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DISCLAIMER: This blog is published for general information only - it is not intended to constitute legal advice and cannot be relied upon by any person as legal advice. While we welcome you to contact our authors, the submission of a comment or question does not create an attorney-client relationship between the Firm and you.

Entries in Tax Law (3)

Friday
Jan042013

Energy News Roundup: December 29-January 4

This week in regional energy news …

Friday
Dec212012

Energy News Roundup: December 15-December 21

This week in regional energy news …

Tuesday
Dec212010

Extension of Renewable Energy Incentives in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

The 2010 Tax Relief Act that President Obama signed into law last week contains several items of interest to developers and investors in the renewable energy market:

  • One year extension of the Section 1603 Grant.  The Act extends for one year Treasury’s authority to provide grants in lieu of investment tax credits under Section 1603 of the American Recovery and Reinvestment Act of 2009.  Accordingly, a taxpayer who places eligible property into service in 2009, 2010, or 2011 may qualify for a cash grant in lieu of credit program.  In addition, a taxpayer may receive a cash grant in lieu of credit for eligible property if construction of the property begins in 2011, so long as the construction is completed before 2013 (in the case of wind facility property) or 2014 (for most other eligible property.  The 2010 Tax Relief Act also extends the deadline for applying for the grant to October 1, 2012. 
  • Temporary Expensing of Certain Business Assets.  The basis of property eligible for the Section 1603 grant is reduced by 50% of the grant amount.  The balance of the property cost may be expensed if the property is first placed in service after September 8, 2010 and before January 1, 2012.  For example, assume a wind turbine facility has a cost of $3MM.  Further assume that the turbine is placed in service on January 1, 2011.  The Section 1603 grant with respect to the facility is $900,000 (30% of $3MM).  The basis of the facility is reduced by $450,000 (50% of the grant amount).  The balance of the basis ($2.55MM) can be recovered as a deduction in 2011.  Before the Tax Relief Act, bonus depreciation was limited to 50% of the recoverable basis (tax basis after adjusting for the Section 1603 grant).  Further, the bonus depreciation was available only for property first placed in service before 2011.  The expansion and extension of bonus depreciation is a significant incentive for renewable energy project investment.