Grant in Lieu of ITC

To help monetize the ITC, ARRA enables taxpayers (that are otherwise eligible to claim the ITC) to elect to receive a cash grant from the U.S. Treasury Department instead of claiming the ITC.  To qualify, the project must be placed in service during 2009 or 2010 or, if construction began in 2009 or 2010, before January 1, 2013.  The grant is not available to any governmental agency, tax-exempt entity, or rural electric cooperative.  Applications must be submitted before October 1, 2011. These grants generally function the same way as the ITC.  The amount of the grant generally is 30% of most of the cost of the facility.  A grant is not included in the taxable income of the recipient, but the tax basis of the facility is reduced by one-half of the amount of the grant.  The Treasury Department must pay the grant by 60 days after the later of:  (a) the date of the application or (b) the date the facility is placed in service.  ARRA contains a specific provision appropriating “such sums as necessary” to make sure that funds will be available to pay grants on all qualifying projects.     Benson, David, Greg Jenner, and Debra Frimerman. SHOW ME THE MONEY: The Law Of The Stimulus Package....

Election to Claim ITC Rather Than PTC

ARRA allows a taxpayer that is eligible to claim the PTC for a wind energy project to claim an investment-based tax credit (“ITC”) in lieu of the PTC.  This election can apply to wind energy facilities that are placed in service from January 1, 2009 to January 1, 2012.  The entire amount of the ITC is available for the year in which a qualifying facility is placed in service.  The credit equals 30% and applies to most of the cost of the facility.  Any unused portion of the credit can be carried back one tax year and carried forward up to 20 tax years.  The owner of a qualifying facility can elect to claim either the ITC or the PTC, but not both.  The tax basis of the facility must be reduced by one-half of the credit claimed.  ARRA also eliminates the reduction of a project’s tax basis (for the purposes of calculating the ITC) if it was financed through subsidies or tax-exempt bonds.     Benson, David, Greg Jenner, and Debra Frimerman. SHOW ME THE MONEY: The Law Of The Stimulus Package....

PTC Incentive – Wind

Extension of PTC Sunset Date.  ARRA extends the production tax credit (“PTC”) for wind energy projects from December 31, 2009 through December 31, 2012.  To qualify for the PTC under the Act, a wind energy project must be “placed in service” on or before that date.  ARRA did not change the basic operation or calculation of the PTC for wind energy projects.  Thus, any qualifying project that meets the placed-in-service requirement will qualify for a credit (indexed for inflation) per kilowatt hour of electricity generated and sold to an unrelated person during each year of the 10-year period beginning on the date the project is originally placed in service. The amount of the credit is 2.1¢ per kilowatt hour for 2009.   Benson, David, Greg Jenner, and Debra Frimerman. SHOW ME THE MONEY: The Law Of The Stimulus Package....