Tuesday, June 09, 2009

IRS guidance on claiming investment tax credits for wind, biomass, geothermal, and other PTC facilities

The 2009 Stimulus legislation (ARRA) permits owners of PTC facilities, such as wind, biomass, and others, to elect a 30-percent tax credit, based on the cost of the facility, at the time the project is placed in service, rather than the 10-year PTC, which is calculated based on sales of electricity. Last week, the IRS issued Notice 2009-52, which explains the process for making this election.

The election to claim the ITC in lieu of the PTC applies to the following types of renewable energy facilities:

*Wind;
*Biomass (both closed- and open-loop);
*Geothermal;
*Landfill gas;
*Trash facilities;
*Qualified hydropower; and
*Marine and hydrokinetic.

To qualify, a taxpayer must claim the ITC with respect to qualified property that is an integral part of the facility on a completed Form 3468. Form 3468 must be filed with the taxpayer’s income tax return for the year in which the property is placed in service.

A separate election must be made for each qualifying facility. At this time; however, there is no guidance on how to define a "qualifying facility."

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