Under newly issued guidance, the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) will begin insuring mortgages on qualifying properties with PACE assessments.
This is an article that David Burton published in Tax Notes that discusses three recent Internal Revenue Service rulings in which permission was granted, in what appears to be solar energy project, inverted lease transactions, in two instances to make a late election to pass through the investment tax credit to the lessee and in a third instance to make a late election out of bonus depreciation.
Here is a link to the article.
Question from Seminar Participant: The tax equity investor invests to own only a portion of the production tax credits (PTCs) up front, since there is an unknown of the actual production levels of the wind farm. What does the project company do with the portion of the PTCs not sold up front? Are they generally sold to the same tax equity investor year after year, or is there some other way for the project to receive value for them?
Answer: In a typical wind tax equity partnership that follows the safe harbor in Revenue Procedure 2007-65, the tax equity investor is allocated 99 percent of the profit and loss (which is different from its right to distributable cash), determined using tax principles until the later of (a) when it achieves after-tax flip rate and (b) five years. That allocation of profit and loss brings with it the right to 99 percent of the PTCs. PTCs are generated for 10 years from the project’s placed-in-service date (i.e., when it starts operating). If the tax equity investor achieves its flip rate before that 10-year period is over, the tax equity investor’s allocation declines. The minimum revenue procedure permits the investor’s allocation can decline to 4.95% (i.e., 5 percent of 99 percent), but the exact level to which it declines is negotiated up front in the limited liability company agreement (LLCA).
Here is a link to an article originally published in State Tax Notes on February 1 in which David Burton and Richard Page discuss the much-criticized Oregon transferable energy tax credit program and provide three lessons that taxpayers involved with state tax credits can learn from that program.
In its first opinion letter of the year, the Kansas Department of Revenue (DOR) confirmed that under Kansas law only a utility can sell power to a residential customer.1 The text of the letter references the request as being made by a residential solar company, but the identity of that company is redacted.
David Burton has published an article in the Daily Tax Report that analyzes a recent Tax Court involving the "material participation" exception to the "passive activity loss" rules. The passive activity loss rules are critical when an individual seeks to shelter income from her salary or investment portfolio with tax credits or depreciation.
Last night, Speaker Paul Ryan (R-WI) and other congressional leaders released a proposed legislative compromise that would fund the government through September 30, 2016, extend tax credits for solar and wind projects and lift the ban on exporting oil. The text of the bill is available here, with the energy tax credit provisions starting on page 2002.
In a nimble procedural maneuver, the House will vote on two separate bills: an omnibus spending bill and a tax extenders bill. Despite being in the nature of tax extenders, the extensions of the wind and solar tax credits has been included in the omnibus spending bill.
The change applies to Cash Grants paid on or after October 1, 2015, and on or before September 30, 2016, regardless of when the application was submitted to Treasury.