 treasury grant award, and the amount of the grant award was reduced due to federal budget sequestration laws then in effect, taxpayers may not make up for the shortage in the grant award or payment caused by sequestration by taking either a PTC or ITC to make up that 1603 grant shortfall.
 
Some taxpayers apparently were attempting this despite the tax law being quite clear it was not permissible to do so. Others were apparently attempting this because Treasury’s awards were reduced from what the grant applicant felt was a larger eligible amount. Neither action is permitted for federal tax purposes.
 
With this notice, the IRS makes it clear that there is absolutely no mixing of Section 1603 grant monies and the PTC or the ITC for the same energy system.  One must pick either a PTC, ITC, or grant for each energy property, and only one form of benefit may be claimed, each according to the rules specific to whichever incentive was chosen. 
 
Contact
 
For more information, please contact Timothy Kemper, Partner and Renewable Energy Industry Practice Co-National Director, at 404-847-7786, Anton Cohen, Partner and Renewable Energy Industry Practice Co-National Director, at 301-280-1822, or Lee Peterson, Senior Manager, at 404-847-7744.

For more information on CohnReznick’s Renewable Energy Industry Practice, please visit our webpage.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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