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January 6, 2021

IRS issues final regulations under IRC Section 45Q on carbon oxide sequestration

The IRS and Treasury Department have published final regulations (TD 9944) on the credit under IRC Section 45Q for carbon oxide sequestration. The final regulations address (1) secure geological storage, (2) contracting with third parties for the disposal, injection, or utilization of qualified carbon oxides and allowing third parties to claim the IRC Section 45Q credits, (3) the definition of the recapture period for carbon oxides that are not properly captured, and (4) clarification on "utilization" of captured carbon.

The final regulations retain the basic approach of the proposed regulations (REG-112339-19), with certain modifications (see Tax Alert 2020-1515).

A Tax Alert is forthcoming.