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November 17, 2023

IRS releases proposed regulations on types of energy property eligible for IRC Section 48 investment tax credit

The Treasury and IRS have released proposed regulations (REG-132569-17) on the IRC Section 48 investment tax credit that would (1) update the types of energy property eligible for the credit, (2) clarify how to apply the new credit transfer rules to the recapture rules when a taxpayer fails to satisfy the prevailing wage requirements; and (3) include qualified interconnection costs in the basis of some lower-output energy properties. More specifically, the proposed rules would, among other things, clarify the eligibility of power conditioning and transfer equipment like subsea export cables used in offshore wind projects; provide rules on the credit eligibility of standalone battery storage; and provide rules and requirements for other energy property such as retrofitted energy property, dual use property and property that could be eligible for multiple federal income tax credits. A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor