New IRS Guidance for Section 48C Qualifying Advanced Energy Project Credit

Description

The Inflation Reduction Act of 2022 (IRA) modified the credit for "qualifying advanced energy projects" under Section 48C of the Internal Revenue Code. Counsel, developers, and investors must understand the requirements of Section 45C in order to maximize tax benefits and take advantage of the tax credits.

New Section 48C allows a taxpayer to claim the tax credit for any taxable year in an amount equal to a base rate of six percent of the taxpayer's "qualified investment" for that taxable year with respect to any "qualifying advanced energy project" owned by the taxpayer. This base rate increases to 30 percent for taxpayers satisfying certain prevailing wage and apprenticeship requirements with respect to the project.

IRS Notice 2023-18 provides initial procedures for applications and allocations of the Section 48C credit program providing significant insights such as (1) the categories of projects that are considered to be a "qualifying advanced energy project," (2) qualified investments, eligible property, and placement in service, and (3) allocation procedures, as well as other key items that must be considered.

Listen as our panel discusses "qualifying advanced energy projects" under the Internal Revenue Code and Notice 2023-18, qualified investments, eligible property, placement in service, allocation procedures, and related challenges.